The Town Council voted 4-0 to issue $2.1 million in Refunding Bonds, which it’s anticipated will save the Town over $100,000 in debt service.
Councilor Jim Butler was absent.
Public Finance Official William Fazioli of Boston told the Council the Town’s $4.3 million General Obligation Bonds, issued on Aug. 15, 2006, are very sought after, as they aren’t subject to Federal or State income tax.
The 2006 bonds, issued at rates around 4 percent, could be refunded at .25 percent, according to Fazioli, noting their estimates are conservative.
“We expect the rate could come in substantially lower, which would make the savings even higher,” he said.
The Town is not obligated to move forward if the rate is later determined not to be to the Town’s satisfaction.
“Rates are very favorable right now. We estimated two to three weeks ago refunding bonds over $100,000 to the Town,” Fazioli said. “We ran the estimates before the Federal Open Market Committee decided to hold rates. The savings could be even higher now.”
However, the expectation is the federal government won’t hold rates through the end of the calendar year and rates could go up by December.
In that case, Fazioli said the Town would still achieve a net present value debt service savings in excess of 3 percent of the aggregate outstanding principal amount of the refunded bonds.
There are no out-of-pocket expenses to the Town, and Fazioli recommends the Town undergo a private placement process, seeking bids from local banks.
Maturities of the bonds are to be from 2017 to 2026, and the annual debt service is expected to go down $5,000 to $10,000.
Moving forward, Fazioli will review the desired savings pattern with the Town, evaluate proposals, provide cash flow schedules to the Town and assist with the settlement.
Councilor Tom Dolan advised Fazioli and the Town Manager to consult with the School District to identify any additional savings to the taxpayer by refunding their bonds.
Fazioli said he worked with the District to refinance some outstanding bonds in early 2014.