Brattleboro Selectboard weighs bonding options
BRATTLEBORO -- Whatever the Brattleboro Selectboard ultimately decides, town taxpayers will be seeing steep increases over the next few years due to the $14.1 million renovations to the police and fire stations.
And as the project inches forward, the board is trying to figure out the best options between saving money on long-term interest costs and asking tax payers to begin paying off large portions of the bonds in the coming years.
Brattleboro town meeting representatives have approved the project and Steve Horton has been hired as project manager.
The town is going to have to bond for a portion of the design and construction costs this year, but deciding on how much and how quickly the town wants to pay off the bond are two questions that are still up in the air.
"In an effort to save taxpayer money one of the first steps we can take is authorizing a schedule for borrowing the money," said Selectboard Chairman David Gartenstein. "Town meeting reps have approved the project, but they have also asked us to be attuned to the tax burden, and to do everything we can to mitigate that burden on taxpayers."
Selectboard members talked about their options at the board's meeting Tuesday after receiving a detailed analysis from the Finance Department outlining the different impacts of a 10-, 15- and 20-year bond.
Horton has told the Selectboard that the town probably only needs about $5 million during fiscal year 2014 to cover design, real estate and preliminary costs, so it makes sense to only borrow that portion of the eventual $14.1 million in the first year.
The town could bond for the $5 million and pay it off in 10 years, saving residents about $1.7 million, but that would force a steep 11.5 cent jump in the tax rate.
Gartenstein said that option, while saving the most money in the long run, would cause too much of an impact on the tax rate.
"That is too much. It would be unacceptable," Gartenstein said about the steep jump in the tax rate the shorter borrowing time would cause.
Borrowing the $5 million over 15 years would save more than $500,000, and have a gentler effect on the tax rate.
The board did not take any action at Tuesday's meeting. Gartenstein said the board members hope to hear from more residents over the coming weeks before deciding how they want to proceed.
Finance Director John O'Connor, in a letter to Selectboard members, said his office was recommending that the town bond for the $5 million with a 15-year repayment term.
The rest of the money, about $9.1 million, will be borrowed during fiscal year 2015.
O'Connor says the rest of the money should be borrowed over a 20-year term.
"It is staff's view that this approach best balances the goals of attempting to keep the tax rate impact as low as possible, mitigating the interest rate risk, which is inherent in delaying the financing, and keeping the total financing cost as low as possible," O'Connor wrote to the board members.
Gartenstein also said the board members will work with Horton, and with the Police Fire Facilities Committee, throughout the project to save money in any way they can.
The committee will work with town and with police and fire department officials to cut costs when possible, said Gartenstein.
"There are a number of ways we can respond to the concerns about the cost of this project," Gartenstein said. "We hope to save money on financing and we will carefully scrutinize the program needs throughout the process, to determine if savings are possible."
Howard Weiss-Tisman can be reached at 802-254-2311, ext. 279, or firstname.lastname@example.org. Follow Howard on Twitter @HowardReformer.
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