Brattleboro board talks debt service for police-fire projects
BRATTLEBORO >> After police relocation at the Black Mountain Road site was approved to go to a special Representative Town Meeting vote, the Selectboard is starting to address how funding might be handled.
"Financing the project over a longer period of time results in an increase in the total interest paid but does lower the annual debt service payments beginning in fiscal year 2018," wrote John O'Connor, town finance director and treasurer, in a memo.
Officials had mostly looked at a 20-year schedule for bond repayment as different alternatives for upgrading police and fire facilities were explored. They were then asked to look at whether a 25- or 30-year schedule might be better for tax bills.
"It comes with the offsetting downside of a larger total overall interest cost because you're borrowing the money for a longer period of time," said Town Manager Peter Elwell at Tuesday's meeting. "There's an irony to this. The first partial year before you hit the peak year hits a little harder in the longer-term borrowing because it's interest only, because there's more interest to pay."
He called it a "pretty square trade off," saying each option was equally marketable. The decision comes down to tax rate impact versus overall long-term cost.
Comparing schedules and including a bond previously authorized for police and fire facility projects, repayment over 30 years would cost approximately $18,715,822 while a 20-year bond would come out to about $16,962,524. That would mean a $1.8 million additional cost over the payment period lasting 10 years longer, according to O'Connor's analysis using interest rates from the Vermont Municipal Bond Bank in October.
"Because that's spread out over 30 years instead of 20 years, if you look for instance at the peak year of 2018, it's a 8.42 cent tax rate to carry the 30-year bond and a 9.8 cent tax rate to carry the 20-year bond," Elwell explained. "It's really a pure policy decision. There isn't a right or wrong answer here."
Projects at the two fire facilities are covered under bond authorization approved in 2012, according to Town Attorney Bob Fisher. Therefore, no vote is required.
A private bank loan, instead of a bond, has come up in discussions. But communication with banks indicated "the market may not be very good right now and in the near future for going out for the longer periods of time with the banks," said Elwell.
There is certainty with going with a bond bank, he told the board, although he did not dismiss the private bank option.
"We know how to go into that process and we know that we can do it for 20 or 25 or 30 years," Elwell said. "The bond bank actually pools our need with that of many other public entities throughout the state and they go to market with a much larger bond issue than we could do ourselves. So that's favorable for all of us because we'll have a better interest rate by pooling our resources that way."
A special Representative Town Meeting on March 12 will ask representatives through Australian ballot whether an amount not to exceed $4.5 million should be taken out of the previously authorized bond for purchasing and renovating 62 Black Mountain Road rather than making improvements at the current police department site at the Municipal Center. The building, now home to Reformer newspaper operations, would become the police station if approved. Under an agreement, the newspaper would be a tenant for at least five years. The meeting starts at 8:30 a.m. at Brattleboro Area Middle School.
An informational meeting regarding the special Representative Town Meeting is scheduled for March 2 at Academy School. Doors open at 6 p.m. Caucuses start at 6:30 p.m. with a meeting at 7 p.m.
An informational meeting for annual Representative Town Meeting will be held at 7 p.m. on March 9 at Academy School with doors opening at 6 p.m. Caucuses will begin at 6:30 p.m.
Annual Representative Town Meeting is on March 19 at 8:30 a.m. at Brattleboro Area Middle School.
Officials are planning to visit different groups and organizations to discuss the police-fire project.
"The point is to reach as people as possible and have everyone as well informed as possible as we get to Town Meeting," said Elwell.
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