Preliminary CIP Report Prompts Update

On Hook & Ladder Commitment

By John Voket

The July 11 meeting of the Board of Finance provided a few hints about where town officials could start looking to cut Capital Improvement Projects in order to keep future borrowing at or under a self-imposed ten percent debt cap.

During her report to the finance board, First Selectman Pat Llodra said she has already started meeting with department heads planning capital projects in the 2013, 2014, and 2015 fiscal cycles, because the town will be forced to reduce its borrowing below the last projected limits.

Mrs Llodra explained that it is because of the link between operational budget revenues and the debt cap.

Since Newtown’s latest CIP ties projected borrowing to a projected annual average budget growth of 2.25 percent, and that rate of budget growth fell short of that mark in 2010-2011, and is not expected to increase at that rate this current fiscal year, the first selectman said she and Finance Director Robert Tait are beginning to recalibrate potential capital borrowing.

She said the projected debt that would be required for bonding to fund all capital projects on the CIP today pushes that ratio over the ten percent borrowing cap in at least the next three annual fiscal cycles.

“We have to make some adjustments in the anticipated CIP for standing projects which have already been identified,” Mrs Llodra told the finance board. “And no new projects can be entertained.”

Finance Chairman John Kortze asked, in view of required reductions to CIP commitments, about the status of the Hook & Ladder building project. The town previously committed $1.5 million in capital borrowing, which would go to Hook & Ladder in three annual half-million-dollar installments.

That capital expenditure would ultimately serve as financial backing so the independent volunteer company could more easily secure affordable borrowing to complete the construction of a new headquarters facility.

But the first $500,000 that was earmarked in 2010 was never delivered because plans to construct that facility near the corner of Sugar and Main Streets halted when the company failed to secure required permits to begin construction.

The Inland Wetlands Commission (IWC) and the Borough Zoning Commission (BZC) rejected the fire company’s applications for a wetlands/watercourses protection permit and for a zoning permit for the 12 Sugar Street site, respectively.

In response, the fire company has filed court appeals against both agencies in seeking to overturn those permit rejections. Both appeals are pending in court.

Mrs Llodra said while she cannot be involved in the appeal litigation, she has discussed the $1.5 million earmarked for the project with the company’s leadership. The first selectman also said that protracted delays that have plagued the firehouse development have had collateral impact on CIP planning and how earmarked allocations for borrowing are being determined.

“Every time they delay because of being stuck in their process, we find ourselves having to bump around the CIP and that is becoming a problem,” Mrs Llodra said, adding that she has taken every opportunity to encourage the fire company to consider alternate sites for the new fire station, but fixing a deadline for timing purposes is becoming critical.

A court-granted delay in further action has put off any official action on the litigation to September 7, but Mrs Llodra said she is continuing discussions and the exploration of a first option site on the grounds of Edmond Town Hall, but not the location of the existing fire station, which has become structurally unsafe.

Mrs Llodra also told The Bee that a second potential site on South Main Street near the corner of Borough Lane is on the radar, but that parcel, which is owned by the Amaral family, would have to be bought. The first selectman said it is unclear whether the $1.5 million already made available would be enough to purchase property and construct the building.

Under questioning by finance board member Joseph Kearney, Mrs Llodra clarified that the $1.5 million is currently planned to pay down the principle on the company’s mortgage as a way to offset its indebtedness.

“It enhances their likelihood of getting a mortgage at a good rate if the lender knows they are backed by the full faith and credit of the town to the tune of $1.5 million,” Mrs Llodra said. “I think there are still open questions about how we do this and how we write it up.”

Mr Kortze said that since the funding is being provided by taxpayers, there are still a lot of open questions about how and whether such an obligation could ultimately be structured.