News Column

West Haven City Council approves scaled-back $40 million bond refinance

June 11, 2014

By Mark Zaretsky, New Haven Register, Conn.

June 11--WEST HAVEN -- The City Council unanimously approved a scaled-back $40 million version of Mayor Ed O'Brien's prevously-defeated effort to refinance what originally was to be up to $50 million in outstanding debt.

The approved resolution to sell up to $40 million in general obligation refunding bonds at lower rates than the original bonds, sold in 2002, will provide interest savings that will allow cash-strapped West Haven to fully fund its pension contribution for the next two years.

But gone from the version approved Monday night was component that originally allowed the city to skip an interest payment and use the total $8 million in savings to pay off the existing $7.5 million deficit.

Several council members who voted against the original $50 million plan, including Finance Committee Chairwoman Nancy Rossi, D-7, and Councilman Michael Last, D-9, said they favored the scaled-back plan because, unlike the previous plan, it represented true savings.

"This was the compromise I spoke about ..." said Rossi. "It shows a real savings ... it's an actual savings for the city...I plan to vote in favor of this."

Last said he liked the latest version because "the terms of the bonds stay the same," while the previous version would have extended the pay-back period by several months, but "the rate goes down. It's a real savings."

Director of Finance Kevin McNabola said the savings from the refinancing would be used to pay the city's full annual required contribution, or ARC, for the pensions for the next two years but would have to be factored into the budget after that.

The vote came during a long, busy council meeting that also saw the City Council vote to amend the five-year capital plan and approve the sale of $3.41 million in bonds to pay for a required new narrow-band emergency communications system.

The council also approved a $107,000, one-year contract with McGladrey LLP to do the city's annual audit, with the potential for two one-year extensions.

But much of the meeting was devoted to discussing something that ended up being held in the Council as a Whole Committee, a proposal by Rossi that would have required Mayor O'Brien to cut the salaries of all elected officials and non-union mayoral employees by 10 percent.

Rossi said during the course of the discussion that she had submitted the item primarily to get it under discussion and did not expect it to pass -- but said she thought the mayor should live up to one of his campaign promises, which was in a mailing he had sent out before the election.

She produced a photocopy of the mailing.

O'Brien told Rossi that he was more than happy to work with her and engage in discussion at any time, but he chastized her for putting it on a City Council agenda just for discussion purposes and said it created anxiety among staff and caused hours of work in recent days for him, Corporation Counsel Vin Amendola and others.


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Source: New Haven Register (CT)

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