Photo: The Belmont Police Headquarters renovation.
Patience is a virtue and, in the case of Belmont, a way to pocket a few million dollars.
By holding off selling more than $103.5 million in municipal bonds on a pair of building projects from March to May, Belmont will reap a $6 to $7 million savings to taxpayers, according to Belmont’s Town Treasurer Floyd Carman as the Belmont Select Board voted to approve the bond sale at its remote meeting on Monday, June 1.
Originally, the sale of the triple-A rated, 30-year municipal bond to finance a portion of the $240 million Belmont Middle and High School project and the Police Headquarters renovation was schedule for mid-March. At the time, the financial markets began reeling due to the start of the coronavirus pandemic. Initial interest was anemic; just two firms showed any
Rather than chance an auction during rising volatility in the market, Carman pulled the paper and proceeded to reaffirm the town’s top status with the credit rating agencies.
Due to its long-standing policy of conservative budgeting and spending, a small default rate by homeowners and a willingness to payoff long-standing debt and keeping cash reserves – free cash – above what agencies require, Belmont is seen as having a high level of creditworthiness resulting in the coveted top ranking.
Belmont is one of just 11 municipalities in Massachusetts and one of fifty nationwide in which two of the three rating agencies – Moody’s and Standard & Poor’s – declared its “paper” at a AAA rate, the highest possible rating that may be assigned to an issuer’s bonds.
“We are truly in a category of our own,” Carman told Select Board Member Tom Caputo.
By retreating to the sidelines, Belmont could afford to bide its time toward a recovery and a more receptive market.
By late May, according to Carman, the number of bidders drawn to Belmont’s triple-A muni spiked to 10 and the resulting auction resulted in a “fantastic rate” of 2.178 percent – sold to JP Morgan Securities – a whopping 1.124 percent decrease from the 3.302 percent the town received at last year’s $111 million bond sale to support the middle/high school.
“Let me thank Carman for just a wonderful job … bringing these bonds to market and achieving a terrific result that the auction,” said Select Board Chair Roy Epstein who noted the sale occurred during the depressed state of the bond market in the last few months.