The Town of Lexington works diligently to seek ways to minimize financing costs for investments in infrastructure, roadways improvements and amenities such as the Icehouse Amphitheater.
Starting January 1st, Congress enacted a major overhaul to the federal tax code impacting local governments with new limitations on our ability to refinance debt. Due to this change, town staff worked fiercely to refinance our debt before December 31, 2017, under the 1987 tax code rules which allowed a tax exempt bond issuance of state and local governments to be advance refunded once before its call date; thereby taking advantage of lower interest rates and lowering the cost of services to our citizens.
As a result, the Town of Lexington refinanced $36.5 million in water and sewer bonds saving our customers $5.9million in future debt service payments. It is important to note, that in the past five years we have refinanced bonds and produced a total of nearly $7 million in future debt service savings with a net present benefit of over $4.1 million. These savings will effectively cover a significant portion of a major investment in our regional sewer system including, the new Cromer Road Pump Station that was recently bid and priced at $6.3 Million.
Finally, another outcome of our recent refinancing was an upgrade in our credit rating for our water and sewer issues from AA- to AA, high investment grade, by Standard & Poor’s. This upgrade is a testament to the both the Town of Lexington’s sound planning and financial condition and will save our ratepayers in future bond issuances.