Town of Hampden authorizes short-term internal borrowing to cover water project cash flow

Town Treasurer Richard Patello told the Select Board on Jan. 5 that the town faces a short-term cash-flow squeeze driven by a major water-district project and asked the board to authorize internal borrowing from the stabilization fund.

"Internal borrowing is a procedure where the general fund can borrow from other funds, free cash or stabilization, on a short term basis," Patello said, explaining that the town had spent about $1.5 million on the project and that about $650,000 of that amount had already been taxed to property owners. He said the town held roughly $1.312 million in its stabilization fund and asked the board to authorize up to $750,000 so he could draw only what was needed until tax receipts and a state note come through.

A board member moved to approve the internal borrowing authorization; the motion was seconded and passed on a voice vote with all members saying "Aye." The board did not record individual roll-call votes.

Patello characterized the borrowing as a routine, short-term liquidity step rather than a change in the town's budget: "This is strictly cash flow," he said, adding the intent is to repay the borrowing by the end of the fiscal year once revenues arrive. He also said the town expects a large tax remittance from a servicing bank a few days before the tax due date.

The authorization gives the treasurer short-term authority to move funds between accounts to ensure bills for the water project are paid on time. The board did not set a separate repayment schedule in the meeting minutes; Patello indicated repayment would follow standard procedures tied to the fiscal cycle and any required state note issuance.