By refinancing $14.9 million in bonds on a day when interest rates for municipal bonds were at low levels — and subscriber demand for Milford bonds was high — the city is reducing expenses by $729,250.
This initiative continues a series of cost cutting measures that help to make Milford government more cost effective, said Mayor Ben Blake in a prepared statement. He said that in addition to the tax relief found in the bond refunding, the city realized savings of approximately $2.5 million last year from two prior refundings.
“I am pleased to announce the city will be refinancing $14.9 million in bonds, securing a very favorable 2.47% net interest rate on bonds which were originally financed at an average rate of 4%,” Blake said. “The sale will yielded a total savings of $729,250, or 4.03% of the initial obligation. We were able to take advantage of existing market conditions to seize the opportunity and return $729,250 to the taxpayers of Milford.”
The mayor credited Matthew Spoerndle, director of Phoenix Advisors, LLC and Peter Erodici, Milford's director of finance, for the move.
Blake also cited Milford's bond rating as a key to the transaction.
“Milford would not be able to secure these rates if we did not maintain excellent bond ratings,” Blake said. “The three rating agencies, Moody’s, Standard & Poor’s and Fitch, recently gave our city high marks for prudent fiscal practices amid the downturn in the real estate market. All three affirmed the city’s bond ratings (Aa1 for Moody’s, AA+ for S&P and Fitch).”
Blake pointed out that in other parts of the country, agencies have downgraded bond ratings for cities or states that struggle to maintain obligations to retirees. He said Milford’s pension fund is fully funded, and the city has kept pace with requirements to fund retiree health care that is not seen everywhere.
“This is outstanding news for Milford,” Blake said. “We will be able to use the savings to provide tax relief for upcoming budgets.”