City’s bond refinance nets $1.1 million saved

MD-city bond refinancing 3x-042016

Special to Dorchester Banner/Cambridge Economic Department
On April 19, the City of Cambridge signed papers to refinance bonds on the Marina and Public Safety Building, saving more than $1.1 million over the life of the bonds. Pictured, from left, are City Manager Sandra Tripp-Jones, Finance Director Ginger Heatwole, Ward 2 Councilman Donald Sydnor and former Mayor Victory Jackson-Stanley.

CAMBRIDGE — On April 19, Cambridge City Officials signed final bond sale documents refinancing marina and public safety building bonds, lowering the interest rate from nearly 4 percent to 2.01 percent. This translates to a savings of $102,000 in the first year and $1.1 million in net present value over the 15-year life of the bonds. To accomplish this, the city had to undergo its first bond rating in decades, and earned an A1 rating by Moody’s, one of the nation’s leaders in credit ratings, research and risk analysis.

The A1 rating was a significant accomplishment for a city the size of Cambridge, and exceeded expectations. The process took close to four months and required the input of all city offices, and focused on the overall economic health of the city, new business growth and development as well as the city’s overall finances and management.

“In this case, by going to the bond market, we get a true feel of our financial stability,” said acting Mayor and Cambridge Ward 2 Commissioner Donald Sydnor, who is also Chairman of the City Finance Committee. “Getting that A1 rating indicates that the city has progressed a long way over the last eight years, when we were in the red.

“Originally, we had both bonds financed through a local bank, and they were very generous to us,” he continued. “The advantage here was that we were able to refinance both as one and get a much more favorable interest rate.”

Efforts by current and previous City Councils to stabilize the financial landscape after the economic downturn in 2008 played a significant role, as did the subsequent implementation of new positions of City Manager and Finance Director, who are collaborating to implement important policies in the next fiscal cycle, contributing to the long-term economic health of the city.

“This is a substantial savings, and all of the city staff contributed to getting that high of a rating,” said Commissioner Sydnor, stating that practically every level of every department had some roll to play.

Achieving this favorable bond rating also required help from consultants outside of the city.

Susan Ostazeski and Lester Guthorn from Public Advisory Consultants, a firm based in Owings Mills specializing in finance plan development, debt service and credit analysis, worked in conjunction with local staff and Lindsey Rader from Funk & Bolton Attorneys at Law. Rader has served as both bond council and issuer’s council while covering a variety of public finance, securities and disclosure issues for her firm.

On hand for the final signing of documents were the City Manager, Finance Director, City Attorney and Commissioner Donald Sydnor. Also present was former Mayor Victoria Jackson Stanley, who was proud to have supported this effort.

Contacts: Ginger Heatwole, finance director: 410-228-4020. Brandon Hesson, associate economic development director: 410-228-4554.

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