Politics & Government

More Than $6M in Bonds Approved for Sale

The borough's CFO and bond attorney hope to sell the bonds at a low interest rate.

The Chatham Borough bond attorney and CFO made a presentation before the governing body Monday night to outline the details of three resolutions approving the sale of more than $6 million in bonds.

Steve Rogut, the borough's bond attorney, said interest rates at this time are very low, and that it makes sense to consolidate these bonds and sell them at a lower interest rate than they have currently.

The total amount of the bonds will be $6,735,000. A resolution authorized $5,819,000 in general improvement bonds to go up for sale, and a second resolution authorized $916,000 in water utility bonds to be sold.

Find out what's happening in Chathamwith free, real-time updates from Patch.

The two resolutions "authorize each series of bonds that are outstanding," Rogut said. "They set forth what ordinances we're borrowing under, maturity schedules [and] the payment dates for those bonds."

A third resolution authorized the borough to print a notice of the sale in the approved local newspapers, and electronically on the Internet. It also stipulates that the borough will provide financial statements and other pertinent financial information to the purchasers of the bonds.

Find out what's happening in Chathamwith free, real-time updates from Patch.

"We have currently $4,763,500 [in] short-term notes outstanding," Rogut said. "We're going to refinance those notes and then add in approximately $2 million worth of new bonds under ordinances that have been adopted this year."

Tammie Kopin, the borough's CFO, said that the last time the borough issued bonds was in 2006.

"You want to sell the debt to somebody, usually  a bank or security firm or another financial institution," she said, and get the lowest interest rate possible.

Council Member Len Resto noted that there was a small amount of money, about $15,000, in the General Improvement Bond that was earmarked for the Community Garden's expansion to the lot north of Main Street along Brooklake Road. The land was licensed to the borough for the garden's expansion by PSE&G, but the utility company .

Rogut said that he had listed all the projects that were included in ordinances passed within the last year.

"If you decided not to move forward with that project, then you have two choices. You would have unspent money, and you could either use it to pay debt service on these bonds, or ... determine that [you] want to use that money for another capital project."

Bob Falzarano, the borough administrator, said that the bond sale was planned for August. "An enormous amount of work has gone into this project," he said.

Rogut also said that the rating agency Moody's had recently moved the borough's credit rating from AA 1 to AAA.

Councilman James Collander said, "I'm surprised that they would take a town our size ... and move it to."

"That's a real vote of confidence," Mayor Nelson Vaughan said.

Falzarano noted that the borough's rating for this bond service was not AAA.

Rogut said that the various rating agencies have been "criticized for rating municipals too low," compared with their conversely high ratings for mortgage-backed securities and derivative products.

"They've gone through a process of unifying their rating process for corporates and municipals, and as a result of that they've raised a lot of ratings," Rogut said. "They didn't call it an upgrading, they called it a refinement of their rating schedule."

The three resolutions were all passed unanimously.


Get more local news delivered straight to your inbox. Sign up for free Patch newsletters and alerts.

We’ve removed the ability to reply as we work to make improvements. Learn more here

More from Chatham