One key to a successful municipal bond issue is being able to tell the right story to explain why it’s needed, explains Connor Holly of Sage Rutty Inc., a family owned financial services firm in Rochester, N.Y.
So when his firm had the chance to compete for an $850,000 muni bond issue to assist with flood recovery efforts in Gowanda, a small village of about 2,700 people in western New York, Holly wanted to be sure they had a story worth telling.
“When we found out what they were going to be using the bonds for, that really gives them a story, and that’s what our clients here at Sage Rutty really like,” Holly said in a recent interview. “A lot of the clientele we have here who buy municipal bonds have been buying bonds from Sage Rutty for a very long time. Finding out what they’re using them for is very important to them, so that if they’re ever driving through the area, they can say, ‘I helped make this happen.’”
That story started with a catastrophic flooding incident in August 2009. Following heavy rainfalls, overflowing waters from nearby creeks led to severe flooding in the tiny village. Houses and cars were washed away, while local facilities were damaged and the reservoir was destroyed, leaving the village without water. Two Gowanda residents lost their lives. Overall damages throughout the tri-county area, encompassing Cattaraugus, Chautauqua and Erie Counties, were estimated at $90 million.
The flash flood struck quickly, giving local leaders little time to respond: “It’s worse than a war zone,” Gowanda Fire Chief Steve Raiport said after the disaster. “It started with a couple of road closures. The next thing you know, the whole village was flooded.”
A short video posted to YouTube by a local resident gives some sense of the volume and speed of the rushing waters in the Cattaraugus Creek:
In the flood’s aftermath, damage to the village’s public facilities and infrastructure was estimated at $4.9 million (with significant additional damages to privately held property).
Significant repairs and reconstruction would be required at the Village Hall, the wastewater plant and the Department of Public Works building; some 15,000 yards of brush, trash and a thick layer of mud would need to be cleared from the streets; and the creek banks would need to be repaired. Local residents, bolstered by support from the Army National Guard and volunteers, took to the hard task of reclaiming the village from the flood.
A federal disaster declaration in September 2009 paved the way for state and federal reimbursement funding to support the recovery effort. State and federal funding would ultimately cover most of the recovery and rebuilding costs. For the remaining portion, the city turned to an issue of $850,000 in public improvement serial bonds, to be backed by property taxes and repaid over 10 years.
That was where Sage Rutty came in. Responding to a competitive bid solicitation, the Rochester firm studied the city’s financial statements, prepared a proposal and submitted the winning bid to underwrite Gowanda’s muni issue in October 2014. The funds were delivered soon thereafter.
As Holly points out, many muni bond investors aren’t only looking for a good return on their investment; they also want to know that they’re helping to make something good happen. That was the story that Sage Rutty wanted to be able to tell about Gowanda. It’s that attention to local service that has kept the firm thriving for a century, as Sage Rutty marks its 100th anniversary in June 2015.
A second, less severe flood in 2014 brought additional hardship to Gowanda—additional damage to the reservoir has left the village in a state of emergency while it awaits additional federal funding for repairs. But thanks to the improvements following the previous flood, the village was better prepared to respond. Gowanda has faced severe challenges—but with combined investment from the public sector and through issuing municipal bonds, the community is on the road to recovery.