February 4, 2009

City hits sweet spot in bond sale

The bond rating upgrade Bristol got last week paid off big this week.
At a Wednesday bond sale, the city managed to sell two different bonds at rates that officials never dreamed possible.
The results, which will save taxpayers as much as $250,000, were “beyond the wildest imagination,” said Mayor Art Ward.
Eastern Bank Capital Markets, based in Boston, bought up the city’s bonds with rates lower than even AAA-rated communities were able to secure on sales the previous day.
“We just set the new standard,” Comptroller Glenn Klocko. “Amazing.”
Finance Chairman Rich Miecznikowski said he “thrilled that we got such a great rate.”
David Bertnagle, the city’s chief accountant, said that because of the low interest rates the city has to pay to bondholders, there won’t be a need to raise the debt service payment levels in the budget.
He said that officials were eyeing the possibility of raising the payment level in the budget by as much as $250,000 next year alone in order to cover the borrowing tab. But that won’t be necessary, Bertnagle said, because the rates were so good.
“It looks like our hard work paid off,” said Matthew Spoerndle of Milford’s Phoenix Advisors, the city’s financial consultant.
A number of city leaders watched the bid projections on a wall in Klocko’s office as Spoerndle maneuvered through the iDeal website to show incoming bids.
They expressed amazement when they saw the long-term rate that Eastern Bank Capital Markets offered, beating out eight competing bids.
Sam Caligiuri, the city’s bond counsel, called the results “great” and a credit to the city’s fiscal management.
“It shows how well run Bristol is,” said Caligiuri, a Republican state senator.
The taxable bonds were sold to reimburse the city's rainy day fund for the money spent on the downtown mall site. The tax exempt bonds were sold to cover road, sewer and park projects.

Rates Bristol got
$8.9 million, 16-year tax-exempt bonds – 3.12 percent
$7.4 million, 1-year taxable note – 2.5 percent

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Copyright 2009. All rights reserved.
Contact Steve Collins at scollins@bristolpress.com

13 comments:

Anonymous said...

Uh oh...this is really going to upset the naysayers. Before they start their usual juvenile spew...GOOD JOB BRISTOL!

Anonymous said...

Borrowing money to create an artificial reserve is stupid. Would you borrow money from the credit union, put it back into your savings account then show it as collateral in order to borrow more money? This scheme is going to catch up with us pretty quickly. Klocko doesn't care, he won't have to pay the tax increase to service this debt, he lives out of town. In effect , Klocko used a substantial percentage of our rainy day fund to buy the mall property (currently a depreciating asset). Brilliant.

proved yourself said...

8:13 - refer to 4:48 - idiot.

Anonymous said...

Gee, do you think that Mayor Ward will now give us a tax cut?

self-explanatory said...

9:19pm - you seem to serve as an example for what I have been told is a reason that NORMAL people don't frequent these types of sites - keep stuttering, eventually you will trip over your stupidity.

Anonymous said...

9:19 Poster,

How can Ward possibly give the taxpayers a break when he's to busy giving the Unions big contracts?

Anonymous said...

Hey Kloko, did you ever think that maybe we got the good rate was because the feds are borrowing so much that there isn't as much money out there?
But if you did, would you admit it?

Anonymous said...

I love the way they say this will "save $250,000". Do you think we are stupid? We borrowed money and will have to pay it back with interest & people are happy about this? On top of that we borrow money and stick it into a savings account? That makes no sense.
How about we get back to responsible budgeting? If you don't have the money...you don't spend it! I know what you're thinking...I must be crazy to actually pay as I go. Am I the only person who saves up money instead of buying on credit?
The reason we are in the situation we are in now is because people spent $ they didn't have. And...the companies that are assigning ratings are full of it. These are the same companies that rated mortgage backed securities.
Ridiculous!

Anonymous said...

8:13

Because it isn't coming out of his pocket,and the unions are strong enough to keep him in office, and the republicans do not know hope to effectively challenge him.

Anonymous said...

Glenn check the WSJ seems like everyone is getting that same good deal because the govt is borrowing so much.

Wasn't just your suave behaviour that did it!

intheknow said...

"Because it isn't coming out of his pocket,and the unions are strong enough to keep him in office, and the republicans do not know hope to effectively challenge him."

This administration is no friend of the unions. True, the unions backed the democrats, but check the most recent contracts. Teachers got a raw deal, they accepted almost no raise, then a day after they settled, it came out that BOE ended the year in the black. General city workers got increases in medical and prescription copays and below inflation raises. Police accepted a 500% to 700% (no misprint, five hundred to seven hundred percent) increase in their prescription copays. Fire dept. is in binding arbitration (which over the last ten years tends to favor municipalities) over issues that will actually SAVE the city money. Anyone that says this administration is a friend of the unions has no idea what they are talking about. If the unions have anything to say about it, Art Ward and company is history.

Poboy said...

"8:13 - refer to 4:48 - idiot."

Such profound insight, no wonder so many people read this blog.

Make no mistake. There is no reserve fund. A big portion of it is sitting in a pile of rubble on North Main Street. That one year note is taxable because it did not meet the requirement for tax exempt status. That should tell you something. When the year is up,
the taxpayers are on the hook for all the interest on that bond. Then we either borrows again or increase taxes to pay off the principal. Additionally, the tax exempt bond is not for new work but for work already done. The money has already been spent. This is not how a reserve fund should be built. It should be added to when there is a budget surplus and used for emergency expenditures. Instead it was used recklessly, in the mall case almost frivolously. for The entire "reserve" fund is now borrowed money. Good luck paying your taxes next year.

Anonymous said...

When the unions have to choose between Ward and Slam Bang Johnson, which way will they vote?