By Joseph Cyr
Staff Writer
HOULTON — Is it wise to borrow money to pay for capital improvement projects?
That was the topic of debate Monday evening as Houlton Town Councilors discussed a proposal to borrow $194,000 through a five-year loan through Machias Savings Bank at an interest rate of 1.79 percent. The loan would be repaid on a yearly basis at an estimated $41,000 per year. The first payment would appear in the 2014 budget. The total cost of the loan, with interest, will be $204,689.
Councilors voted 4-2 Monday evening to approve borrowing, with Sue Tortello, Dan Peabody, John Fitzpatrick and Rob Hannigan in favor of the loan, while councilors John White and Phil Cloney opposed the measure.
“It’s a lot of money,” council chairman Paul Cleary said. “We’re borrowing money to put in a reserve account for hockey boards. I just don’t agree.”
Conlogue said the original loan package was for $250,000 but was trimmed to $194,000 to minimize the impact.
During the public hearing resident Phil Bernaiche once again spoke out against the loan. Bernaiche was the only resident to offer any input on the loan.
“This is the fourth time I have indicated that borrowing may not be in the best interest of the town,” he said. “Will we be able to pay for it? I still maintain you should cut what you are doing and stop your borrowing.”
Among the major projects to be financed through the loan are: $40,000 for cylinder replacement for the elevator in the town office; $38,000 for craft kettle crack sealing equipment for the public works department; $29,000 to purchase a new police cruiser; and $10,000 for bathroom repairs at the Just for Kids playground building in Community Park.
The purchase of a police cruiser as part of a five-year loan has raised some concerns, since cruisers can sometimes reach the end of their useful lifespan in just three-and-a-half years, due to the high mileage put on them.
The Millar Arena would get several pieces of equipment once the bond is approved, including $25,000 to be placed into the hockey board replacement account; $22,000 for a new computerized temperature control system; $12,000 to replace a compressor for the ice rink; and $1,000 for a new skate sharpener.
By placing an additional $25,000 in reserve for the hockey boards, the town is still about $75,000 short of the $150,000 estimated to replace the boards. The town has asked RSU 29 to kick in the remaining costs for the hockey boards, so they could be replaced prior to the next winter season.
“The proposal has been made to the school board, but I am not sure that is going to occur,” Conlogue said. “There are some other alternatives down the road, if that does not work out.”
Other projects include: repairing electrical lighting issues with the tennis/basketball courts, $7,500; repairing/replacing the back stairs at the Gentle Memorial Building, $2,500; upgrading computers in all departments, $6,000; and replacing a door for the Community and Development office at the town hall, $1,000.
Cleary questioned the amount of money sought for elevator repair.
“The $40,000 for an elevator cylinder replacement … does that seem high or is that normal?” he asked.
Conlogue said the answer was “both.”
“It is a high figure, but it is normal,” he said. “When you deal with specialty providers, such as Otis Elevator, you pay the top dollar for work that has to be done.”
Cleary asked why the work was not put out to bid, to which Conlogue replied, “It’s an Otis elevator, so things require Otis to do it (the work).”
Last year, the town paid $43,275 to do repairs to the elevator after it failed in April, causing individuals to become stuck inside. Those repairs were merely to get the elevator functioning again. At that time, it was noted that the cylinder should also be replaced, but money was not available for the full project. Otis Elevator Company was the only business to bid on the initial repair work.
The elevator was installed in 1976, according to town clerk Cathy O’Leary.
Cleary suggested the board could consider closing the second floor of the town office and restructure the first floor, in order to save the town some money.
“It is a potential safety issue,” Conlogue said.
“To me, it seems like we are borrowing money for things that should have been in the budget,” White said. “I don’t agree with it.”
Tortello said the town manager presented “what we asked him for.”
“Back when we were doing the budget, everyone was concerned with trying to keep the mill rate down,” she said. “Yet we also wanted to do some of these capital projects because the longer you wait the more expensive it gets. Even though this is a very tenuous time, because we don’t know what is going to happen in Augusta and how it will filter down to us. We also discussed interest rates were pretty lucrative right now.
“This list assumes we are going to continue to have ice in the civic center and I don’t know if we have gotten to that point,” Tortello said.
Conlogue noted that just because the loan is approved, does not mean all of the items included in the list have to be purchased. If the council felt strongly, it could modify the list at a later time and use any unspent money to pay off the loan early with no penalty.
In other agenda items, the council:
• Approved a victualer’s license for Shawn and Denise Campbell, doing business as The Lunch Box, to be located at the Shop N’ Save parking lot.
• Granted a license to operate beano/bingo on April 11 for the Houlton Rotary Club.
The next regular council meeting is slated for Monday, April 8, at 6 p.m.
