In another example of the national economic crisis hitting home, West Tisbury finance officials have been advised to wait until the end of this month before attempting any short-term borrowing for the town hall renovation and expansion project.
An initial attempt at financing failed last month.
Town treasurer Katherine Logue told selectmen last week that she tried to sell short-term bond anticipation notes worth approximately $4 million on Sept. 30, the day after the House of Representatives initially balked at a $700 billion bailout plan for several national financial institutions.
Ms. Logue said the town’s financial adviser reported that several large banks which specialize in selling Massachusetts short-term bond anticipation notes were simply not buying on that day.
“There was nobody buying, which almost certainly had some connection to what was going on with the [national] economy . . . we were advised to back out and try again,” the town treasurer said.
Ms. Logue said the town will try to sell the bond anticipation notes on Oct. 30. If there are no takers on the second attempt the town could turn to Island banks to borrow smaller amounts of money. She said there are no immediate concerns about the town’s ability to pay for bills associated with the $5.2 million project, which started earlier this month.
And she said any setbacks with short-term borrowing should not delay the project.
“All indications are the timetable is intact,” Ms. Logue said.
As a general rule, towns often obtain short-term loans to pay bills for a municipal project during construction by selling bond anticipation notes. When a project nears completion — and officials have a better idea of the final cost of the project — the short-term notes are replaced by long term-borrowing.
Meanwhile, the West Tisbury town hall renovation project is under way. The project will overhaul and expand the historic mansard-roofed building in the center of town. The money will come from a combination of borrowing and Community Preservation Act funds
Ms. Logue said the town budgeted a relatively conservative short-term borrowing interest rate of around four per cent. A few months ago, she said town finance advisors were optimistic that rate could drop as low as two per cent when the bond anticipation notes went on the market.
But with the lack of interested buyers last month and a decidedly uncertain economy, the rate now is more likely to be between two and four per cent, she said.
The turmoil on Wall Street and a turbulent world economy has not translated to all bad news for Island towns.
Tisbury treasurer Tim McLean said the town recently rolled several temporary borrowing notes into a single long-term borrowing note and put it out to bid. The town received several bidders and actually managed to lower the interest rate on the collective debt.
The previous interest rate for the various spending measures — that among other things paid for work at Veteran’s Memorial Park, the gymnasium roof at the Tisbury School, and the balance on the new ladder truck — was between 2.46 to 2.92 per cent.
The winning bid from the Roosevelt & Cross bond company, which specializes in municipal lending, was 2.45 per cent, he said.
Mr. McLean said the bid was awarded just prior to the upheaval on Wall Street, but he said municipal bonds are considered a sound investment.
“Municipal bonds are considered very stable and are very attractive. There may be fewer bidders because there is less liquidity in the market, but overall there are people out there who are interested because they are considered very solid compared to some other investments,” he said.
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