This email came Wednesday from Mike Sullivan, but I was on trial at the time so I am only now catching up. Read Mike’s email before looking at the PDF to make better sense of the PDF. 20150512-public safety & solar PV bond sales
Sale of Bonds for Public Safety and Solar Array
We opened the bids yesterday for the $18,700,000 of bonds authorized by the Special Town Meeting in March. We did well, although last week the bond market was reflecting rising interest rates, so it’s good we sold them quickly. The results were very confusing as the public safety issue was reduced to $16,375,000 and the Solar array issue was reduced to $610,000. The reason for the reduction in the public safety issue was that the low bid included about $1.8 million in premiums, so we used most of that premium to reduce the amount of bonds issued from $18 million to $16.375 million. The rest of the premium on this particular issue will be used to cover the cost of the bond issuance costs. As for the solar array issue, the cost estimates has gone down because of the falling prices for solar panels and, also, bond counsel wanted us to reflect the fact that we had already received $90,000 in grant funds from the state for this project. What really confuses this issue is that we then received a premium of about $89,000 on this issue, which is almost the same as the $90,000 reduction in the amount of bonds issued. After covering its share of the bond issuance cost, the remaining $80,000 will be used to pay a portion of the annual debt services costs for this issue or about $8,000 per year in premium amortization funds.
We received six bids, which was low and a bit of a surprise, considering the last bond sale we had. we received 11 bids. I think this reflected the uncertainty in the bond market this week. The low bidder was Janney Montgomery Scott LLC, Philadelphia PA. The interest rate on the public safety bonds (twenty years) was 3.055% and the interest rate on the solar array (ten years) was 2.015 for a combined interest rate of 3.033. These rates are below what we projected at the town meeting so we’re in good shape as far as not underestimating our borrowing costs. I’m scanning the debt schedules for the two projects, along with the bid results and sending them in a separate email.
Hopefully Georgia will make sense of all of this when she comes to the Selectmen’s meeting on the 19th.