Ocean View council discusses hiring financial advisors

Date Published: 
Jan. 25, 2018

The Town of Ocean View held a workshop earlier this week at which Jamie Schlesinger of PFM Financial Advisors LLC discussed the refinancing of the Town’s water debt.

“The ultimate goal is to save taxpayers monies and reduce costs,” said Schlesinger.

The firm, based in Pennsylvania, serves as a financial advisor for municipalities, townships and school districts, including the Town of Milford.

The Town, if it were to pursue having a financial advisor, would need to create a preliminary official statement and hire bond counsel, as well as have a company calculate its credit score.

Schlesinger said he believes the Town would have a strong rating, which would ultimately lead to others wanting to buy the Town’s bonds.

Schlesinger noted that the Town has long-term debt for 40 years, through the USDA, which he classified as a normal time period for a USDA loan.

He said there are internet auction sites similar to eBay that would allow his company to place the Town’s bonds up for auction for a 15-plus-minute period. The bonds can then be auctioned off to any qualified underwriter allowed to bid.

“Whoever has the lowest interest rate during the 15-minute period wins,” he said. “If someone bids the lowest rate, the auction gets extended by two extra minutes…”

Schlesinger said the Town could go to market with its bond anywhere between April and May, if they moved on retaining his firm.

“I think you’d really have a really strong sale, based on timing,” he said.

Councilman Tom Maly asked Schlesinger what the drawbacks of hiring the firm would be to the Town.

“You hire me… We start going through the process and … interest rates go up between now and when we sell — there’s no savings,” he said. “The risk you have is, if we get to the credit rating process and your credit rating comes back [low], now you’ve incurred the cost of a credit rating… The cost of a credit rating of this size is about $12,000.”

Schlesinger said the Town could move as fast as it wants, with the caveat that the Town would need certain documents in place.

The council unanimously agreed they were interested in retaining Schlesinger’s firm, and said they would discuss and possibly vote on moving forward with hiring PFM Financial Advisors at their February meeting.

“This is an extremely low-risk move for the Town, in my perspective,” said Mayor Walter Curran.