FOR IMMEDIATE RELEASE
Contact: Jim Lewin, Lee County Administration
(941) 335-2336
 

ONLINE AUCTION OF COUNTY BONDS YIELDS LOW RATE

 
FORT MYERS, Fla. (June 29, 2000) – For the first time ever, Lee County Government has sold a series of bonds through an online auction – a method that increases competition and will save taxpayers thousands of dollars through lower interest rates. 
The $18.2 million of Capital Revenue Bonds were purchased Wednesday by Salomon Smith Barney, with participation from Southwest Securities and Gibraltar Securities, at a true interest cost of 5.068 percent over the 15-year term (which includes issuance costs). That’s significantly lower than the 5.25-to-5.29 percent initially estimated by the county’s financial advisor. 

The proceeds from the bonds will be used to complete the expansion of the Ortiz Correctional Facility, build a Juvenile Assessment Center at the County Jail in downtown Fort Myers, build new inmate processing facilities, and renovate the dispatch area at Lee County’s Emergency Operations Center. 
The bonds were sold over PFM/auction from 10:30-to-11 a.m. Wednesday. The county’s financial advisors, Public Financial Management, coordinated the sale. Underwriters, who eventually will place the bonds with investors, electronically bid on the bonds during the sale period. They could bid on a maturity-by-maturity basis or for the entire placement. 
Government bonds are tax-exempt, meaning the interest paid on the bonds to the people buying them (the bondholders) is exempt from income taxes. In other words, the bondholders have a tax-free investment. This allows the government to issue the bonds at a lower interest rate.
 

During Wednesday’s auction, 12 underwriters eventually bid on the bonds, most between 10:55 a.m. and the end of the sale at 11 a.m. Each bidder can see electronically how many other bidders there are and whether they are currently the low bidder. However, they can’t see the identities of the other bidders or the amounts of the bids. 

On the county’s end, it could see everything using an Internet link, including those who were bidding, the bid amounts and the rankings. 

This is much different from the county’s standard way of placing bonds through a negotiated sale, which involves pre-approving a specific number of underwriters for percentage participation in the placement.