The last time Buffalo borrowed money by enticing investors to competitively bid for bonds,

&#8220The Cosby Show&#8221 was winning the TV ratings game, and Ronald Reagan still occupied

the White House.

Not since 1986 had the city orchestrated a competitive bond sale. Its precarious finances

forced comptrollers to take the less-desirable route and engage in negotiated sales.

But this all changed last week when, for the first time in nearly a quarter-century, the

city staged two spirited auctions to snare the best interest rates for $27.6 million in bonds.

The money will be used to pay for dozens of improvement projects in city parks, schools and

other public facilities.

Returning to the competitive bond market was a &#8220proud day&#8221 for Buffalo, said City

Comptroller Andrew A. SanFilippo. The fact that seven investment entities &#8212 some of them

Wall Street Goliaths &#8212 bid on each of the two sales is further proof of Buffalo&#8217s

improving financial status in the bond market, SanFilippo stated.

&#8220We would have been happy with four bidders. This far exceeded our expectations, and

we&#8217re very excited about that,&#8221 SanFilippo said.

Document: Bids from investors for sale of city bonds

What&#8217s the big deal? What difference does it make whether the city requests proposals

from individual bond buyers, then negotiates a deal, or whether it offers bonds at a

competitive sale?

The city&#8217s outside fiscal consultant said competitive bidding can help lower borrowing

costs, provide a more &#8220transparent&#8221 process and offer a better gauge as to how bond

buyers view municipalities. J. Chester Johnson, chairman of the New York City-based Government

Finance Associates, said the fact that so many investors eagerly bid for Buffalo&#8217s bonds

is a good sign.

&#8220We have some clients with [credit] ratings higher than Buffalo&#8217s that do not get

seven bidders,&#8221 Johnson said. &#8220It&#8217s obvious there&#8217s a change in attitude

about Buffalo.&#8221

SanFilippo said the city&#8217s rising credit rating is a key factor. Two months ago,

Buffalo received its first A+ credit rating in decades, making it the first time in memory

that three major Wall Street agencies placed the city in the A tier.

Wednesday&#8217s online auctions involved rounds of spirited bidding that &#8220went down

to the wire,&#8221 SanFilippo said.

&#8220It was almost like an eBay auction,&#8221 he said. &#8220One bidder ended up bidding

with only three seconds left.&#8221

The winning bid in the first auction was made by J.P. Morgan Securities, which offered a

final net interest cost of just under 3.63 percent for $22.7 million in bonds.

During the second auction involving $4.9 million in bonds for school improvements, Morgan

Stanley & Co. submitted the winning bid of 3.53 percent &#8212 just eight seconds before

closing.

&#8220It was pretty exciting,&#8221 SanFilippo said.