Higher Rating Plus Lower Interest Equals Big Savings For Tewksbury
Tewksbury fiscal managers are taking advantage of interest rates at historic lows to refinance the town's debt.
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What would you call a move to refinance more than $4 million in debt, cutting the interest rate by two-thirds and saving the town almost $650,000?
A good deal? A great deal?
Tewksbury Finance Director Karen Kucala would call it "a start."
With the recent addition of the town's share of the new high school project, Tewksbury presently has $146,278,242 worth of debt. That works out to just about $5,051 in debt for every man, woman and child in Tewksbury.
According to Kucala, the debt costs Tewksbury $4.6 million in interest payments each year. With that big of a burden, it's no wonder that Kucala, along with Town Manager Richard Montuori and Treasurer/Collector Kelly Odoms are constantly searching for opportunities to lower interest rates and payments on the town's various outstanding bonds.
Most recently, the town packaged $4,135,000 in small bonds, wioth interest rates ranging from 4 to 5 percent, and refinanced them, lowering the interest rate to 1.32 percent. The savings for the town, over the life of the loans, is $649,000.
"You normally don't see the interest rates you're seeing now," said Kucala.
"We definitely rely on our financial advisors, as to when it's a good time to lower debts and lower interest," said Odoms. "It's been a really good time to borrow since I've been here."
Kucala and Odoms have each been with the town less than a year. Their hirings have been part of Montuori's efforts to streamline municipal operations and overhaul the town's finances. Among Montuori's initiatives have been rebuilding the reserve account, eliminating cash transactions, eliminating leases for heavy equipment and merging the positions of Town Treasurer and Collector.
"It's his master plan," said Odoms. "He knows what he's doing."
From her perspective, Kucala believes Montuori's moves have paid dividends and Tewksbury is headed in a positive direction, financially.
"I think this last (Fiscal 2013) budget shows that we are at a turning point," she said. "This last borrowing shows that the community is on an upswing."
The next step in Tewksbury's fiscal recovery is expected to take place some time in early 2013, when Standard & Poor's is expected to raise the town's credit rating from it's present "AA-minus with a positive outlook" status. AAA is the highest rating possible.
Any improvement in the Tewksbury's rating will have a positive impact on interest rates the next time Tewksbury looks to borrow or refinance portions of its existing debt.
Kucala says she and Odoms, with the help of the town's outside financial advisors, will continually be looking for ways to lower interest rates and interest payments in the hopes of lessening the burden on taxpayers.
"It's satisfying. It's good for the taxpayers and we're glad to help them," said Kucala. "We're homeowners too (outside Tewksbury), so we know how important this is and how much it means."
Robert L Homeyer
6:25 am on Monday, September 17, 2012
good job !!
Rusty
7:35 am on Monday, September 17, 2012
When will I see this affect my RE tax:s?
Bill Gilman
10:57 am on Monday, September 17, 2012
You won't see a reduction per se but by reducing annual expenditures on interest payments, you hopefully will see an impact on future property tax rates and actual tax bills.
bk
9:56 am on Monday, September 17, 2012
High Rating?
Aren't our schools just downgraded from level 2 to level 3?
Bill Gilman
10:55 am on Monday, September 17, 2012
The rating referred to in the article is the town's credit rating as assigned by Standard and Poor's.
bk
12:48 pm on Monday, September 17, 2012
Thanks Mr. Bill for clarifying.
My point is that since schools are towns' flag-ships, I am concerned that it would be accounted for, some day later, while assessing towns credit rating.
IMHO, Its like who is going to buy a company stock when one of its major division has been downgraded by financial analyst(s).
I am sure schools committee must be working hard to make improvements and till
we see some results, these are thoughts of a concerned parent *and* a Tewksbury resident.
--B
Karyn
2:48 pm on Monday, September 17, 2012
Kudos to Mr. Montuori and our new Finance Director and Treasurer! ALL of them run circles around the "old staff" they replaced in their management capabilities and financial expertise as well as their energy and enthusiasm in helping turn Tewksbury in the right direction! They display both the transparency formerly lacking in the Town's Finance Dept. in addition to responsible leadership and teamwork FOR OUR TOWN that's been a LONG time in coming.
Rusty
8:09 pm on Monday, September 17, 2012
Kudos but my taxes are still too damn high,Bill you just sound like a shill for these pols.
Robert L Homeyer
8:14 pm on Monday, September 17, 2012
Sometimes positive direction is just that
Jon Pratt
9:36 am on Tuesday, September 18, 2012
Good news
Our emerging dilemma-how will we climb a mountain of entitlement and Sewer and water debt . We now have more retirees than active workers.
Bob Ferrari
12:21 pm on Tuesday, September 18, 2012
Too bad our schools have been downgraded:
http://www.tewksburyissues.org/phpBB3/viewtopic.php?f=14&t=10410
Concerned Parent
1:52 pm on Tuesday, September 18, 2012
That is a disgrace about our schools. How do we as a town let this happen? They need to revamp the entire system, obviously what they are doing is not working. I want more information. I know my kids are bored, so are they going to be even worse off now?
bk
2:43 pm on Tuesday, September 18, 2012
Concerned Parent,
"Other possible mandates relative to the status of level three schools are the dismissal of staff relative to the failure, appointing an outside expert to advise on the schools direction, ... or a restructuring of the internal structure of the school. "
The above line in the report seems to give them power to dismiss school staff who are not showing results... just like the private sector..
This is their chance to revamp.
--B
Bob
3:11 pm on Tuesday, September 18, 2012
Maybe we should change the name of the "Christine McGrath" Auditorium/Theater!
jo
3:28 pm on Tuesday, September 18, 2012
BK, I believe that you are confusing level 3 schools with level 4 schools. A district must assume the same level as its lowest leveled school. In other words if one of the 7 schools in Tewksbury ( or the 4 that actually count towards accountability K-2 do not) is a Level 3, then the district is a level 3. Level 3 means that the school(s) in that category are in the lowest 20% of same grade schools in the commonwealth. Theoretically a school could be performing at an acceptable level, but still be in the lowest 20%.
The report that was in the Town Crier last week was full of inaccuracies. There is no more school choice within a district. The state received a waiver from some of the conditions of No Child Left Behind.
A level 3 designation indicates that the school(s) in that category qualify for support from the state. The idea is to be supportive, not punitive.