Refinancing rainbow yields pot of gold

By Steve Wehrly. Journal reporter

Thanksgiving came a week early for the Town of Friday Harbor.

Town Treasurer Wendy Picinich set the table with 10 years of cold-eyed fiscal discipline and Administrator Duncan Wilson carved the turkey by orchestrating the refinancing of the 2003 sewer revenue bonds into a total net savings to the town of $269,002 over the next 11 years.

Wilson gave a tip of the hat to Picinich and to former administrator King Fitch for the town’s solid financial footing.

“Because of the conservative policies maintained by King Fitch and Wendy Picinich we were able to drive down the interests rates on this refinancing,” he said.

Mayor Carrie Lacher and the council listened with broad smiles at the council’s Nov. 15 meeting, as Jim Nelson of Martin Nelson & Company of Seattle reviewed the charts showing an average annual savings of $24,455 for each of the 11 years remaining on the bonds first issued in 2003. Nelson congratulated the town for “a fantastic accomplishment” in obtaining a AA- bond rating, something Nelson said was “rare” for a small town of limited population and a limited tax base.

The savings result from two developments: recession-induced lowering of interest rates in general, and municipal bond interest rates specifically, and a first-ever bond rating grade by Standard and Poor’s of AA-, which qualifies the town’s sewer bonds for investment by a wider range of investors at better interest rates.

To obtain the AA- bond rating grade, Picinich and Wilson had to lay out the complete financial history of the town and facts “looking forward” that would convince Standard and Poor’s that the town would pay off the $1.4 million remaining principal of the 2003 bond issue.

For Friday Harbor, the favorable Standard and Poor’s bond rating and low interest rates resulted in an ultra-low “True Interest Cost” interest rate of 1.82 percent.

Following a brief explanation of the legalities of the sewer revenue refunding bonds and ordinance confirming the town’s intention to pay off the bonds, the council voted unanimously, with Councilman Felix Menjivar absent, to pass the ordinance.

Lacher was effusive in her thanks to Picinich and Wilson for a job well done.


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