Alaska Municipal Bond Bank Authority
Administrative Agency:
State Agency: Department of Revenue
Program Goals:
To assist communities with financing for capital projects.
Resource Provided:
Direct loans. No set loan limits. Statutory limit of $750 million in outstanding bonds. Interest rates depend on the national market for tax-exempt bond issues.
Eligibility:
Any organized local government in need of capital project financing should contact the Bond Bank.
Alaska Program Status:
The Alaska Municipal Bond Bank Authority is a public corporation created by state law (AS 44.85). The Bond Bank was created to address the disadvantages that Alaska's communities often experience in financial markets. Communities may have low bond ratings or lack familiarity among investors that would result in above-market interest rates on borrowed money.
Generally, the Bond Bank sells bonds on the national money market and then uses the proceeds to purchase the bonds of Alaska municipalities at the same interest rate the Bond Bank obtained, thereby providing the municipalities with funds for their capital projects. The Bond Bank's A rating from both Moody's and Standard and Poor enables it to borrow money at low rates. As municipalities pay principal and interest to the Bond Bank, the Bond Bank uses this money to pay its bond holders.
The Bond Bank is self-supporting. It does not use general fund monies, and, in fact, has returned up to $2.2 million to the general fund annually. The bank has an excellent loan record, with no defaults. The bank has five directors, including the Commissioners of the Departments of Revenue and Commerce, Community, and Economic Development, as well as three public members.
Program Contact: (Primary Contact listed first.)