Amity District in good fiscal shape
WOODBRIDGE-Orange, Bethany, and Woodbridge taxpayers are breathing a sigh of relief as Amity Regional School District No. 5 has been able to secure $28,190,000 in financing at low interest rates to help pay for the $68.5 million school construction project.
The District recently sold $20,000,000 of bonds at the rate of 4.1043 percent the lowest bond interest rate the District has received in 40 years. According to a report issued by Moody's Investor Services, the District received five bids to purchase its bonds. In the end, Merrill Lynch & Co., New York City, won out.
The District also received seven bids for the $8,190,000 in short term bond anticipation notes issued for the same purpose at an average rate of 2.195 percent.
According to Mark Chapman, who works with Independent Bond and Investment Consultants (IBIC) the district's financial advisor, "The fact that so many investors were interested in purchasing the bonds shows that investors have great confidence in the financial stability and profitability of the district." Moody and Fitch Ratings analysts thought so too as they adjusted the districts bond ratings upwards.
Fitch Ratings reconfirmed the District's bond rating at "AA" with a stable outlook. Moody's Investor Service reported a reconfirmation of the District's "A1" rating with a positive outlook. Moody's assigned the positive outlook based upon their expectations that the District will continue to enhance its financial position and continue to experience positive relations with its member towns. In addition, Moody's expects that the District will continue to exhibit strong management and continue to complete the hiring of its permanent management team.
Moody's expects that if the District continues to maintain its positive financial operations and enhances its management further it could result in an upward rating change to "Aa3" in 2006 or 2007.
Jill Ferraiolo, a member of the District's Finance Committee and a Board of Education member said, " It's great news for the district. The positive outlook from the rating agencies and the favorable interest rates really confirm that we are moving in the right direction," said Ferraiolo.
School Superintendent John J. Brady said that he was very pleased with the low interest rates as well as the high ratings issued by the analysts. "This is a vote of confidence by Moody & Fitch. They see stability and good prospects for the future of our district."
According to Chapman, 35 percent of the $68.5m school construction costs, approximately $24 million, will come from state grants and the district must raise the remaining amount.
According to the FAQ (Frequently Asked Questions) issued by the district last March before the District Wide referendum vote was taken on the $68.5 million project, the average annual tax impact to residents would be as follows: Bethany (median house value $300,000) $256.20; Orange (median house value $335,000) $213.40; Woodbridge (median house value $372,000) $255.20.
According to the analyst report issued by Moody's Investor Service earlier this year, the strong financial condition of the district is exemplified by the fact that during fiscal year 2003, Orange, Woodbridge and Bethany were able to meet annual operating expenses and still a surplus to deposit into their General Fund.
According to the Moody's report, "Orange, the largest member of the district, recorded a substantial $1.48 million operating surplus, which boosted the General Fund balance to $4.38 million in 2003…Woodbridge also maintains strong finances with a modest $123,000 operating surplus further increasing the General Fund balance to $4.24 million…Finally Bethany, the smallest member town of the three, recorded a $367,000 surplus in fiscal 2003, bringing the General Fund balance to $ $2.06 million.
Chapman said that it helps to consider the General Fund for each of these towns as a 'rainy day account' set up by the town to meet unexpected expenses. "Most towns set up this account so as not to have unexpected expenses impact the town's annual operating budget," said Chapman