FOR IMMEDIATE RELEASE
December 21, 2016
David J. Hanrahan
City Of Vineland Refinances Electric Utility Bonds
Move Projected To Save Taxpayers $1.6 Million Over The Next 16 Years
Vineland, NJ (12/21/2016) – The City of Vineland has completed a deal with Capital Bank of New Jersey to refinance $19,815,000 in outstanding Vineland Electric Utility General Obligation Refunding Bonds, Series 2010. The city received four responses to its request for proposal, with the lowest rate of 3.35% coming from the group led by Capital Bank. Closing on the bond issue took place earlier this week.
The Series 2010 bonds were initially issued to fund the Electric Utility’s territory expansion in 2002 when they purchased Conectiv’s service area in Vineland. The purchase added approximately 40 square miles of territory within the city and about 5,200 additional customers. The bonds were subsequently refinanced in 2010, following the great recession, under a favorable variable interest rate package.
“I want to thank everyone involved for their hard work in putting this new package together and for finding a way to utilize local banks to support future growth in our community.” said City Council President and Mayor-elect Anthony Fanucci. “As we review and adjust plans to address our long-range infrastructure needs, this bond refinancing will give us a level of stability and certainty with respect to our future obligations, and will save Vineland tax payers in reduced interest payments over the remaining life of the bonds.”
According to Vineland officials, a decision to refinance the 2010 bonds has been in discussion for some time as the national economy continued to show signs of strengthening and the Federal Reserve signaled a change in monetary policy. “After much discussion with our Financial Advisor, our Chief Financial Officer, and Utility Management, we all agreed that getting this permanent financing at this rate was essential for the Utility’s economic stability and growth for our future,” said Assistant Business Administrator Bob Dickenson.
“The city has already saved millions of dollars using the variable financing rate structure from the years 2010 through 2016, and now we have completed permanent financing at a lower rate than when the bonds were originally issued,” said Vineland Chief Financial Officer Susan Baldosaro, CMFO. “With this particular package, Capital Bank was able to formulate a financing deal that saves the city from what would have been paid in a more normal bond issue.”
Joseph F. Rehm, Chief Lending Officer of Capital Bank of New Jersey, said “We are proud to have been able to assist the City of Vineland and the Vineland Municipal Electric Utility with a long-term, fixed-rate financing solution. The steep and recent increase in market rates created an urgency to close on the transaction and lock in the interest rate. Fortunately, we have relationships with other good, nimble South Jersey community banks, with whose participation we were able to quickly and cost-effectively meet Vineland’s needs. This transaction underscores a choice by everyone involved to support our local community.”
Capital Bank led a consortium of four South Jersey community banks in completing the financing package. In addition to Capital Bank, the other participants were Century Savings Bank, Haddon Savings Bank, and 1st Colonial Community Bank.
David J. Hemple, President and CEO of Century Savings Bank, said “We are elated that the City of Vineland has sought a local solution to improve its long-term financing. We were able to quickly react and eager to provide needed assistance which will positively impact both the city and the South Jersey community banking institutions.”
“The savings with the Capital Bank group is about a half of a percent per year on almost twenty million dollars of financing, which equates to about $100,000 per year for sixteen years,” said Cumberland Advisors Chairman and Chief Investment Officer David Kotok, Financial Advisor to the City of Vineland.
The Vineland Municipal Electric Utility (VMEU) is the only municipally-owned generating utility in the state of New Jersey. The VMEU has been providing electric service to residents and businesses in the City of Vineland since 1899. The Utility currently has approximately 25,000 customers and provides among the lowest rates in the state.
Capital Bank opened in Vineland in 2007. Today it has four locations – two in Vineland, one in Woodbury Heights, and one in Hammonton. Capital Bank lends money to businesses and individuals throughout South Jersey, is an Approved SBA Lender and a NJEDA Premier Lender. It is also 5-Star rated by BauerFinancial (www.BauerFinancial.com) and was named in the 2015 Top 15 Percent of Community Banks by Seifried & Brew. For more information about Capital Bank, please visit www.capitalbanknj.com.