Town discusses short-term note and future certificates of obligation to preserve debt capacity for police facility
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Summary
Staff and financial advisor presented a financing strategy: a short-term tax note (around $500,000) to fund pre‑construction studies for a police facility and the possible issuance of certificates of obligation next year to include construction without increasing the town’s I&S tax rate.
Town financial adviser Hilltop Securities and staff presented an overview of the town’s existing debt profile and a proposed two-step financing strategy to preserve the town’s interest-and-sinking (I&S) tax capacity.
Advisor Nick Boulash reviewed the town’s outstanding debt, the town’s S&P AA+ rating and how the town’s debt amortization schedule creates a drop in debt service obligations in 2029 and 2032 that provides capacity to absorb new debt. He explained that changes in state property‑tax law (Senate Bill 2) compress maintenance-and‑operations (M&O) tax capacity and that using I&S capacity carefully preserves the town’s overall tax-rate posture.
Staff proposed issuing a short‑term tax note (a two‑year note in the neighborhood of $500,000, final amount to be determined) in July to fund pre‑construction expenses — architecture, engineering, site and road studies and other planning for a police/law‑enforcement facility — and then consider a larger certificate‑of‑obligation (CO) issuance next spring to fund construction. The strategy would allow the town to advance design work now while waiting for certified tax values and to time a CO sale so debt service appears in the FY27 I&S tax schedule rather than causing a mid‑fiscal stress.
Council and staff discussed timing, credit‑rating implications, legal notice and petition processes for different debt instruments, and the risk of interest‑rate volatility. Staff emphasized the town’s desire to maintain the current overall tax rate while funding a critical capital need. The town manager said staff will return with a true‑up of numbers and a formal tax‑note ordinance for the July meeting if the council wishes to proceed.
No debt issuance was authorized June 16; council directed staff to return in July with an exact tax‑note proposal and schedule for any subsequent CO issuance.
