NORTH ARLINGTON –
In a move that the Democratic majority says will save taxpayers money in the long run, the North Arlington mayor and Borough Council voted July 11 to convert more than $7.6 million in short-term bond anticipation notes to a longterm bond before interest rates begin climbing.
Borough officials said the action will roll the current temporary financing of 25 different capital improvement projects into one bond that will spread interest costs over 14 years.
“Payments of principal [would] start Aug. 15 at $350,000, then go to $700,000 in 2019, drop to $650,000 in 2025 and $609,000 in 2027,” said borough spokesman Thom Ammirato.
Although the interest rate won’t be known for sure until the bonds are sold, Council President Al Granell, who chairs the finance committee, predicted that, “There will be considerable savings in interest and fees as we go from short-term notes that have to be renewed every year to [permanent financing].”
The two Republicans on the council – Rich Hughes and Joseph Bianchi – voted against the bond resolution, not over the strategy of going to long-term financing but in opposition to getting the document at the 11th hour.
“It’s the correct thing to do,” Bianchi said, “but let me read it first. We got the resolution] 10 minutes before the meeting. It was 15 pages long and all those bonds. I just wanted a chance to read it. The council president [Granell] never warned us we were going to get it. The Democrats kept us in the dark about it. There was no reason to rush. If we’d gone into closed session, for say, 30 minutes, we could’ve heard about it and we [Republicans] probably would’ve approved it.”
Granell said the council needed to act now because interest rates have been gradually ticking up in recent weeks.
“The council cannot afford to dawdle on this financing plan; the longer we wait, the more it will cost the taxpayers,” Granell said. Had the council acted last year to consolidate the borough’s debt, it would have saved more than $700,000 over the life of the financing, he added.
Democrats said the borough managed to reduce its debt by about $1 million this year thanks to efforts by the borough auditor and administrator who, they said, closed out several state and federal grants and applied the money to outstanding debt.
However, based on a part of the ordinance that he managed to read, Bianchi wondered why the borough – which had co-bonded $500,000 with Lyndhurst on the Joint Sewer Commission to buy new sewage pumps – didn’t apply the $250,000 it received from the N.J. Meadowlands Commission to pay off its share of the bond. “The borough applied that money somewhere else and we wanted to know why but our bond counsel couldn’t answer.”
Democrats said it made sense to go to long-term financing because the shortterm notes have interest rates that reset each year at the market interest rate prevailing when the notes are sold.
And, they said, constant reauthorization of the notes puts the borough at risk because it cannot lock in a low interest rate and it must pay additional thousands of dollars in professional fees associated with the annual short-term borrowing.
The borough has two temporary bond anticipation notes coming due next month: one is for $1.78 million and the other is for $5.6 million.
Mayor Peter Massa said: “It would be foolish not to seek permanent financing for this debt at this time. I support the council majority’s decision to take decisive action now that will allow the governing body to bring financial stability to the borough.”
– Ron Leir