To borrow or not to borrow to repave the town’s worst roads is a decision Town Board members will be making next year.
During recent discussion and review of the 2013 budget, Town Supervisor Peter Parsons attempted repeatedly to persuade his colleagues on the board to include $235,000 to begin an annual road repaving program next year. He was met with firm resistance from the three Republican members and his measure died.
The end result is that if road paving needs are to be addressed, the money will have to come through additional borrowing.
At present, the town is carrying $13.9 million in debt, and will be paying $1.2 million in debt service in 2013. Increased debt service was a major contributor to the town’s breaking the state’s 2% tax levy cap for next year.
On Monday Mr. Parsons discussed the town’s debt load and the possibility of future borrowing for roads.
“One of the biggest problems about more borrowing is the debt service,” he said. “In 2013 we have to pay back $1,228,752 in principal and interest. This is about 12% of our total $10.2 million town budget. We do have to be concerned about adding to this. Any borrowing we do must be of long-term benefit to the town.”
Over the past months of budget discussion, Mr. Parsons has said repeatedly he does not believe Lewisboro should borrow to pave roads, something he sees as a “pay as you go” obligation to town residents that for next year would have cost each household $40.
“Roads do not last forever,” he said. “Depending on the surface, they must be repaved periodically. The usual time limit for borrowing for road paving is 15 years. You cannot bond longer than the assumed life of the road.”
Ms. Parsons said most adjacent towns have a line for annual road repaving in their annual budgets. “Ideally, this is what we should be doing,” he said.
Mr. Parsons reviewed the town’s outstanding $13,943,500 debt with The Ledger.
The town’s special water and sewer districts set up for the Oakridge and Wild Oaks condominium complexes account for $6,168,000 of the total debt. “The Oakridge sewer bond is by far the largest, at $5,440,000,” he said. “There is also an Oakridge water bond anticipation note (BAN) at $663,000 and a Wild Oaks sewer BAN at $65,000.”
Oakridge and Wild Oaks residents are responsible for paying back the money the town has borrowed on their behalf as administrator.
The remainder of the debt is bonds for the purchase of open space at the Leon Levy and Old Fields preserves at $1,608,000, renovation of the town pool at $1,554,000, and $2,395,000 for road repaving in 2008. The town also has a $306,000 BAN for road repaving.
The most recent borrowing took place several months ago when the town borrowed another $725,000 in the form of a BAN for completing ADA compliance at Onatru and settlement of a lawsuit regarding the town pool. Additional smaller loans amount to $246,000 for tennis court repairs and a townwide radio communications system.
Bond anticipation notes may be renewed every year but for no longer than five years. The lender is able to re-set the rate of interest annually. Bonds are longer term instruments with a fixed rate of interest.
Mr. Parsons said he believes more borrowing for roads is on the horizon.
“On the positive side, in this climate of low interest rates, it makes more sense to keep as much debt as possible in BANs,” he said. “We can now get a rate at less than 1%. When it looks like interest rates are going up, we can convert to bonds.”
Mr. Parsons said if the town decides to borrow for roads, it can be done through either a permissive referendum for smaller amounts on which the Town Board can make the decision, or for larger amounts put to a public vote in a traditional ballot referendum.
“The roads debate has got to be had,” he said. “In one sense, we are lucky to be having it when interest rates are exceptionally low. At the same time I still find it questionable to borrow for something that should be a routine expense. But we are now faced with the choice of doing nothing or borrowing. If I lived on one of the town’s bad roads I would probably want to borrow the money.”