The Suffield Board of Selectmen decided unanimously last Wednesday night to move forward with a $4.5 million bond request plan for road and drainage improvements as well as monies to repair the broken Boston Neck Bridge.
The proposal must pass though the Board of Finance and then be approved at a Town Meeting, set for Nov. 1 at 7 p.m. at Suffield High School.
First Selectman Ed McAnaney said he expects the plan will move along and get the opportunity to go to Town Meeting.
“I’d be completely flabbergasted if (the Board of Finance) did anything other than approve it,” said McAnaney.
A bond of $4.5 million was approved last year by town referendum for road and fire equipment, and will be combined with the newly proposed number for a grand total of $9 million.
Although the previous proposal was approved last year, the town has not begun the process of selling the bonds and, according to McAnaney, combining the two allows the town to take advantage of savings from processing only one bond sale.
The bond, if approved, would not necessitate a new millage or tax increase, according to McAnaney, who said the debt service will be paid out of an anticpated combined debt service/capital projects portion of the budget (about 11 percent of the total roughly $51 million budget.)
“Because interest rates are so low, I expect that it won’t have a great effect on the capital projects. We currently pay about $2 million per year servicing our debt and about $3 million towards capital projects,” he explained this week. “The new $9 million in bonding will cost us less than another $750,000 per year which will come out of the capital account. This new total, roughly $2,750,000 will immediately decline so that in the next year, it’ll be about $120,000 less ($2,630,000) and less in succeeding years.”
“There will be no tax increase as a result of the bonding,” he said.
The proposal would be worded to include the ability to fix any and all roads within the boundaries and with the ability to move money to fund different line items.
Municipalities often issue bonds to borrow money for improvements such as roads and sewers. A bond is essentially a loan an investor makes to the bonds’ issuer. That issuer can be the federal government (as in the case of Treasury bonds) or a local government (municipal bonds), government-sponsored enterprises (like Fannie Mae), companies (corporate bonds) or even foreign governments or international corporations.
The investor, or bond buyer, generally receives regular interest payments on the loan until the bond matures or is “called,” at which point the issuer repays the principal.