WATERTOWN — The Town Council, meeting Tuesday, February 16, received an analysis of the town’s existing and proposed debt.
Barry Bernabe, managing director of Phoenix Advisors LLC, Milford, pointed to an all-time low interest rate of .45 percent in in March 2020, comparing that number to 16 percent in September 1981.
In his 20-year experience, he has not seen such low rates for borrowing money.
He juxtaposed that information against Watertown’s bond rating of AA+ or one level below the highest rating possible.
“I think that’s something the town should be very proud of,” he commented.
The factors that go into a good bond rating are management practices and economy and demographics including the unemployment rate and housing value.
Financial performance and debt management are directly controlled by the town and factor into a bond rating along with long-term liabilities such as pension and other postemployment benefits.
“The town is doing great with all these factors,” Mr. Bernabe said, adding that the factors of interest rate and bond rating work with existing annual debt service, which demonstrates the town’s efforts to plan for the future.
Watertown’s current debt situation includes $6 million in bonds for roads and public works, no authorized but unissued projects, and an existing debt service that will stay relatively flat for the next three years before it decreases.
Mr. Bernabe noted that the town’s good fiscal discipline includes practices that pay off debt.
According to his calculations, Watertown could issue $15 million of new bonds over the next couple of years with no impact on the current debt level.
In four to six years, the town’s debt would start to significantly decrease again, allowing for more debt issuance.
“This is a perfect scenario,” Mr. Bernabe added, saying that it would be possible to kept debt flat. Although he cautioned that no one knows if interest rates will change, he calculated no change in his presentation.
The town’s bond rating could also change but, again, he assumed no change.
As the council discussed Mr. Bernabe’s input, they advocated for caution regarding interest rates.
They considered the wisdom of reissuing bonds; Mr. Bernabe said there is a current opportunity to save perhaps $800,000 and he plans to discuss that possibility with Finance Director Susan Zappone.
In other business, the council discussed the town budget with department representatives, starting with the library.
Council member Rachael Ryan asked Brian Flaherty, treasurer of the Watertown Library Association, to comment on the status of the renovation.
He responded that the roof issues are being addressed, responding to another question to confirm that the addition was constructed from generous donations only.
Economic Development Coordinator Joe Seacrist highlighted a line item for AdvanceCT, formerly the Connecticut Economic Resource Center, to market large development opportunities.
He anticipates a hiccup in the economy after the pandemic ends and AdvanceCT can support a town branding effort to improve Watertown’s ability to compete with neighboring towns.
The town clerk’s budget contains few changes from the previous year, with a 30 percent increase in revenue for calendar year 2020 largely due to property transfers.
The police department, which includes administrative, patrol and detective, maintenance and support, traffic, animal control, and communications expenses, has a 9.27 percent increase.
Police Chief Joshua Bernegger explained that four years of pay raises accounts for the majority of the increase, as the contract was recently ratified.
There is an increase of $30,000 for overtime and the chief anticipates replacing an officer eligible for retirement and the former police chief.
The Police Accountability Bill is an unfunded mandate that will require funding for dash cameras, drug and steroid screenings, mental health wellness exams, and the possible need to replace firearms if the 1033 program, which provides military gear to local police at no charge, is discontinued.
The town manager pointed out that the budget reflects a 53-week pay period, with a corresponding increase, that has impacted all town budgets.
Ms. Zappone said that expenses related to the pandemic were charged to line items last year but, this year, those costs are itemized differently for tracking purposes.
The council will review additional department line items in upcoming meetings.
Before the meeting adjourned, the town council held a moment of silence in remembrance of Rob Kane, resident and former town council chair, who died on February 5.