First Selectman Jon Zagrodzky in the selectman’s every-other-week edition of the Town of Darien newsletter (sent out last Friday, Oct. 31). This week the newsletter is mostly about the town debt and bonding:
This past Monday, I delivered a live presentation to the Representative Town Meeting to lay out the facts on town debt, including the bonding process, current debt, and debt service levels, and the path ahead. In my newsletter this week, I thought I would summarize the key points from this address.
The Bonding Process
• The Board of Selectmen (BOS) and Board of Education (BOE) sponsor projects; the Board of Finance (BOF) evaluates affordability and taxpayer impact; the RTM does the final appropriation and authorization. After RTM approval and the 10-day referendum window, the Town can begin spending from Fund Balance (town reserves), which will later be reimbursed with bond proceeds.
Image from Darien TV video
Jon Zagrodzky as he began delivering his speech on the town debt and bonding.
• To reduce issuance costs (rating review fees required for each issuance run $50,000 per issuance), we bundle projects into fewer, larger bond sales when practical. The BOF sets final bond terms (type, duration, structure) at issuance time.
• We work with a couple of important third parties in this process. Marie Phelan, an attorney with Pulman and Comley, serves as bond counsel. She and her firm provide legal and strategic guidance throughout the year on all town debt matters, including bond issuances. Mark Chapman, a financial advisor, manages the quantitative and market aspects of borrowing process. I have known these professionals for years; we are well served by their expertise and diligence.
• The criteria Moody’s uses to re-rate the town include leverage, financial performance, overall economy (strength, diversity, and stability of the local tax and employment base), and institutional framework (predictability and flexibility of legal / governance environment).
Our Debt Situation and the Path Ahead
• Darien’s outstanding debt has risen sharply in recent years, driven primarily by school construction and Great Island financing. Measured from June 2017 to June 2025, total outstanding obligations increased by roughly 280%, with approximately $236 million outstanding as of June 30, 2025.
• Looking ahead, the heaviest lift is the likely Middlesex Middle School (MMS) renovation. Timing is to be confirmed (beginning in 2030?) as are potential costs ($75 to $90 million before state grants?), but once this borrowing is layered in, our total debt could exceed $315 million before trending down as debt from major projects starts to amortize.
• Debt service will also rise as these projects move forward. As a share of the General Fund budget, it was about 6.2% in FY 2025; in the projection, it crests around 12.4% before easing back as debt levels drop. To put this in context, even at the peak, roughly seven-eighths of the budget remains for other priorities.
The town’s credit quality remains strong — Darien has long held the top Moody’s rating (Aaa). Based on professional advice and rating criteria, our modeling suggests the rating is not at risk at the projected borrowing levels. Even if it were, our borrowing costs would only be impacted modestly. In any event, we will continue to manage Fund Balance and liquidity to support the rating.
Bottom line: Debt is high by historical standards, and it will rise further as MMS [renovation] proceeds. In my judgment, though, the projected debt levels are manageable. There is no cause for alarm, but we should be judicious, which includes phasing in large projects like MMS sensibly and safeguarding Fund Balance. Importantly, we should not defer or cancel essential upkeep of town assets.
I will provide periodic updates as assumptions, costs, and timelines are refined, but don’t hesitate to call me with any questions. If you have time, here is the DarienTV link to my RTM presentation.
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Let’s close with something fun: I will be supporting Wave Strong’s 30 for 30 Push-Up Challenge to promote awareness of Men’s Mental Health in November. This means 30 push-ups a day for 30 days, including Thanksgiving (I will get mine in before the turkey). Here’s an Instagram link with details.
Who’s with me? Let’s do it!
Stay safe. JZ