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Marblehead’s Select Board on Wednesday night approved a $24.975 million general obligation bond issue that will pay for road and sidewalk work, a new roof and heating, ventilation and air conditioning system at the high school, roof, HVAC and Americans with Disabilities Act accessibility upgrades at the Mary Alley building, renovations at Abbot Public Library, roof and gutter work at the Franklin Street Fire Station and new information technology equipment and software.
The spending itself is not new. Voters signed off on all seven projects at past town meetings, with appropriations dating back as far as fiscal 2021 for the road and sidewalk program and the library renovations and as recently as fiscal 2025 for the high school, Mary Alley and Franklin Street Fire Station work. The bond sale takes the short-term notes the town had been carrying against those authorizations and converts them into 30-year debt.
The seven projects break down as follows:
- Roads and sidewalks — $9,098,250
- High school roof and HVAC — $8,441,500
- Mary Alley HVAC and ADA improvements — $5,637,450
- Abbot Public Library renovations — $941,050
- Mary Alley Building roof replacement — $451,550
- Franklin Street Fire Station roof and gutter replacement — $123,450
- Information technology equipment and software — $281,750
Treasurer Cami Iannarelli delivered the financial case to the board on behalf of Finance Director Aleesha Benjamin, who did not attend. Iannarelli told the board the CFO had asked her to read the statement on her behalf, then walked through the bid results, the premium, the true interest cost and the debt service arc.
The town went to market April 16 and drew 10 competitive bids, with Oppenheimer & Co. winning at a true interest cost of 3.752% — the effective rate Marblehead will pay on the $24.975 million borrowed. That rate will generate roughly $15.3 million in interest over the 30-year life of the bond, bringing the total principal-and-interest obligation to approximately $40.3 million through final maturity May 1, 2056.
With inflation running near 3.3% and the Federal Reserve’s long-term 30-year inflation expectation at 2.47%, the town locked in a borrowing rate less than 1.5 percentage points above projected long-term inflation — a margin finance officials call meaningful savings for taxpayers across three decades of repayments.
A bond premium of about $1.5 million cut the town’s actual borrowing from $26.2 million to $24.975 million. Investors bid more than the face value of the bonds because the coupon rate was attractive relative to the market, and that extra money went straight to the town, fully covering the costs of issuance and saving taxpayers money before the first payment came due.
The nine runners-up included J.P. Morgan Securities, Morgan Stanley, Huntington Securities, Robert W. Baird & Co., Mesirow Financial, FHN Financial Capital Markets, R. Seelaus & Co., BNY Mellon Capital Markets and KeyBanc Capital Markets. J.P. Morgan bid 3.743633% and Morgan Stanley 3.745617% — a spread of less than one-hundredth of a percentage point between the top three. When 10 firms compete for the same paper, no bidder can leave much room on the rate.
Interest earned on municipal bonds is also generally exempt from federal income tax, and in most cases from state income tax for investors in the issuing state. That treatment makes a 3.752% municipal bond comparable, on an after-tax basis, to a corporate or Treasury bond yielding considerably more — widening the pool of buyers and letting towns raise money at rates private companies cannot touch.
Annual debt service on the new issuance averages approximately $1.86 million per year through fiscal 2041, then drops materially as shorter-lived projects come off the books. Only the high school roof and HVAC project and the Mary Alley HVAC and ADA improvements carry obligations through 2056. The largest maturity, $17 million, comes due in 2035, with the remaining balance spread across 2046, 2049, 2053 and 2056.
Prior outstanding town debt stood at roughly $90.16 million as of June 30, 2026. With the new issuance, Marblehead’s total outstanding debt rises to approximately $115.1 million. The town does not plan to issue additional debt.
The financing comes 12 days after S&P Global Ratings affirmed Marblehead’s AAA bond rating April 10 while revising the outlook to negative from stable. Analysts pointed to a $7.7 million structural deficit identified for the fiscal 2027 budget, rising health insurance costs and the town’s continued reliance on free cash to balance operations. S&P said there is a one-in-three chance it could lower the rating over the next two years if Marblehead continues to experience negative financial operations that draw down reserves.
Officials closed the $7.7 million gap through more than $3 million in school department cuts, about $2 million in other municipal cuts, a $5 million free cash appropriation the town intends to phase out and a plan to shift curbside trash collection to a fee-based model. A three-tier operating override proposal of $9 million to $15 million over three years and a separate $2.3 million trash-funding question are moving toward the June ballot.
S&P cited factors in Marblehead’s favor: a wealthy, built-out tax base, above-average incomes, formal reserve and debt policies and available reserves equal to about 18% of operating revenues in fiscal 2024. The agency said it could restore a stable outlook if the town maintains or grows reserves while keeping revenues aligned with expenses.
Through Iannarelli’s reading, Benjamin reminded the board that Marblehead has held S&P’s highest rating for at least 17 consecutive years — a streak few Massachusetts communities can claim.
“It’s just like a credit score,” she said. “The higher your credit score, the less interest rate you pay on your cards. Same thing — so the less interest we have to pay when we borrow for our bonds.”
An outlook revision is not a downgrade but a signal to the bond market that something bears watching. Benjamin has been direct about the core constraint facing a built-out seaside town dependent on property taxes capped under Proposition 2 1/2.
“There’s not a lot of ways to increase our revenues,” she said. “Marblehead has very little new growth.”
The board approved the sale on a unanimous vote, reading the full schedule of maturities and coupon rates into the record.
