It seems that Raleigh risked taxpayer money on the RCC bonds by using a bond “buyer of last resort.” Now the city is paying at least $730,000 in additional interest on those bonds according to the N&O here.
The city issued $243 million worth of variable-rate bonds for the
center between February 2004 and January 2005. Variable-rate bonds have
their interest rate reset every seven days.Raleigh hired
Citigroup to market the convention center bonds and Depfa [a German Bank] to be the
liquidity provider. A liquidity provider agrees, for a fee, to buy the
bonds from investors if another buyer cannot be found.Depfa’s troubles have cost Raleigh an estimated $730,000 in additional
interest so far. While that number is likely to rise, it’s not clear by
how much.
This is an unnecessary expense since the then entire RCC project was doomed from the start to be a “taxpayer-funded money pit,” as discussed in this JLF Regional Brief.
