The Great Neck Library closed on the sale of its first tax exempt bonds. The $10.4 million Dormitory of the State of New York (DASNY), Great Neck Library Revenue Bonds, Series 2014 produced net proceeds of $10.76 million which are committed to be used for the library’s complete gut and renovation of its 42,000 square foot Main facility which dates to 1970.
The entire issue of the bonds was sold within three hours of the offering by Roosevelt and Cross on Nov. 19, and generated an original issue premium of nearly $660,000. The success of the sale had much to do with the library garnering a Aaa rating from Moody’s.
In its review, Moody’s looked at the last six years of summary General Fund revenues and expenditures, as well as six years of Balance Sheets. They also had the audit reports for 2013 and 2014. The Library’s Finance Committee and the Business Manager, led by Treasurer Josie Pizer and President Marietta DiCamillo, have been very conscientious in monitoring and containing expenditures, while the Business Manager, Neil Zitofsky, has also been managing the balance sheet in anticipation of this event.
In a teleconference with Moody’s analyst Dan Seymour, Zitofsky and Library financial advisor Noah Nadelson of Munistat, walked Mr. Seymour through the library’s strong financials. They highlighted the Library’s tax collection process via the School District which practically eliminates the risk of default.
Seymour had indicated that it has long been Moody’s practice to peg public library ratings one notch below its affiliated school district. Nadelson, knowing that the Great Neck Public Schools has a Aaa rating, advised the library to expect a very respectable Aa2 rating, which is Moody’s second highest grade.
During the teleconference with Zitofsky, however, Seymour voiced that in this instance, perhaps it was time for Moody’s to revisit its practice. It is believed that the Great Neck Library is the first public library to receive a Aaa rating from Moody’s.
The Aaa rating, as compared to an Aa2 rating, saves the library an estimated 10 basis points (0.10%) in bond interest expense. This equates to just under $25,000 per year, or nearly $500,000 over the 20-year term.
On Nov. 19, 2013, the voting public in the District approved a referendum for the $10.4 million bond with a maximum annual debt service of $875,000. The average annual debt service payment has now been finalized at $733,000, a savings of more than $2.8 million for local taxpayers over the life of the bonds.