Cheshire reviews $60 million bond sale, bond premium and plans to pare capital projects ahead of FY26 budget

Town of Cheshire staff told the Town Council at a workshop Thursday that the town completed a $60 million financing last week to fund two new elementary schools and is weighing how much of a $1.9 million bond premium and existing reserves to apply to next year’s debt service.

The discussion, which focused on debt-service projections and the capital improvement program, came as staff presented initial assumptions for the proposed fiscal 2026 operating and capital budgets and asked the council whether to add new capital borrowing this year.

Sean, a staff member who presented the sale, said the transaction included $40 million of long-term bonds and $20 million of bond anticipation notes that come due in one year and are expected to be folded into next year’s bond issuance. “We did get bond premium… This year was $1,900,000,” Sean said. He told the council the bond sale produced an interest rate of about 3.6% on the $40 million tranche, close to projections, and that the town will need to use a portion of the premium—about $170,000—to align accounting with the budgeted rate. Jim, a staff member, gave the current debt-service reserve balance as about $4,000,000; after the premium allocation Sean said that puts the reserve at roughly $5,700,000.

Why it matters: the town’s debt-service-to-budget ratio is projected to climb above the council’s 10% policy target in the next fiscal year as the schools’ payments come online. Staff emphasized that the most durable way to reduce future pressure is to reduce new capital borrowing rather than rely on one-time reserves.

What staff presente…