Brick Expects To Save $748K In Bond Refinancing, Official Says

BRICK, NJ -- Brick Township will save nearly $748,000 in debt service under a bond refunding ordinance that was introduced at last week’s Township Council meeting, an official says.

The ordinance, which is scheduled to be up for a second reading and final adoption next Tuesday, will refinance $18.4 million in bonds remaining from a 2009 bond ordinance, said Scott Pezarras, Brick Township’s chief financial officer. The move will allow the township to take advantage of lower interest rates as well as help avoid large peaks and valleys in the township’s debt service -- its interest -- payments.

For budgeting reasons ”you don’t want a town’s debt service to go from $13 million one year to $15 million back down to $12 million,” Pezarras said, because it makes it more difficult to adjust for those changes. Taking advantage of lower interest rates helps smooth out the peaks and valleys, he said.

The 2009 A series is a mix of bonds for more than 20 items, Pezarras said, including Traders Cove, the French’s Landfill closure and a number of smaller items. The total amount of that bond series was $32,881,000, Pezarras said. That figure has been paid down to $18,420,000, and will be paid off in 2028, he said.

Unlike when someone refinances a mortgage and receives a new term, refinancing a bond does not extended the length of the bond, Pezarras said.

The cost to refinance the bond is rolled into the total figure, which is why the township is bonding for up to $18,800,000, he said.

This year’s debt service, Pezarras said, is $13,617,857, down from $13,711,667 last year.

The township’s total indebtedness is $152,780,652 (that figure includes the additional $380,000 factored into the proposed bond refinancing), a figure that is less than half of the maximum municipal indebtedness allowed under state law, he said.

“You’re allowed by law a maximum (indebtedness of) 3.5 percent of equalized ratable base,” Pezarras said. Brick’s indebtedness puts the township at 1.458 percent, about 2 percent beneath the maximum, he said.

“There’s about $200 million we could borrow,” Pezarras said, “but the mayor has instituted a debt reduction program that has reduced the township’s net debt by more than $15 million so far.