4/12/21 Caucus

By: Carolyn Maxwell

PERTH AMBOY – CFO Jill Goldy spoke first via Zoom. She stated, “We have 3 options: Option 1 is callable bonds which deals with our water and wastewater. It was first refunded in 2012. We have a chance to refund it again for a better interest rate. Another option is the refunds for the Public Safety Complex which is under the MCIA (Middlesex County Improvement Authority). There are 3 options that are callable in the year 2020.” She then said that Neil Grossman (from GB Associates LLC) will talk next to give more details. 

Grossman did the reports on bids received for general obligation bonds that was on tonight’s agenda This included general obligation bonds, water/wastewater utility bonds, and parking utility bonds to fund the 2020 capital ordinances. Grossman said, “There are 3 options. Number 1 would be taxable, refundable bonds with higher interest rates. Your savings would be from $1 – $1.5 million. Option number 2 would be tax exempt bonds which would be a lower rate and higher savings. The gross would be $2 million over 10 years remaining on bonds that are 30% higher than taxable bonds. The city has an option to wait until November of this year for 15% higher in more revenue, but then you take a chance of what the rates would be. You can lock in savings today instead of taking a chance on what the interest rates would be in November.”

Council President Petrick asked, “What has been the trend in the last few months (regarding interest rates)?”

Grossman responded, “The rates increased, and the savings can be anywhere between $800,000 to $2.5 million depending on the interest rates. If we wait, we will lose a premium of 2.5%.”

Goldy ended the conversation, “We can price the bond now and lock in the rate. We recommend option number 2.”