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04/16/2019 02:30 PMThe town will save $758,000 in debt service over 15 years due to restructuring several bonds, a better-than-anticipated result of refinancing some of its debt, according to First Selectman Christine Goupil.
To finance projects such as school construction, road repairs, and other capital projects, towns have the option of purchasing municipal bonds that are paid back over time with interest. The bonds may be paid back over several years or even more than a decade. To take advantage of a new interest rate, bonds may be refinanced after a certain period of time.
The announcement came at the April 3 Board of Selectman (BOS) meeting. Goupil said the savings were more than anticipated when the town decided to refinance the bonds earlier in 2019. At a February BOS meeting, Mark Chapman of Hilltop Securities, the town’s municipal financial advisor, recommended that the town appropriate $14,000,000 to refund some of the bonds. Chapman estimated at the time that the savings could be as high as $732,000.
“The bonds were rated AA+ by S&P Global Ratings, the second-highest rating offered by the rating agency,” Goupil said. “In its credit rating report, S&P noted the town’s very strong economy and very strong budgetary flexibility supported by balanced operations. Further supporting the rating is the town’s very strong liquidity with a 12 percent fund balance...”
The debt in the most recent proposed budget is $5,284,931. Goupil said that no additional funds were borrowed and no maturities were extended. Goupil estimated that approximately $180,000 will be saved in this year’s proposed budget between town and education debt service as a result of refinancing.
Earlier in 2019, Goupil told the Harbor News that “reducing the debt for the next four to five fiscal years through restructuring our existing debt will help the town equalize budgets. When the Bond Committee meets in the coming weeks, I will make the recommendation we only bond for projects which are reimbursable to the town such as the Kelseytown Bridge. Many of the projects in the list get reimbursed through grants, state and federal programs,” Goupil said.