Is it worth it to issue 20 or 30-year bonds to purchase items with a life expectancy shorter than the period of time taxpayers will be paying for them?
Opinions differ. Some council members and at least one resident think that spending $4.5 million toward a list of capital improvements — most notably a list of upcoming road reconstruction projects — that are estimated to last, on average, nearly 12 years, will burden the taxpayers years into the future.
Business Administrator Robert Hary, however, said that while an average life expectancy is provided in the bond ordinance, the township tends to receive value from these items well beyond their listed lifespans. And it is the usual practice that the township issue 20-year bonds for such projects, he said.
The bond ordinance — a follow-up to the adoption of the township’s 2010 municipal budget — is for $4.7 million, but the township will issue $4.5 million in bonds or notes for the capital improvements, if passed. The township is expecting $225,000 in grants from the state Department of Transportation.
The bond ordinance includes funding for the decommissioning of the Duck Pond Run pump station. Because the sewage will run in gravity flow, there will no longer be a need for a pump station. The bond ordinance also includes the annual funding toward the township’s road improvement program.
However, there is usually a lag in the calendar year for the timeline for the completion of the road improvement projects. So this year, the township is working on road projects that were funded in the 2009 budget, and around the time next year when the budget is adopted, the 2010 projects will begin.
The upcoming roads that will be repaved this year (but were funded in the 2009 budget) are Southfield Road, from Route 571 to Sheridan Drive — although township officials are hoping the bids come in low enough to be able to repave the road all the way to the Cranbury border — and a section of Lillie Street near the Benford Estates area.
However, this most recent bond ordinance, and the funding in the 2010 budget, includes funding for a list of potential roads: Birdsall Way, Ross Kelly Drive; Terry Lane; Harrison Lane; and Rumford Way. Also on the list is the second portion of Lillie Street. Officials are hopeful those projects can go out to bid next summer, rather than next fall.
The Township Council opted to extend a public hearing into its next meeting on Monday, September 13, instead of voting on adopting the ordinance on September 7.
Resident Pete Weale said the items listed in the bond ordinance “look more like wants,” rather than necessary items.
Councilman Charles Morgan said he felt the bonds should have a shorter lifespan — perhaps 10 years, which he also said had lower interest rates. “You’ve got some items with a five-year useful life, which are marginally capital in nature,” he said. “I have a real problem with how we manage our debt.”
All together, the items in the bond ordinance have an average life expectancy of 11.79 years, he said. Further, Morgan said, issuing 20 or 30-year bonds to pay for items with life expectancies of nearly 12 years is “highly inappropriate.”
The council expects to have more information when it re-opens the hearing on Monday, September 13.
Still, Hary explained, items like the trucks the township will purchase with the bonds, will be kept for much longer than five years. And “we’re not going to be decommissioning that pump station in another 10 years.”
Other Capital Improvements. The Township Council introduced a separate $1.17 million ordinance on September 7 that would fund road improvements on Meadow, Penn Lyle, and Alexander roads.
In the ordinance, $878,635 is set aside for Meadow Road, while $274,820 and $13,925 is set aside for Penn Lyle and Alexander roads, respectively. A public hearing is scheduled for Monday, September 20.
According to the ordinance, the township already has the funds for the work set aside in a trust account called “Off Tract Road Assessment.”
Tractor Purchase/Liquor License Transfer. In other business during the September 7 meeting, the council approved the purchase of a 2010 Brush Bandit Model 250 Chipper for the Department of Works from Cherry Valley Tractor Sales, of Marlton, at a cost of $30,201.63. The money was allotted in the 2009 municipal budget.
The council also approved a person-to-person and place-to-place transfer of a consumption license from H-C Princeton Associates to the Hyatt Corporation, which will also expand the premise of the license to allow for consumption at an outdoor pool and deck area at the Hyatt Regency at Alexander Road and Route 1.
According to Township Clerk Sharon Young, the liquor license transfer was necessary because of a name change made as a result of a “change of officers.” The official name on the liquor license was changed from H-C Princeton Associates to the Hyatt Regency — the reason for the person-to-person transfer — although the location is and will continue to be the Hyatt Regency.
The reason for the place-to-place transfer is that, during this name change, Hyatt Regency also wanted to extend the license to cover its pool and patio area.
