Town sells $7 million in bonds to finance projects
Date: 11/12/2012
By Chris Maza
chrism@thereminder.comLONGMEADOW — The town of Longmeadow recently sold approximately $7 million in bonds in a cost-saving effort related to the financing of past school projects and recent capital improvements.
Finance Director Paul Pasterczyk told
Reminder Publications that on Oct. 25, the bonds were sold in an effort to save money on the interest from bonds sold to finance the renovations of Wolf Swamp and Blueberry Hill elementary schools in 2001 and 2002.
"Essentially what we did is an early refunding of those original bonds," he said. "When we originally took out the bonds, they were 20-year bonds with coupon rates of between 3.25 and 4.25 percent. Now, obviously, rates are lower and we wanted to take advantage of that. Now we essentially have 10-year bonds with coupon rates as low as 2 percent."
All told, he explained, the town saves approximately $1 million through the process.
"It's like refinancing your house. You take advantage of the lower rates in order to realize savings. That's what we're doing," he said.
In addition to the school renovations, the bonding also addresses expenses from water and sewer projects that were recently approved by the town. Combining those projects with the "refinancing" of the school renovation debt will also lead to savings for the town, Pasterczyk said.
"By combining all of these, the town will also save money on the issuance costs," he said.
Pasterczyk added that the town maintains a strong bond rating.
"We're on the upper end of that scale," he said.
Moody's Investor's Service recently determined that Longmeadow would maintain its Aa2 rating. Moody's gives ratings from Aaa — the highest — to C — the lowest — with numerical modifiers of 1, 2 and 3 at each rating level. An Aa rating, according to Moody's, means that a municipality's obligations "are judged to be of high quality and are subject to very low credit risk."
