The Town of Middletown is always on the lookout for ways to save taxpayers money, something an upcoming refinancing of old debt is expected to accomplish
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REFINACING EXPECTED TO SAVE TOWN HUNDREDS OF THOUSANDS OF DOLLARS
MIDDLETOWN, R.I. (APRIL 15, 2021) – A move by the town to refinance some existing debt is expected to save more than $300,000.
During a recent meeting, the Town Council approved a proposal for the town’s finance office to refinance about $2.3 million remaining on a 2011 bond. If all goes according to plan, Finance Director Marc Tanguay said the town intends on going to market with the refinancing in mid-May.
The effort should save the town about $305,000 over the remaining 10-year life of the bond, Tanguay said.
“The threshold to see if it’s worth refinancing is 3 percent,” Tanguay said. “Working with the financial advisors, this refunding is at 11.624 percent, so it’s well above the 3 percent threshold.”
Council Vice President Paul M. Rodrigues applauded the town and finance staff – including Town Administrator Shawn J. Brown -- for seeking out different opportunities to save taxpayer dollars, whether short or long term.
“Thanks to you and Shawn for continuing to look for opportunities to gain leverage on savings,” Rodrigues said, addressing Tanguay. “It doesn’t matter what the timeframe is. You never know what’s coming down the path financially and it certainly doesn’t get any cheaper and with moves like this, it certainly continues to put us in a better position to make better decisions and move the community forward.”
Brown agreed, saying the refinancing was part of a systematic approach by the town to save money without disrupting existing services wherever possible.
“After bonds are issued for a certain period of time, we typically work with our financial advisor to start looking for opportunities to refinance those bonds,” Brown said. “Generally, we look for a savings in excess of 3 percent before we actually make the decision to go out and look for a lower rate.”
Brown added that just because the town was refinancing, that didn’t mean Middletown was lengthening the loan.
“It’s important to note we don’t extend the term of the bonds, so if it’s a 20-year bond and we’ve already paid on 10 years when we refinance it, we’re financing the last 10 years, we’re not refinancing it for another 20,” Brown said.
The move is part of a wider conservative financial policy by the town, especially in light of the COVID-19 pandemic. For example, every purchase gets multiple sets of eyes and there’s a freeze on all “non-essential” spending.
In general, the town also takes a “fix what it has approach” towards big ticket items like building projects instead of new construction, whenever possible.
To keep Middletown as affordable as possible, the council has not increased the tax rate four years in a row. It’s unclear whether that will be possible with the proposed fiscal 2022 budget, which is expected to be received Monday night at 6 by the council. To view and participate in that meeting, visit https://us02web.zoom.us/j/8973485818 online.