Preston – Standard & Poor’s Rating Services has increased the town’s bond rating for borrowing from A+ to AA-, an improvement expected to save the town a third of a percent in the interest rate for the $1.78 million capital improvements bond.

The town’s rating for short-term borrowing also jumped by “one full step,” First Selectman Robert Congdon said. The Preston Redevelopment Agency is expected to seek short-term borrowing for the town’s $2 million matching share for a state loan to continue cleanup of the former Norwich Hospital property.

Congdon said the town won’t know the exact interest rates until it seeks to sell the bonds Tuesday.

In its ratings rationale, Standard & Poor’s cited the town’s conservative fiscal policies, including the decision this spring to increase the town’s surplus reserve to 9 percent, low town debt and “stable” outlook for the bond rating improvement.

The bond rating service also cited the town’s effort to clean up the former Norwich Hospital property and its potential to improve the town’s tax base in the future.

Several town officials, including Congdon, Board of Finance Chairman Jerry Grabarek, Finance Director Robert Sirpenski, Preston Redevelopment Agency Chairman Sean Nugent and Treasurer Susan Nylen participated in a two-hour conference call last week with Standard & Poor’s officials to explain the town’s financial profile.

c.bessette@theday.com