Editor’s note: The following article originally was published on Nov. 16. It has been updated with additional information released today.
UPDATE Moody’s Investors Service said today it had assigned a triple-A (Aaa) rating and stable outlook to the Town of Westport’s planned $8.56 million general obligations refunding bond issue and affirmed the top rating to its $93 million in long-term general obligations debt.
“Moody’s highest quality long-term rating reflects the Westport’s sizable tax base with extremely high wealth and income indices, and a manageable debt position,” the rating agency said in a statement.
“The rating further incorporates the town’s well-managed financial operations marked by adequate reserve levels, a well-funded pension system, and proactive funding of the town’s post-retirement benefits liability.”
It said the bonds, with an expected sale date of Nov. 19, are secured by the town’s unlimited general obligation tax pledge and will be used to refund the town’s Issue of 2009 general obligation bonds, for an estimated net present value savings of $122,000, or 6.7 percent of refunded principal.
Moody’s said the bonds are secured by Westport’s “unlimited property tax pledge.”
It said the stable outlook “reflects our expectation that the town will remain fiscally sound given conservative budgeting practices and that the town will continue to benefit from its sizeable tax base and above average wealth levels.”
As for what could make the company change its rating, Moody’s said: “reductions of financial flexibility or available reserve levels; inability to maintain structurally balanced operations, and substantial deterioration in the town’s tax base or weakening of socioeconomic profile.”
In a news release issued on Nov. 23, the town said it negotiated the issue with Piper Jaffray & Co., an investment bank headquartered in Minneapolis.
It said the bonds have a 14-year maturity since the term has to mirror the term of the issue being refunded. The overall interest rate on the new bonds was 1.91 percent compared to the average interest rate of 3.88 percent on the old bonds.
The town had been contemplating the issuance over the last few months, but given the fact that interest rates had drifted downward and remained favorable, the decision was made to price the bonds now, said Finance Director Gary Conrad.
“By refinancing, the town will save nearly $590,000 over the next 13 years,” he said. “The majority of the savings will be realized in the next two fiscal years to help offset the recently announced reduction in state funding to the town.”
This article has been updated to show the results of the sale as reported by the town on Nov. 23.
Good news turns into disappointing news. 4 months after the new state budget was approved, and we know our own Rep Steinberg voted for the Implementer which approved the budget, the state is now $254 MILLION in the red. Already the state has decided to stop paying about $430,000 in PILOT payments to Westport and the eventual hit to Westport will probably exceed $600,000. We will lose $600,000 in state payments to Westport we normally receive.
Therefore the savings from the refinancing to fm the bonds will be lost. Since we will lose the state payments, the savings we will get from the bonds will not make up the lost payments from the state. Westport will not gain from the refinancing.
But look at what we got for 99 Myrtle Avenue: a plus at best, a wash at worse.
Town Of Westport to Patricia Gylnn, 99 Myrtle Ave., $626,000
Dick—good point. Just think if we were able to get out PILOT payments, the towns budget would be receiving almost $1M in extra money this year (some of the debt savings and Myrtle Ave). Now at best we will just the financing savings.
And Dick-who knows how much more the state will cut, as the reality of the budget deficit sets in. The red ink will continue as spending and obligations and debt mount—and revenue state revenue declines. And how many more move out of CT as businesses find the cost too much.
It is hard to believe the budget was approved based on unattainable revenue growth and savings. Even with the tax increases that Rep Steinberg voted in favor.
Dick—I don’t know where this all ends. Can the leadership in CT make the hard decisions and be honest with those that are receiving benefits that are bankrupting the state? We will see.
Can you try keeping it to 25 words or less?
Dick- would it not have been nice if the interest savings and sales went to help seniors? Now that is less than 25.