King County achieves low borrowing costs for South Park Bridge bonds
$30 million in bond proceeds will pay County’s portion of bridge replacement costs
King County issued $30 million in bonds today to finance the County’s share of costs to replace the South Park Bridge. Construction of the new bridge began in May 2011, and it is expected to open in fall 2013.
“Once again, our prudent fiscal management and blue-chip bond rating has enabled us to finance a needed piece of infrastructure – in this case replacement of the South Park Bridge – at the lowest possible cost to taxpayers,” said King County Executive Dow Constantine.
The total cost of replacing the South Park Bridge is $163 million. The other funding sources include a grant from the federal government and contributions from local partners including the State of Washington, Port of Seattle, City of Seattle, and others.
The county was able to achieve very low borrowing costs thanks to its high quality bond ratings and favorable market interest rates. Annual debt service costs, initially projected at $2.5 million annually, will actually be about $2 million, resulting in a savings of $500,000 per year for the County’s Roads Fund, or $10 million over the 20-year life of the bonds.
Higher bond ratings allow King County to borrow money for projects at lower interest rates. The ratings mean that King County will be able to achieve an interest rate on the new bonds of at least .25 percent less than other comparable government borrowers with a credit rating that is one step lower, and a rate that is .80 percent less for the same borrowers with a credit rating that is two steps lower than King County’s. This will result in a projected interest savings of $1 million to $3 million over the life of the bonds.
The new South Park Bridge will meet current structural, seismic, and traffic standards. A state-of-the-art mechanical and electrical drive system will substantially improve the reliability of bridge operations. The bridge project includes features that will help restore this stretch of the Duwamish Waterway to a more natural condition. As part of the project, the contractor is removing hundreds of creosote-treated timber piles and replacing them with pier walls made of steel and recycled materials. For project updates, visit www.kingcounty.gov/transportation/SouthParkBridge.aspx.