The Board of Selectmen propose to take advantage of the present state of the economy and the historically low interest rates to address the Town’s roads and bridges. We will present a warrant article at Town Meeting asking for authority to take out a loan or bond to pay for the proposed projects.
Below is a list of projects put together during meetings with our Road Agent and Steve Liaikos, a DOT Bridge Engineer. The list includes three bridges and approximately 15 roads or sections of roads.
Bridges to be improved: Hall Farm Road Bridge, Kearsarge Mountain Road Bridge.
Bridge to be removed: Gale Road Bridge
Roads to be paved: Monticello Drive, Switch Road, Shaw Hill Road, Bay Road, and Overlook Avenue. We will also address roads in Andover, Cilleyville, and East Andover.
The Board is developing an open selection process for determining which roads have the highest priority.
What About the Lawrence Street Bridge?
The Lawrence Street Bridge is excluded from this capital budget as the total estimated cost of the project at this time exceeds $5,000,000, and this project is awaiting federal funding. The Town will still need to fund $1,200,000 (current estimate). The Board of Selectmen has been assured by DOT that once the project is fully designed, major cost savings will be realized.
The estimated total of all the projects is $970,525 (excluding Lawrence Street). If the projects are funded and completed in 2014, as being proposed by the Board of Selectmen, the project cost will be reduced by no less than $100,000. DOT has confirmed that a saving of at least 10% is realized by bundling projects.
The Town is currently borrowing at 1% to 1.5% for our tax anticipation notes, but for budgeting purposes (being conservative), our proposal uses a 3% interest rate.
Based on the Town’s past practice of funding $100,000 per year for road and bridge work, it will take 10 years to deal with the proposed projects. Based on current budgeting factors used by DOT, the total project cost will exceed $1,678,000 if the projects are completed one at a time between now and 2024, as opposed to a budget cost of $1,000,000 if the projects are bundled into a single year. The total cost, with interest at 3%, would be $1,109,900. That means a savings of over $550,000 from taking advantage of historically low interest rates and getting the projects all done in one year.
Making the Loan Payments
The Board proposes to meet the monthly loan payments using a DOT Highway and Bridge Block Grant estimated at $90,000 and by taking 20% of the auto registration fees for an estimated $70,000, for a total of $160,000. A seven-year loan at 3% would be $13,200 per month or $158,400 per year.
All projects would be completed by the end of 2014 and paid for by 2021, with over $550,000 in savings realized. The Board of Selectmen are confident that the total amount borrowed will be less than the $1,000,000 proposed ($879,000) and that a more accurate payoff date would be 2019. Also note the Town is currently able to borrow at just less than 1%, not the 3% used for budgeting.