CLARKSBURG -- The Selectmen have taken under advisement a proposal that could save the town money over the long term.
Clark Rowell, of Unibank, recently presented a plan to the board that would refinance four of the town's five outstanding loans at a lower interest rate of 2.25 percent and condense payment of those loans into a five-year period.
"It would be a five-year, roughly $100,000 loan," he said.
He said payments would increase significantly for the first three years, but over the 24 years that the debt service extends to, the town would experience savings of $46,242.64.
Currently, the town's debt payments total $77,227.59 for fiscal 2013 and include loans for the landfill, remodeling the town library, the purchase of equipment for the fire and public works departments, and the installation of sewer lines. The time remaining to pay back the loans ranges from three to 24 years.
Rowell said the debt for the sewer lines can't be refinanced because it's a rural development loan.
While the Selectmen liked the idea of refinancing the town's loans at a lower interest rate, board members expressed reservations about debt payments increasing in the short term.
Carl McKinney, chairman of the Selectmen, said at Wednesday's meeting that while it's admirable to try to find ways to reduce the town's debt-service costs, the board has to consider the fact that the amount paid annually on loans would increase
"My biggest concern is that we would have to raise the debt service over five years, with the increase being significant the first three years," he said.
Town Administrator Thomas Webb asked Rowell how long it would take for the town to pay off its debt if it continued to fund the debt service at the current amount.
Rowell said he suspected it would take 10 years, but would get back to the town with a more definitive answer.
Melissa McGovern, town treasurer and tax collector, said Thursday that the interest the town pays on its debt is between 4 and 6 percent. Having the loans refinanced in the way that was presented to the Selectmen would add an average of $32 annually to the town's tax bills for the first three years, she said. That amount would drop by about $26 to $6 for the remaining two years, she said.
To reach Meghan Foley, email mfoley@thetranscript.com.
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