The City of Lowell has taken a significant step forward in funding essential projects, including improvements to Lowell High School (LHS), by issuing $70.1 million in bonds. This move was announced by Conor Baldwin, Chief Financial Officer of the City of Lowell. Bond proceeds will be used to fund various municipal projects, including $30 million in high school construction bonds, and will refinance bonds of the City originally issued September 12, 2013.
The City received competitive bids from bond underwriters on Wednesday, September 13, resulting in a successful issuance of $70,130,000, 30-year general obligation state-qualified bond. Morgan & Stanley Co, LLC, emerged as the winning bidder, offering an attractive net interest rate of 4.024%. Impressively, the City received a total of 7 bids, illustrating strong interest and confidence in Lowell's growth and prospects.
The refunding bonds will generate total net savings of $399,993 through the remaining life of the bonds refunded. Utilizing a substantial premium earned from the sale, approximately $3.4 million, the Finance Department managed to reduce the par value of the sale from $46.9 million to $43.6 million. This reduction in the bond size will lessen the City's future debt service and result in approximately $206,000 in savings over the next 25 years.
Prior to the sale, S&P Global Ratings, a municipal bond credit rating agency, affirmed the City's 'AA-' underlying bond rating. The rating agency cited the City's very strong management with strong financial policies and practices, stable budgetary performance, strong budgetary reserves and liquidity, and strong institutional framework as positive credit factors. Furthermore, S&P Global Ratings assigned 'AA+' enhanced rating to the Bonds as debt service is secured by the State Qualified Bond Act local state aid intercept program.
To obtain the approval to issue State Qualified Bonds, the City appeared before the Municipal Finance Oversight Board (MFOB) on July 12, 2013. The board, chaired by State Auditor Diana DiZoglio, met to consider the financial condition of the City and unanimously granted the approval. Furthermore, the Director of Accounts for the Department of Revenue noted the strong financial conditions in Lowell and credited the finance team for their diligent work in managing the City's finances.
City Manager Thomas A. Golden, Jr., said about the bond issuance, "This success is because the Council has made a significant investment in infrastructure, including $12.46 million in infrastructure spending on roads, bridges, and sidewalks, as well as $16.4 million in building improvements to City and school facilities, and $1.7 million in new vehicles. This move marks a significant milestone for the City of Lowell, ensuring crucial projects are funded effectively while also making prudent financial decisions that will benefit the City in the long run."
Mr. Baldwin added, "The finance team, spearheaded by City Treasurer Ted Panagiotopoulos, has been hard at work throughout the summer to put together the financing for a bond sale. We are pleased with the level of competition in the market and the interest rate on the sale. This accelerated schedule was a strategy to lock in interest rates prior to potential future hikes by the Federal Reserve in the coming months."