SAUGUS — The town’s solid bond rating will save it $3.5 million.
Town Manager Scott Crabtree said the AA+/Stable Standard & Poor Bond Rating made it easier to start construction on the new High School/Middle School, which is slated to be completed in time for the 2020 school year, and will make it easier to borrow money needed to fund other important projects as well.
Because of the solid rating, Saugus received competitive bids from eight financial institutions/agencies for a $49,283,000 30-year bond issue to fund the new school and other important community capital investment projects, he said.
Bank of America Merrill Lynch submitted the winning bid of 2.62 percent. The bank then offered the town a premium of $3,548,000 net after issuance costs, reducing the loan to $45,735,000 and resulting in $3.5 million in savings.
The AA+ rating puts Saugus very close to the top (AAA) of the S&P bond rating system, and it means that the town’s ability to meet its commitments on any “obligation” (such as a multi-million dollar loan) is very strong.
The rating agency cited the town’s very strong economy, strong budgetary performance, strong budgetary flexibility, very strong liquidity and strong institutional framework as positive credit factors.
“This has been a long time coming,” said Crabtree, “and it is the result of a collaborative effort on the part of the Board of Selectmen, Finance Committee, and Town Meeting.”
“They have supported the town’s financial management policies and procedures, and that includes living within our means,” Crabtree said.
The rating means that S&P sees Saugus as a town with strong management, with good financial policies and practices.
“I am very pleased to see the continued improvement in the financial strength of our town as well as enhancements to the overall systems and processes,” said Jeff Cicolini, vice president of the Board of Selectmen
“These improvements translate to significant cost savings for our residents and taxpayers,” Cicolini said. “It is so encouraging to see eight of the top tier financial institutions bidding on our bond issuance and the interest rate spread from the highest to the lowest being so small (10 basis points) illustrates clearly that they all view us in the same positive light.”
Crabtree also said a town-wide light-emitting diode (LED) street light conversion is underway as part of a grant through the Massachusetts Area Planning Council (MAPC) and Department of Energy Resources (DOER)’s LED Streetlight Rapid Retrofit program.
The objective of the conversion is to increase energy and cost savings and to provide residents with improved lighting and less light pollution in the community.
The state LED program allows eligible communities to convert their street lights to LED by providing rebates and incentives. National Grid estimates that the town’s return on investment with the incentives and grant is 2.37 years. In addition, this conversion will result in an annual estimated savings of $597,437, Crabtree said.
In May, Town Meeting members supported an up-front investment of $1,035,000 for the conversion project. With MAPC and DOER incentives and rebates, the project will result in a net cost estimate of $597,000. The project is estimated to pay for itself in 2.37 years, and then result in additional annual savings for the town.
“Not only will this effort result in short-term project cost savings of $438,000 with incentives and rebates and a full return on investment in an estimated 2.37 years, but it will also continue to provide the taxpayers of Saugus with an annual estimated cost savings of $597,437,” Crabtree said”
Quality LED light bulbs last longer, are more durable, and offer comparable or better light quality than other types of lighting, according to energy.gov.
The town has engaged Tanko Lighting to oversee the project, which includes an audit of the Town’s existing 2,852 street lights, the new energy efficient design, and installation of the LED street lights and fixtures.
