Town Manager Scott Crabtree issued the following press release
Town Manager Scott C. Crabtree is pleased to announce that the taxpayers of Saugus will benefit from a $3.5 million savings in bonds borrowing due to the Town of Saugus’ solid financial standing and AA+/Stable S&P bond rating.
The town received competitive bids from eight financial institutions/agencies for a $49,283,000 30-year bond issue to fund the new Saugus Middle-High School and other important community capital investment projects. The winning bid was offered by Bank of America Merrill Lynch with an interest rate of 2.62 percent. Bank of America Merrill Lynch offered the Town of Saugus a premium of $3,548,000 net after issuance costs, reducing the loan to $45,735,000 and resulting in a savings of $3.5 million for the residents of Saugus.
Several weeks ago prior to the sale, S&P Global Ratings, a municipal credit rating agency, affirmed the town’s underlying AA+ long-term bond rating. The rating agency cited the town’s very strong economy, strong management with good financial policies and practices, strong budgetary performance, strong budgetary flexibility, very strong liquidity and strong institutional framework as positive credit factors.
“I am extremely proud that the Town of Saugus’ solid financial standings and AA+/Stable bond rating contributed to the town receiving a net savings of $3.5 million in borrowing costs for the new middle-high school and other capital investment projects,” said Crabtree. “I would like to thank the Board of Selectmen, Finance Committee, and Town Meeting for their support of the town’s financial management policies and procedures.”
The town’s reaffirmed AA+ bond rating reflects S&P’s opinion that the Town of Saugus has:
• Strong management, with good financial policies and practices under our financial management assessment (FMA) methodology. Strengths include management’s strong revenue and expenditure assumptions when budgeting, strong intrayear budgetary monitoring, and long-term financial plan;
• Strong budgetary performance, with slight operating surpluses in the general fund and at the total governmental-fund level in fiscal 2018;
• Strong budgetary flexibility, with available fund balance in fiscal 2018 at 14.4 percent of operating expenditures;
• Very strong liquidity, with total government available cash at 14 percent of total governmental fund expenditures and 5.6x governmental debt service, and access to external liquidity we consider strong;
• Strong institutional framework score; and
• Low overall net debt at 2.9 percent of market value, which is a positive credit factor according to S&P.
“I am very pleased to see the continued improvement in the financial strength of our town as well as enhancements to the overall systems and processes,” said Board of Selectmen Vice Chairman Jeff Cicolini. “These improvements translate to significant cost savings for our residents and taxpayers. It is so encouraging to see eight of the top tier financial institutions bidding on our bond issuance and the interest rate spread from the highest to the lowest being so small (10 basis points) illustrates clearly that they all view us in the same positive light. Our bond rating being so strong not only will save us over $3.5 million from the premium paid by the financial institution, but also provided us with a very low interest rate which will also save the taxpayers significant dollars over the course of the debt repayment. I am extremely proud of our continued financial improvement and see no reason why it won’t continue under the current administration’s conservative fiscal mindset.”
“Due to the continued best practices in the town, and the continued AA+ bond rating, it was great news to hear that eight bid on providing funding for our request of bonding, which resulted in a net savings of $3.5 million to the Town of Saugus for the debt service,” said Finance Committee Chairman Kenneth DePatto. “I’d like to commend the town manager, his staff, the Finance Committee, and Town Meeting for their continued support of good financial practices.”
For more information on the project, contact the Town Manager’s office at 781-231-4111.