Tuesday, September 6th, 2016
The Morris County Improvement Authority has cut Lincoln Park’s interest rates in half on the refinancing of the borough’s original 2009 bonding to finance a municipal complex project, a move that will save local taxpayers nearly $2 million over the next 14 years.
The MCIA on Aug. 18 completed an advance refunding of the borough’s 2009 bond issue, which called for $20.1 million in borrowing at a 4.09 percent interest rate. The refinanced deal calls for the remaining $15.5 million still owed on the original bonding to be repaid at 1.91 percent, or less than half of the original interest rate.
“This will result in a pure budgetary savings of $1.9 million in interest payments that will directly benefit residents of Lincoln Park,’’ said Morris County Freeholder Deborah Smith, who is the county governing board’s liaison to the MCIA.
“This is yet another demonstration of the value of the Authority to Morris County’s towns, school districts, and agencies – directly benefitting their constituents — to be able to tap into the county’s top-ranked Triple A bond rating for the best possible borrowing options and financing of capital projects,’’ Smith added.
In 2009, the Improvement Authority issued $20.1 million of Morris County guaranteed bonds which allowed Lincoln Park to finance construction and renovation of municipal buildings and various capital projects.
The 2009 bonds maturing on or after March 15, 2020, were eligible to be refunded at the option of the Authority or Borough. Given the current low tax-exempt interest rate environment, all of the outstanding callable Lincoln Park bonds were refunded for the savings described above.
Since the Improvement Authority was established in 2002 by the Morris County Board of Freeholders, it has been providing municipalities, school districts and the county itself with innovative and cost effective methods of funding projects and saving tax dollars at the same time.
By using the MCIA and the county’s AAA Bond rating to finance such projects as equipment and vehicle purchases or leasing and even school and municipal construction, local officials may be able to spend fewer dollars and thereby reduce the property tax burden on their residents.
In its first 10 years, the Improvement Authority transacted more than $204 million worth of construction and refinancing loans for school districts and local governments in the county, saving them approximately $15.4 million in debt service as a result of pooling transactions. Of that, one-third, or nearly $5.3 million can be directly attributed to leveraging Morris County’s AAA bond rating to enhance the savings.
The MCIA has also helped towns and school districts borrow money at low interest rates to finance needed equipment through its Guaranteed Capital Equipment Lease Program.
Under this program, since 2004, low-interest loans totaling $32 million have been facilitated by the MCIA for 24 school districts and five municipalities enabling them to secure funding for equipment ranging from school buses, vans and public works vehicles to computers.
For more information on the MCIA, visit: http://improvement.morriscountynj.gov/