FREEHOLD – The Monmouth County Board of Chosen Freeholders has partnered with the Monmouth County Improvement Authority (MCIA) to reduce borrowing costs for local municipalities recovering from Super Storm Sandy.
“Communities that are awaiting reimbursement from the Federal Emergency Management Agency (FEMA) for cleanup and repairs following Super Storm Sandy will get some relief from this one-of-a kind financing program,” Freeholder Deputy Director Serena DiMaso said. “The MCIA and its finance professionals designed a short-term financing technique that will save 16 towns nearly $210,000.”
On behalf of 16 Monmouth County municipalities, the MCIA recently sold $47,475,000 in pooled notes designed to reduce the costs of financing for certain Superstorm Sandy recovery expenses and to ensure continued market access, despite the credit implications of lost ratables in affected communities.
The note financing received a low 0.279220 percent net interest cost for the one-year financing. The participants will save an estimated $209,088 over the next 12 months by using this financing technique.
Most Monmouth County shore communities initially financed their individual Sandy recovery expenses with the issuance of municipal notes. These financings were temporary because the notes will be retired when FEMA reimbursement is received. It is expected that FEMA reimbursement will be 90 percent of total costs.
MCIA and its finance professionals designed a financing technique that is issuing the Governmental Pooled Loan Revenue Notes, Series 2013 secured by individual municipal General Obligation Notes.
The MCIA pooled note issue benefited from a Monmouth County Guaranty on the notes the ensured market access and carries the highest credit ratings available, generating lower interest costs for the Shore communities while they wait for FEMA reimbursement.
The 16 participating towns are Allenhurst, Avon-by-the-Sea, Belmar, Bradley Beach, Brielle, Colts Neck, Deal, Highlands, Keansburg, Monmouth Beach, Neptune Township, Red Bank, Sea Bright, Tinton Falls, Union Beach and Wall.
Towns that borrow money through the MCIA already benefit by utilizing the county’s AAA bond rating to get the lowest possible interest rate.
“Helping municipalities save money through the MCIA’s pooled loan program goes a long way toward helping local governments continue their post-Sandy recovery,” Freeholder Gary J. Rich, Sr. said. “The relief provided will help the towns and ultimately our taxpaying residents.”
The MCIA has offered fixed-rate pooled financing on behalf of various local governmental entities for the past 20 years, saving Monmouth County taxpayers more than $26 million in that time. The financing is normally designed to pool the local government entities into a single financing to permanently finance outstanding bond anticipation notes and unfunded capital bond ordinances. The MCIA is offering this program in December.
The MCIA, a county agency whose singular focus is on finding alternatives to traditional methods of public finance, has saved Monmouth County taxpayers more than $60 million dollars since it was formed in 1986. The county guaranty and the pooling of local government bond and notes into a single, larger financing makes the MCIA’s bonds attractive to investors.
Raymond James handled this sale for the MCIA.