Over the past several years, Plainville has been budgeting their debt management fund around $4.4 million annually, and Town Manager Robert Lee projected that the town should be able to stay within that number through 2025.
On Monday, Dec. 2, Lee reported the town’s debt management plan at the town council meeting, to account for $6 million in general obligation bonds to complete the Wheeler School renovation project.
Lee said that according to the latest financial projections, borrowing $6 million in bonds will impact next year’s budget in an amount of approximately $495,000, assuming a 3.25% interest rate, which Lee said was a very conservative estimate.
“Things would have to go fairly far south between now and May in order to reach that 3.25%,” said Lee, “so that is a conservative interest rate for this analysis.”
Lee explained that the town’s debt fluctuates above and below the $4.4 million goal as new debt is accrued and older debts are paid off. There are expected decreases to the debt that have been projected to impact annual budgets through June 2025.
“This would allow the town to consider addressing other improvements, such as the Middle School of Plainville,” he said, “and I know that there’s been some discussion with regards to sidewalks as well.”
Lee explained that before the town issues the bonds, it will seek a rating assessment from Standard & Poors (S&P).
“The town’s current rating which was done several years ago is AA+, this is one notch under AAA rating which is the highest rating a town can receive,” said Lee.
S&P evaluates five major factors before determining and assigning a rating – management practice (25%), economy and demographics (30%), financial performance (25%), debt management (10%), and long term liabilities (10%).
S&P will be analyzing how the town of Plainville is disciplined fiscally, the town’s ability to plan, monitor, and manage government finances; the unemployment rate, housing values, and some income values; the fund balance levels and budgetary discipline; what percentage of the budget is debt, and what percentage of the grand list is debt; and pensions and other post employment benefits, such as retirement healthcare.
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