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CITY OF CHESAPEAKE SELLS EXPRESSWAY TOLL ROAD REVENUE BONDS: CITY RECEIVES LOWER INTEREST RATE

CHESAPEAKE - The City of Chesapeake, through the financial investment firm of Morgan Stanley Dean Witter, sold $21,630,000 Chesapeake Expressway Toll Road Revenue Bonds on July 27. Morgan Stanley Dean Witter served as the underwriter for the bond sale. The firm also marketed the bonds and sold the entire $21,630,000 issue during a thirty-minute order period to institutional investors, including several well-known mutual funds. Proceeds from the bond sale will be transferred to the City at closing today, August 25.

The bonds will be used to partially fund construction of the Route 168-toll road. Route 168 is part of the City's planned 16-mile Chesapeake Expressway.

The ten-mile, southern portion of the project will be tolled and have a single mainline toll plaza located between Indian Creek Road and St. Brides Road. A state of the art electronic toll collection system is also planned which includes one high-speed dedicated electronic toll collection lane in each direction.

The Chesapeake Expressway Toll Road Revenue Bonds sold at an interest cost of 5.82%. City officials originally estimated a higher interest cost of around 6%. According to Public Financial Management, Inc. (PFM), co-financial advisors to the City on the Route 168 toll road project, Chesapeake's bonds priced better than any other comparable toll road bond issues when analyzed against a national index of tax-exempt rates. In preparation for pricing the bonds, PFM analyzed both the interest rates and underwriting spreads of comparable start-up toll road facility issues and other bond issues in the national municipal markets.

Moody's Investors Service, Inc. assigned the bonds an investment grade rating of Baa2 in July. Moody's has determined that this rating is higher than ratings for most start-up toll roads. According to the City's financial advisor, Lawrence B. Wales of Municipal Advisors, Inc., this is ". . .one of the highest ratings awarded to 19 toll revenue bond issues sold since 1991."

Besides the sale of $21,630,000 in toll road revenue bonds, additional funding for the Route 168 project includes a $39 million loan from the Virginia Toll Facilities Revolving Account, $46 million from the City of Chesapeake's Urban Allocation Funds provided by the State, and $9 million in Federal Transportation funds. The entire project will cost $116.8 million. Expected completion date is spring 2001.

Citizens who need more information should contact the Finance Department at 382-6156.