Towns get low interest bonds

Monday, October 05, 2009
By AMY SARA CLARK
JOURNAL STAFF WRITER

The County of Hudson is using its financial clout to save Bayonne, Jersey City and some other municipalities and government entities millions of dollars in interest charges.

The county is using its MIG 1 (Municipal Investment Grade 1) bond rating - the highest possible short-term rating - to save these entities just over $5.3 million dollars by refinancing some of the municipalities' existing loans at a much lower interest rate than the cities and towns would be able to get on their own, according to a news release from County Executive Thomas DeGise.

"After the brutal year we had on the revenue side of the ledger, I was enormously pleased that we could help reduce interest costs so significantly to our municipalities," said DeGise in the release.

The county was able to get an interest rate of just under 1.5 percent for tax-exempt notes and 2.5 percent for taxable notes. If a municipality were to seek refinancing on their own, they would likely get rates of about 5 percent for tax-exempt notes and 6.5 percent of taxable notes, according to the release.

Jersey City stands to save $965,970 in interest on a $27 million loan, officials said.

"This is a positive example of governmental entities working together for the benefit of the taxpayers," Jersey City Mayor Jerramiah T. Healy said in a statement, thanking the county executive for instituting the program.

Weehawken will save $750,233 on a loan of $21 million.

"In these tough economic times, anything that helps save any money is helpful and the county came up with a great program," Weehawken Mayor Richard Turner said. "Saving more than $750,000 in interest is significant for Weehawken."

Bayonne will get the biggest break, with the city saving $2.2 million in interest on a $61.8 million loan. In addition the Bayonne Local Redevelopment Agency will save $612,769 on a $15.3 million loan and the Bayonne Municipal Utilities Authority will save $123,767 on a $3.4 million loan.

In addition, Hoboken will save $577,316 on a $15.8 million loan and West New York will save $88,073 on a $2.5 million loan.

Besides having a MIG 1 rating for short-term transactions, the county's general credit rating is also excellent, according to the release.

Moody's Investors Service affirmed the county's AAA rating due to its "substantial and expanding tax base and its expectation that the county is relatively well positioned to maintain financial stability in the coming year