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Atlantic Beach opts to move fire-truck proceeds to higher-yield account, continue loan payments
Summary
Council agreed by consensus to move $1.2 million of fire-truck loan proceeds into a higher-yield account and continue scheduled annual debt payments on the $1,094,356.35 loan rather than paying the loan off immediately.
Atlantic Beach leaders agreed to move loan proceeds for a recently purchased fire truck into a higher-yield account while continuing annual debt payments rather than immediately paying off the loan.
Staff reminded council the outstanding loan is $1,094,356.35 at 3.35% interest and that $1,200,461.69 in First Bank money-market proceeds was earning 0.03%. Town staff presented an alternative to place the funds in the North Carolina Cash Management Trust (NCCMT), where rates were noted in the discussion at about 5.38% at the time of the meeting.
Two options were presented: Option A — keep proceeds in the general fund balance and continue the annual debt payment of $112,560.44 for the remaining 13 years; Option B — pay off the loan now and reallocate the annual debt payment to seed a capital reserve fund. The council reached consensus for Option A and directed staff to move the proceeds to a higher-interest account and to return with a plan for allocating interest income.
Council referenced a previously adopted policy (Jan. 24, 2022) to maintain an unassigned fund balance at about 35% of expenditures; staff said placing the proceeds in the higher-yield account would increase the fund balance estimate from 31.1% to about 42.79% if retained.
The council did not record a roll-call vote in the minutes; staff will present a proposal at a future work session for how to allocate interest earned on the proceeds.
