By Keith Regan, Contributing Writer
Northborough—A decision by Moody’s Investors Services to upgrade the town’s bond rating could save taxpayers as much as $2.1 million over the 20 years it will take to pay off the Lincoln Street School project.
Last month, Moody’s upgraded Northborough’s debt to Aa1, its second-highest level and the highest bond rating in the town’s history. The new rating helped the town secure an interest rate of 2.498 percent for the first half of the project debt, which Finance Director June Hubbard-Ward told the Board of Selectmen on June 8, is the lowest she has seen in her 21 years working for the town.
“There is a lot of work and planning and strategy behind that improvement,” Hubbard-Ward said.
Because the town assumed a 4 percent rate while planning the project, taxpayers will see savings compared to projections, with the impact on the average single family home’s tax bill for fiscal year 2016 dropping from $101 to $84.
If the town realizes the same interest rate on the second $7.5 million in borrowing to be issued next January, total savings could top $2.1 million for the life of the bonds, according to Town Administrator John Coderre.
“We are taking on significant debt for a very significant project and we have the best rate in the town’s history which means we are saving the most potential money for the taxpayers,” he said.
At just under $15 million, the Lincoln School renovation is the largest project the town has undertaken, ahead of the $14 million the town contributed to the construction of Algonquin Regional High School.
In boosting the town’s rating, Moody’s cited a strong financial management team guided by formal financial policies, which the town adopted beginning in 2009. Moody’s also noted that the town has reduced its debt obligations over the past six years while funding $9.6 million in capital projects with no new borrowing—funding projects such as school roots and infrastructure upgrades through pay-as-you-go sources such as free cash and dedicated revenue streams. The town has also unanimous support from all oversight boards for all of its budgets and capital spending articles over the past seven years.
“It’s an outstanding result and represents a lot of work that’s not done out in front of the public,” said Selectmen Chair Jeff Amberson.
