The city is refinancing $27.39 million of its debt for lower interest payments, according to government officials.
The bonds will be guaranteed by the Passaic County government which will allow the city to utilize the county’s credit rating to secure better interest rates, according to officials.
Both the city council and the Passaic County freeholder board approved the refinancing resolutions in early November.
Neil Grossman, the city’s bond counsel, in early November, told council members, without a county guaranty the city would have to purchase bond insurance.
Bond insurance could cost as much as $4 million, estimated Grossman. “That’s avoided by going through the county,” he said.
Even with bond insurance the city’s bonds would be rated “junk” and would have hard time finding buyers.
Grossman said the county has a much better credit rating which will benefit the city.
City officials did not have a debt schedule showing the lower interest rate they would receive from going through the Passaic County Improvement Authority.
The prices and the rates will be set when we go to the market, said Grossman.
The city has suffered several downgrades in the past years hampering its ability to borrow money at inexpensive rates.