Council members approved an ordinance to sell the bonds at the June 2 meeting. The town should receive revenues from the sold bonds in late June, Director of Treasury Operations Julie Taylor said.
What you need to know
The town is able to sell no more than $19.2 million in debt to pay for fire, water and sewer projects, according to town documents. The term of the bonds is set to be 20 years with a final maturity date of March 1, 2045, per town documents.
Projects that will be paid for using the bonds include:
- Fire station improvements
- Lakeside water reuse pump station and ground storage tanks
- Stonecrest Pump Station phase two
- Stonehill Pump Station motor replacement
- Timber Valley and Fairfield Lane water line replacement
- Inflow infiltration and evaluation and repair
- Timber Valley and Fairfield Lane sewer line replacement
- Utility asset management and utility replacement
- Wastewater system security implementation
- Wastewater treatment plant effluent filter rehabilitation
- Wastewater treatment plant primary treatment area improvement
Based on the approved ordinance outlining the sale, the true interest cost cannot exceed 5%. Michael Martin, a financial analyst with the town’s financial advisor HilltopSecurities, said the projected true interest cost for the sale is around 4.3%.
Zooming out
Town officials previously approved a reimbursement agreement for nearly $43.86 million to pay for fire facilities and water and sewer infrastructure last October, per town documents. Taylor said around $24.66 million was trimmed from the scope of the projects since then because of delaying project costs until future years.
During the issuing process for the certificates of obligation, the town’s AAA bond rating with Standard & Poor’s was maintained, Martin said. The AAA rating is the highest possible rating of creditworthiness for a government entity and can lead to lower interest rates on debt issuances.
“That’s not really a surprise,” Martin said. “You guys do a great job of managing your finances and you have a great staff that does a really good job of getting all the information that S&P requires for these reviews.”
This is the 12th consecutive year the town has received a AAA rating from Standard and Poor’s, according to a town news release. The rating is based on the town’s conservative budgeting practices, a consistent tax base expansion, the town’s liquidity and reserve balances, and manageable postemployment benefit expenses, such as the town’s pension plan.
“Our bond rating is a testament to the strong financial practices and management provided over the years by our finance team, administration and town councils,” Mayor Cheryl Moore said in the news release. “Residents can feel confident they live in a community that is financially sound and where we respect how their tax dollars are spent.”
Looking ahead
Pricing for the bond sale is expected to take place June 4, Taylor said. The town should receive revenues from the sale of the certificates of obligation June 26, she added.
“Since this is a competitive sale, we already have a few different bidders who are intending to submit a bid,” Martin said.
If a pricing of the bonds is outside the parameters for sale outlined by council, the town can still attempt other sales for up to six months.
