Taking advantage of favorable interest rates, Southampton Town has refinanced $16.8 million of debt — a move that town officials say will save taxpayers $1.8 million over 10 years.
On Wednesday, the town sold refunding serial bonds at an interest rate of 1.16 percent, according to a town statement, which also says that the $1.8 million represents a 10 percent savings over how much was originally owed.
“I am very pleased with the results of this bond issue,” said Town Comptroller Len Marchese. “Bond buyers consider both the brand and the terms of the bond, so the outcome of this issue really speaks to the fact that the financial condition and outlook for Southampton Town is viewed quite favorably.”
Marchese, along with Southampton Town Supervisor Anna Throne-Holst, Deputy Supervisor Frank Zappone, Budget and Finance Committee member Ed Moneypenny and Audit Committee member Dick Halverson, visited Moody's Investors Service earlier this month to make a case for the town.
“The essence of our presentation was that the Town is significantly stronger financially than when we presented to Moody’s two years ago because we have fulfilled the management commitments made at that time, setting a strong foundation for continued stability,” Throne-Holst said.
Moody's assigned the bonds an Aa1 rating — the credit rating firm's second highest classification — and also reaffirmed Southampton's Aa1 rating on $145.4 million of outstanding long-term debt, according to the town.
“The Aa1 reflects the town’s strong financial management practices and demonstrated commitment to the replenishment of the town’s reserves, which is expected to continue in accordance with management’s multi-year plan,” Moody's stated in a July 20 report.
“This is precisely why we have been working so hard over the past few years to rebuild our reserves, cure old deficits, and generally get our books back in order,” Throne-Holst said. "Having a strong and sound financial position is important for obvious reasons, but it also allows us to pass along savings to our taxpayers when we are rewarded with high credit ratings and low interest rates.”
The Moody's report praised Southampton for replenishing financial reserves since the town's fiscal low in 2008, and credited management initiatives such as tighter internal accounting control and better budget monitoring. The report also pointed to the town's 1 percent spending decrease in the 2012 budget, the continuation of a hiring freeze initiated in 2008 and a shrinking headcount due to attrition.
According to a town statement, Southampton has cut staffing levels by 11 percent during the past three years through retirement incentives and reorganizations.
"We have fewer employees and resources available then in the past, but staff and management in every department have stepped up to maintain or improve the services we deliver to the community," Throne-Holst said. "That is the real story here.”