Strafford County subcommittee backs six-year capital plan and recommends bonding, including 10% contingency

A Strafford County delegation subcommittee voted to approve a presentation of a proposed six-year capital improvement plan that recommends financing much of the work with bonds and includes a 10% contingency.

Administrator Bard, who led the presentation, said the county's financial adviser and bond counsel recommend issuing bonds in January because "January is always the best finance month," when bond rates typically dip. Bard said recent comparable issues in the area showed low bids around 3.1% and highs near 5.1%, and the county will seek a public offering in January to try to secure the lower end of that range.

The committee focused heavily on items tied to Riverside Rest Home because those capital costs are largely reimbursable under Medicaid depreciation rules. Diane, a staff member who prepared amortization schedules, told the panel that "we would be able to report cost of about a little over $300,000 each year" on the Medicaid cost report and that amount would be reflected in the nursing-home reimbursement rate once assets are placed in service and the interest amount is known.

Members asked how reimbursement flows and when rates change; staff said rate adjustments occur Jan. 1 and July 1 and that reimbursement for an item begins only after the county places the item in service and reports it on its next cost report. Bard said items done in different years will begin generating reimbursement in those later years rather than immediately.

The presentation included amortization schedules, example bond-payment projections, and a list of prioritized projects. Committee members pressed for clarity on near-term, life-safety work: Bard highlighted urgent projects such as a courthouse sewer replacement and removal of a deteriorating chimney at a daycare; staff said those items would be bid immediately if approved. Several members also raised concerns about vendor lead times for specialized equipment and the realism of multi-year price estimates.

On financing strategy, staff noted the county's outstanding long-term principal was roughly $3.4 million as of the end of 2023 and the statutory debt limit is about $360 million, meaning the county is well under legal capacity to borrow. Bard and the county's advisers emphasized that bond documents are typically written to allow refinancing and prepayment when market conditions improve.

Discussion about contingency focused on a proposed 10% line included in the CIP. Committee members who favored a more conservative approach warned that building in contingency could encourage padding, while others argued it's necessary given current supply and price volatility. Bard said the county does not maintain a designated contingency fund and pointed to an "unassigned fund balance" (audited at the end of 2023) that can be used for emergencies.

At the meeting's close the chair called for a motion to approve the presentation, including the 10% contingency. The motion was seconded and put to a roll-call vote; the transcript records alternating "no/yes" responses and concludes with the chair confirming the motion had passed.

The committee asked staff to circulate bond documentation and the sample bond wording to the executive committee and to provide quarter-by-quarter updates on spending and reimbursements as projects are authorized and executed. The full delegation will see the package at its September meeting and would decide whether to authorize bonding after those reviews.