A city authority in Allentown, Pennsylvania, issued $78.9 million in term bonds to redevelop the city’s downtown area.
The bonds, sold by the Allentown Neighborhood Improvement Zone (NIZ) Development Authority, mature on May 1, 2042, and yield 5%. They received a rating of Ba3 from Moody’s Investors Service, which upgraded the authority’s outlook to positive.
The outlook “reflects the ongoing growth in and diversification of pledged revenues, which will help to dilute the taxpayer concentration that has been the most significant risk facing the NIZ since its creation,” Moody’s analysts wrote.
The bond proceeds will finance the construction and renovation of an event center, retail, office and residential buildings, and other projects in downtown Allentown.
Allentown is a city of 125,000 in eastern Pennsylvania, about 60 miles northwest of Philadelphia. The city’s improvement district was created by state law in 2011 and consists of about 128 acres in the city center. More than $1 billion in real estate development in the NIZ has been completed since the district’s creation, according to the city government’s website.
The bonds are special limited obligations of the authority, secured by taxes paid by businesses in the improvement district. The tax base supporting the bonds is relatively small, generating just $60 million in revenue in 2022. Following the issuance, the authority has more than $600 million in debt outstanding, according to Moody’s.
Citigroup Global Markets Inc, which recently announced that it would exit the municipal bond market, served as underwriter on the issuance. PFM Financial Advisors LLC acted as financial advisor.