(Bloomberg) -- In a summer that’s shaping up to be one of the busiest ever for municipal bond sales, investors have snapped up deals financing everything from airport projects and public transit systems to school districts. This week, they lent $40 million to spruce up one of largest zoos on the East Coast.
The Riverbanks Zoo and Garden located in Columbia, South Carolina, raised the cash to finance a gondola, hillside primate forest and observation deck plus other enhancements. The facility, which spans 170 acres and houses thousands of animals, receives more than 1 million visitors each year.
Zoo bonds are a rarity in the municipal bond market, which has seen issuance surge this year and typically finances more traditional infrastructure like roads and schools. Riverbanks, for example, comes to market roughly once a decade to finance upgrades of its facilities, said the zoo’s Chief Executive Officer and President Tommy Stringfellow. It can take years to construct and populate new exhibits, he said.
“We now are the fastest, largest and most-attended zoo in the Southeast,” Stringfellow said in an interview. The zoo plans to sell another $40 million of debt in the coming two or three years to finance its decade-long capital plan.
The new features are intended to boost the amount of money visitors spend each day as opposed to simply accommodating bigger crowds, Stringfellow said. The zoo is increasing opportunities to generate revenue by offering in-park shows or behind-the-scene tours.
The gondola project, which will carry passengers across the Saluda River, is expected to bring in $1.5 million in profit every year once it opens, says Stringfellow. When new exhibits open, Riverbanks sees attendance numbers surge by 80,000 to 100,000 visitors, he estimates.
The offering, which priced on Wednesday, was well-received, collecting 14 bids, according to Stringfellow. However, soaring construction costs are hampering the zoo’s plans for its bond proceeds, which means more fundraising will be needed.
“We saw over the last three to five years the costs have just skyrocketed of building and so we had to dial back what we’re going to build with the bond money,” he said. The projects will likely total about $100 million, requiring about $20 million of donations to fill the gap, he said.
The bonds are rated Aa2 by Moody’s Ratings, citing the South Carolina state capital region’s “exceptionally large and diverse” $63 billion tax base and the zoo’s history of “prudent” financial management and balanced operations.
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