Milford Mayor Ben Blake announced today that the city has found $2.8 million in savings for taxpayers.
In addition to $1.4 million in refunding savings announced last month, the city will capture another $1.4 million by refinancing decade-old loans the city has with the State of Connecticut under the Clean Water Fund program.
The CWF loans were made with Milford between 10 and 14 years ago to improve local sewer treatment facilities. The 2 percent loans had historically been a better option than issuing bonds in the capital markets. With interest rates for municipal bonds at record low levels and Milford’s high AAA bond rating, the city was able to lock in another $1.44 million in debt service savings by refinancing.
Rating agency Fitch has recently reaffirmed Milford’s AAA bond rating, the highest possible credit grade a city can receive.
This is the first time interest rates on bonds in the capital markets are significantly less than the state’s program. As a result, numerous issuers are looking to take advantage of the fiscal environment by refinancing state loans.
The city received a total of 11 bids with interest rates ranging from a winning bid of 0.33 percent to a high bid of 0.49 percent. The winner narrowly edged out the second-place bid by 0.01 percent.
“This is another win for Milford taxpayers,” said Blake. “The savings will help keep our debt service costs as low as possible.”
“I’ve been doing this for over 20 years,” said Matthew Spoerndle, senior managing director of Phoenix Advisors and Milford’s municipal advisor. “I can honestly say that I never thought that interest rates would go low enough to be able to refinance those CWF loans for this level of savings, and yet, here we are.”
“I am very pleased with these results and how well the refundings were structured. This is great news for the city,” said Peter Erodici, Milford’s finance director.