Higher Rating Plus Lower Interest Equals Big Savings For Tewksbury

What would you call a move to refinance more than $4 million in debt, cutting the interest rate by two-thirds and saving the town almost $650,000?

A good deal? A great deal?

Tewksbury Finance Director Karen Kucala would call it "a start."

With the recent addition of the town's share of the new high school project, Tewksbury presently has $146,278,242 worth of debt. That works out to just about $5,051 in debt for every man, woman and child in Tewksbury.

According to Kucala, the debt costs Tewksbury $4.6 million in interest payments each year. With that big of a burden, it's no wonder that Kucala, along with Town Manager Richard Montuori and Treasurer/Collector Kelly Odoms are constantly searching for opportunities to lower interest rates and payments on the town's various outstanding bonds.

Most recently, the town packaged $4,135,000 in small bonds, wioth interest rates ranging from 4 to 5 percent, and refinanced them, lowering the interest rate to 1.32 percent. The savings for the town, over the life of the loans, is $649,000.

"You normally don't see the interest rates you're seeing now," said Kucala.

"We definitely rely on our financial advisors, as to when it's a good time to lower debts and lower interest," said Odoms. "It's been a really good time to borrow since I've been here."

Kucala and Odoms have each been with the town less than a year. Their hirings have been part of Montuori's efforts to streamline municipal operations and overhaul the town's finances. Among Montuori's initiatives have been rebuilding the reserve account, eliminating cash transactions, eliminating leases for heavy equipment and merging the positions of Town Treasurer and Collector.

"It's his master plan," said Odoms. "He knows what he's doing."

From her perspective, Kucala believes Montuori's moves have paid dividends and Tewksbury is headed in a positive direction, financially.

"I think this last (Fiscal 2013) budget shows that we are at a turning point," she said. "This last borrowing shows that the community is on an upswing."

The next step in Tewksbury's fiscal recovery is expected to take place some time in early 2013, when Standard & Poor's is expected to raise the town's credit rating from it's present "AA-minus with a positive outlook" status. AAA is the highest rating possible.

Any improvement in the Tewksbury's rating will have a positive impact on interest rates the next time Tewksbury looks to borrow or refinance portions of its existing debt.

Kucala says she and Odoms, with the help of the town's outside financial advisors, will continually be looking for ways to lower interest rates and interest payments in the hopes of lessening the burden on taxpayers.

"It's satisfying. It's good for the taxpayers and we're glad to help them," said Kucala. "We're homeowners too (outside Tewksbury), so we know how important this is and how much it means."