Sale of $2.1 million in bonds approved

NEW LONDON – The issuance and sale of up to $2.1 million in sewerage, water, and electric system mortgage revenue bonds to help cover the cost of the Oshkosh Street project in New London was approved by the New London Common Council at its March 18 meeting.
As part of the approval, the council accepted the parameters of the debt sale. As long as the parameters are met, city officials can approve the sale. The sale is scheduled to take place on April 17, with the closing expected by May 7.
Finance Committee
The issuance and sale of the bonds was discussed at the March 5 Finance & Personnel Committee meeting.
At the meeting, Harry Allen, municipal advisor with Ehlers, told the committee that the financing is being considered primarily for Oshkosh Street, adding that there are a lot of revenue sources to fund the street reconstruction project.

“This financing specifically is funding the sewer, water, and the utilities relocation aspect of the Oshkosh Street project,” Allen said.
Another portion of the project will be reimbursed to the city from a state grant, Allen said. That grant is around $2 million.
The non-utility cost to the city for the project will be around $2.3 million, Allen said, adding that there may be a need in the future for the city to take out additional debt to fund the project.
“The current plan is that the city will use reserves to front the $2.3 million and recover the grant portion when it’s available, and then potentially looking at adding some of this project to tax increment district (TID) number 4. There were costs for Oshkosh Street included in that project plan.”
In total, Allen said the city is looking at borrowing around $2.5 million, which includes project costs. Of that total, $1.5 million would be assigned to the sewer utility, and $1 million would be assigned to the electric and water utility.
With the financing, Allen said the city would be financing around $2.5 million of utility projects, but only issuing $2.1 million in additional debt.
The financing would be structured to be paid off over a 20-year term. The first payment would be due in December of this year, with the final payment in 2044.
Allen said the city can expect an interest rate of around 4.25%. The maximum that could be charged is 5.5%.
“We don’t expect to be at that 5.5% territory, if we do see rates creep up that much between now and the sale day, that’s on us to provide advice to city staff to really consider moving that sale to where maybe the market is a little more-calm and you could get a better price,” Allen said.
The debt can be prepaid as of Dec. 1, 2034.
As part of taking out new debt, Allen said the city did go through a rating surveillance process with Moody’s.
“We got really good news for the city, the revenue backed debt of the city was upgraded from A3 to A2,” Allen said.