The continuing bad economy has had a silver lining, saving the town up to $1 million in construction costs for a project to expand Thurston Middle School, as well as helping officials save on interest payments.
The project - which will add 12,000 square feet of modular classrooms and an expanded cafeteria to Thurston - had at one time been estimated to cost $4.5 million. But the job was recently awarded to Vanguard Modulars Inc. of Danvers for $3.5 million.
"One of the good sides of the current economy is that construction costs are down," Town Administrator Michael Jaillet said.
Another benefit of the bad economy is that it can allow borrowers to get a better interest rate. This month, to pay for the Thurston project, Westwood sold its $3.5 million 2009 general obligation school bonds for $3,545,000.
As Jaillet put it, "We're paying $45,000 to borrow this money over the course of 20 years" - a good deal.
Westwood will pay a 3 percent interest rate on the bonds the first year, and pay rates varying between 2.125 percent and 3.50 percent through the first decade. The town will pay more - between 4 and 5 percent - on its payments between 2019 and 2029.
Selectmen officially approved the bond sale at their meeting last week.
Earlier this month, Standard & Poor's decided to keep the town at its AAA long-term rating and underlying rating on Westwood's general obligation debt, and gave the same rating to the 2009 school bonds.
The agency cited Westwood's "strong economy aided by its proximity" to metro Boston; "sound financial performance and position," "low debt burden, with manageable capital needs"; and its "sizable and primarily residential property tax base, with very strong wealth and income levels."
In fiscal 2009, the tax base increased 1.1 percent to $3.7 billion, it reported.
Moody's Investors Service again gave its second-highest rating, Aa1, to the town's $40.9 million in long-term debt, including the new school bonds. Moody's said its rating "incorporates the town's sizeable tax base with significant redevelopment potential, high wealth levels, and manageable debt position with limited immediate borrowing plans."
But Moody's also gave a "negative outlook" - because, it said, Westwood is not meeting its formal policy of maintaining reserves equal to 8 percent of its general fund revenues, minus debt service.
That negative report also "incorporates the lack of a specific and measurable plan to rebuild reserves to more appropriate levels, and the expectation that Westwood's financial position will remain pressured as tax base expansion and revenue growth remain constrained due to recessionary pressures," Moody's analysts wrote.
"We got halfway to the goal that we had put for ourselves," Jaillet says, "and in recent years, although we would like to do more, we haven't been able to make any progress, mostly because of the negative economy."
Jaillet says the town's reserves stand at about 4 percent. He did not have the exact dollar figures at his fingertips - referring questions to Finance Director Pamela Dukeman on that, but she could not be reached yesterday.
He said the "two different rating agencies (were) looking at the same information slightly differently."
Construction on the Thurston Middle School project began over April vacation, and resumed at the beginning of June. The modular classrooms will be added to the back of the middle school on High Street, enlarging Thurston from its current size of 74,500 square feet.
Heath Petracca, the director of business and finance for Westwood schools, says the foundations have been poured, and that trucks will arrive from Pennsylvania with the cafeteria addition today.
Daily News staff writer Edward B. Colby can be reached at 781-433-8336 or ecolby@cnc.com.
