City saves on utility bonds

Published 6:39 pm Friday, November 6, 2009

Suffolk sold $27 million worth of bonds last week to help finance capital improvements in the growing utility system.

Thanks to recent credit rating upgrades, the city was able to sell the 30-year bonds at a fixed rate of 3.98 percent. That rate will save the city about $9.7 million over the life of the bonds compared to what was anticipated, finance director Dale Walker said Wednesday.

“We were anticipating about 5 percent,” Walker said. “We sold at a good percentage.”

The funds will allow Suffolk to move forward with water and sanitary sewer system improvements to meet the city’s growth and regulatory requirements, according to a city press release.

“We can take care of mandated costs,” Walker said.

The city’s credit ratings with all three bond rating agencies — Moody’s, S&P and Fitch — currently are in the “very strong” category, and two of them are marked with a “positive outlook” designation. The ratings are a result of adhering to stringent, self-imposed financial policies, Mayor Linda T. Johnson said.

“Wall Street’s acceptance of our financial operations was evident in the extremely favorable interest rate we achieved,” Johnson added.

Suffolk was able to take advantage of Build America Bonds included in the federal stimulus program, which saved the city additional money.

Meanwhile, residents have seen the cost for their water and sewer service increase about 28 percent from last year.