Town borrowing big

By Allison Brophy Champion

Published: May 12, 2008

A few weeks after receiving a “strong” bill of financial health from Wall Street, the town of Culpeper is getting ready to borrow more than it ever has.

At its meeting Tuesday, Town Council will vote on the issuance of nearly $19 million in general obligation bonds to pay for a variety of projects, namely a major portion of the ongoing $29 million sewer treatment plant upgrade and expansion.

Treasurer Neal Deane said Monday it was the largest bond issuance he was aware of in the town’s history.

The $19 million will also pay for an upgrade to the way the town reads its electric and water meters — from a manual method to a totally automated process, an estimated $1.6 million project.

Another $3 million will be spent on new power lines.

Assuming that Town Council approves the bond issuance Tuesday, the town will offer the $18.95 million in bonds for sale Wednesday through a competitive public sale, accepting bids through May 20, Deane said.

The town will pay back the bonds over 30 years at an esti-mated 4.7 percent interest rate.

Though the interest rate is not as low as the 3.89 percent the town got last year when it borrowed $6.25 million through a 20-year bank loan — also for the sewer treatment plant project — the 4.7 percent is “a great interest rate,” Deane said.

A 30-year loan typically carries a higher interest rate, he said, compared to a 20-year loan.

Still, the relatively low 4.7 percent rate is possible in large part because of the favorable bond ratings the town recently received from top Wall Street firms Moody’s and S&P.

Deane said the town could have paid some $90,000 annually in extra interest if it hadn’t appeared in front of the Big Apple bond rating groups in March — that’s a $2.7 million savings over the life of the 30-year loan.

The treasurer expected the bonds would be issued and the deal closed by June 9.
The $18.95 million loan includes $386,063 in bond issuance costs — fees paid to a variety of professionals including the town’s financial advisors, bond counsel, an underwriter, etc.

Financial Security Assurance or FSA of New York City will insure the town bonds.

Allison Brophy Champion can be reached at 825-0771 ext. 101 or

Culpeper Town Council holds its regular monthly meeting Tuesday at 7 p.m. in the county boardroom, 302 N. Main St.
Here’s what council will be talking about in closed session, starting at 6 p.m. —
* appointments to the Veterans Recognition Committee, the oversight group charged with overseeing a central monument in the newly opened Wine Street Veterans Memorial Park
* appointment of a Consolidation Project Manager to lead the development of a consolidation plan in response to the citizen-led proposal to do away with the town in favor of a larger county
* consideration of possible sites for a new police station