LOCAL Voices: Election 2009

Our town is threatened by non-repayment of notes and bonds

By Peg O'Donnell
Incumbent Candidate for Redding Town Treasurer

[Oct. 8, 2009] Our town has two types of debt outstanding. The first is short-term debt called BANs. BAN is a short name for Bond Anticipation Note. A BAN is typically of 9-months duration, can be renewed for up to 8 years and then must be paid off or refinanced into long-term debt. Also, there are small principal repayment requirements during the 8 years. The bond length (normally 20 years) is also shortened if you keep the BANS for more than 2 years. While interest rates and the economy were rising, the town generally paid off BANs in full within 4 years. The plan was to pay down at least 25% of the BAN principal each year. In the last 7 to 8 years, BANS have not been paid down, except when required.

The town also has long-term debt, or bonds. Since the rates on some of that debt are higher than current market rates, the question of refinancing comes up. However, most of the bonds are “non-callable” which means that we cannot pay them off before the maturity date. We could restructure the debt with new debt, but that would mean issuing a new set of bonds and all the accompanying costs. Any interest reduction would be eaten up by the costs and therefore is not practical.

I have been managing town debt in my role as treasurer for almost 8 years. With your vote in November, I will continue to do so. Please vote Margaret O’Donnell for treasurer on November 3rd.