Town Officials Mull Accelerating Capital Projects To Save Money
By: James Kinsella
Akin to those who like to strike when the iron is hot, Barnstable financial officials are looking at striking when the costs are low.
Mark A. Milne, the town’s finance director, and the town Comprehensive Financial Advisory Committee on Monday discussed contracting for two years’ worth of capital projects in the pending fiscal year.
The idea is to tap into the eagerness of construction companies seeking work in a slow economy and into the low borrowing costs now available.
Mr. Milne and committee members talked at Monday’s finance committee meeting about the advantages and logistics of such a strategy.
Rather than spend about $5.5 million as planned in the coming fiscal year on road and building capital projects, the town would spend about $11 million.
Mr. Milne said the town could cover the initial costs of the doubling of the work through a one-year note, following that with a five-year note.
At present, he said, the town can borrow money on a 12-month note for less than 1 percent, with rates on five-year notes running between 3 and 4 percent.
He further said the town could pay off the note through the routine collection of property taxes without resorting to an override of Proposition 2 1/2, a state law that limits annual increases in property taxes.
“We may save ourselves a few hundred thousand dollars” in construction and borrowing costs, Mr. Milne said.
He cited another potential reason for doing the work now rather than later: the price of oil has been rising, which could push the base cost of oil-based construction products such as asphalt higher.
Committee member Robert J. Ciolek said the downside of adding fiscal year 2013 projects to the pending fiscal year is that the town then would lack a capital program for fiscal year 2013.
Unforeseen problems, such as the failure of a harbor bulkhead, or unanticipated grant funding for a project could pop up in that following fiscal year, Mr. Ciolek said.
Mr. Milne, however, said the town already has several savings accounts and funds that could be tapped for such occasions.
The finance director said the committee has time to consider whether to recommend the doubling up.
The finance committee’s report on next year’s capital improvement plan is not due to Barnstable Town Manager John C. Klimm until February 7.
“The question is, can we get more for our money?” committee chairman William S. Brower said.Mr. Milne thought so.
The town, he said, effectively could obtain another $500,000 in roadwork through an accelerated schedule.
As committee member Henry J. McClean put it, “There’s work looking for someplace to happen.”
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