Town Saves $483,000 in Refinancing Bonds

Southington has reissued more than $8 million in general obligation bonds and the refinancing effort has helped save $483,000 over a 12-year period, town officials said Tuesday.

The savings will bring immediate relief to Southington taxpayers, said Emilia Portelinha, Southington Finance Director, with the savings being used to reduce costs in the town’s 2011-12 and 2012-13 fiscal budgets.

“The town will immediately use $225,000 of those savings in the 2011-12 budget year and another $229,000 in the 2012-13 budget year to help keep taxes under control,” Portelinha said in a press release.

Town Manager Garry Brumback said the interest savings were achieved by refinancing bonds that had been taken out in 2004 at a higher rate. The refinancing works similar to the way an individual would refinance their home mortgage.

The effort is part of a town movement to take advantage of the AA+ long-term bond rating that Standard & Poor’s assigned to the town, effectively reducing the community’s bond interest rate from 4.12 percent to 2.68 percent, board of finance officials said.

The reduction in interest is what led to the savings, Brumback said, and is a testament to the community’s commitment to fiscal responsibility.

The town reached the agreement with Roosevelt & Cross, a New York investment bank, after delaying the move until recently due to a volatile market. The refinancing is now locked-in at the interest rate for the next 12 years.

“The bond market experienced an extended run-up in rates starting in late 2010 that, until recently, had erased the anticipated debt service savings,” Southington Financial Advisor Matthew A. Spoerndle, Managing Director of Phoenix Advisors, said in a press release.

“Thankfully, rates have been steadily declining over the last month which enabled us to enter the market and lock-in significant budgetary savings for the Town going forward.”

 The settlement date for the sale is June 3, 2011.