Meriden finance rate report stable, bond refinancing generates savings

0

MERIDEN — City officials say refinancing municipal bonds this week will generate more than $2.9 million in lower interest cost savings for ratepayers over the next few years.

These bonds, originally issued in 2014 and 2011, have a total present value of $50.8 million. The refinanced bonds include Series A bonds issued in 2014 that covered the costs of several projects, including renovations and additions to Platt and Maloney High Schools, as well as a host of other sewer infrastructure projects, flood control, roads and sidewalks. In addition to refinancing these bonds, officials were able to refinance a State Clean Water Fund loan that was issued in 2011 through the sale.

The sale came shortly after the city’s credit rating agency, S&P Global, raised the city’s financial outlook from negative to stable. Meriden’s overall bond rating of AA remains unchanged.

S&P Global, in a document outlining the revised outlook, explained that the revision to stable “reflects the improvement in the city’s financial trend, including three years of audited surpluses plus a projected surplus for fiscal year 2022, resulting in increased reserves and greater financial flexibility. Additionally, we understand that the local economy continues to experience moderate growth, which should help support revenue growth.”

The agency said the revised financial outlook was supported by the city’s “well-established financial management policies, primarily in the areas of budgeting and planning. These financial policies, which the city has maintained throughout the pandemic, have underpinned strong financial performance, particularly over the past three years,” which the authors say has led to a significant increase in available reserves.

The agency cited city budget reserves of $21.4 million at the end of fiscal year 2021. In its report, the agency wrote that this total equates to 10.6% of city ​​spending – “a level we consider strong and a high point for the city over the past decade.

The authors of the financial outlook report wrote: “Management has been able to sustain surplus operations throughout the pandemic in part due to the pandemic’s limited impact on city revenues, in addition the fact that the city remains very conservative in its estimates in light of income. and expenditure uncertainty. Given that much of this uncertainty has been resolved and the city has received significant federal funding primarily through the American Rescue Plan Act, we believe the city is well positioned to maintain strong financial operations. .

According to figures shared by city officials, the bond sale on the heels of the S&P Global report brought an interest rate cut of 1.85%. This new rate represents a one percentage point decrease from the city’s average interest rate on debt, which was 2.88%.

Chief Financial Officer Kevin McNabola said the city was targeted for a bond refinancing in January to capitalize on historically low interest rates. Officials anticipate with inflation and other market volatilities that interest rates will rise.

“We wanted to do this before the Federal Reserve got together and raised rates,” McNabola said, explaining that despite the current market volatility, the city’s new rates are “locked in.”

Along with the bond sale comes other ongoing financial matters, including finalizing the city’s big list of taxable properties. Officials had set February 18 as the deadline to finalize this list.

Preliminary reports on property reassessments across the city showed an increase in assessments, particularly for residential properties.

Mayor Kevin Scarpati praised the city’s budget management ahead of the sales and outlook report.

“It illustrates the good work and the policies we have put in place to be fiscally prudent and sound as a municipality,” Scarpati said. “We have strengthened our capital base and increased our reserves without increasing the rate per thousand.”

Scarpati said leaders “need to keep doing what’s right,” adding that he applauds the finance department as well as City Manager Timothy Coon and City Council for working “in tandem to provide responsible budgeting to our residents”.

Building budgets that are balanced and responsible, and “that take care of our residents is critically important and we will continue to do so,” Scarpati said.

The mayor suggested that the city’s “good budgetary and financial situation” should lead to a drop in the rate per thousand of taxable properties in the city.

Scarpati said that over the next few weeks, officials will have a better idea of ​​what the big roster looks like.

Whether a potentially lower per-mile rate will result in lower property owners’ tax bills is a question city officials don’t yet have an answer to.

[email protected]:@MikeGagneRJ

Share.

Comments are closed.