Town Council Settles On One Year Bond—To Fulfill “The Letter Of The Law”
On January 29, the Town Council consented to issue a $1.05-million “open space bond” as a one-year note—money that will be borrowed, held in a bank account, not spent, and paid back at the end of a year. The note will cost taxpayers an estimated $88,000—approximately $63,000 in interest and $25,000 in issuance costs. To cover those costs, the town will use about $57,000 currently in the General Fund plus the interest earned on the note (estimated at $31,000).
Whether a bond needs to be issued now, or not, has been hotly debated in a number of Town Council meetings. On November 10, Councilors Carney, Marr, and Slom voted to issue a $1.05 million bond, and Councilor Stokes dissented.
At the January 29 meeting, the Town Council discussed the bond to be issued. Councilor Marr again voiced his opinion that an open space bond needed to be issued now to satisfy the Charter language and the resulting language of the ballot question put to the voters in 2015. He was in favor of issuing a short-term bond (called a note) because it is clean, cost-effective, and resolves the issue once and for all.
Councilor Stokes noted that he had vehemently argued against the process but he supported issuing the short-term note as a clean and beneficial way to achieve what the majority of the Town Council had voted for at the November meeting.
Councilor Van Slyke, who just joined the Council in January, noted she agreed with the arguments that Councilor Stokes had made in the previous meetings but that, because the Town Council had voted on November 10 to issue a $1.05-million bond, a short-term note makes the most sense.
Councilor Carney consented to issue the short-term note as well. She lamented that, although the note fulfills the letter of the law, issuing a short-term bond violates the “spirit” of a bond. She stated that the intent of a bond is to stretch payments over multiple years to capture multiple years of taxpayers. She said that a one-year note instead shrinks the payments into one year.
It is also true that borrowing any amount of money is expensive, and the longer the term, the more costly the borrowing. For example, were the Council to issue a longer-term bond with a term of between five to ten years, it is estimated that, depending on the term of the bond, taxpayers would need to pay between $130,000 to $240,000 every year until the bond matures (or $1.2 million to $1.3 million over the life of the bond). And, of course, the loan would need to be paid back.
Putting aside the question of whether borrowing money that was intended to preserve open space and use it for another unspecified purpose would have been a good thing, the ability to issue bonds is an important tool for a municipality. There indeed may be times when it is a good idea to borrow to pay for expensive projects that will provide long-term benefits to the town without greatly increasing the tax rate.
The other option is, of course, to plan and save up for these expenses. In years past, through planning and frugal budgeting, Charlestown was able to upgrade all town roads (the last being Old Mill Road), provide essential services, preserve open space that protects our groundwater and our rural way of life, and return $2 million to taxpayers, all while maintaining a stable, low tax rate.
Therefore, what is also true is that issuing a bond (that is, borrowing money) just to issue a bond violates common sense. Thus, the Town Council may want to propose amending the Charter language so that a bond does not need to be issued unnecessarily to purchase open space authorized for purchase by the voters at referendum.
Background
Since the voter approval to spend $2 million on open space in 2015, approximately $1.05 million has been expended to acquire and pay for four open space properties: the Patricia Sprague Forest Preserve (in 2016), a strip of land next to the Charlestown Town Hall (early in 2018); an addition to the Pasquiset Pond Preserve (late in 2018), and the Tucker Woods Preserve (in 2021). The town was assisted by Natural Heritage Grants from the RI Department of Environmental Management (RIDEM) for acquisition of the Sprague Forest Preserve and the Tucker Woods Preserve and with the assistance of The Nature Conservancy for the addition to the Pasquiset Pond Preserve. The money from these partners amounted to over $800 thousand in matching funds. Approximately half of the voter approved funds were spent over a six year period.
Discussion of the Town Council debate on issuing the bond can be found in our January 25 post on this issue.
Full discussion of the 2015 Open Space referendum can be found at https://charlestowncitizens.org/vote2015/ under the “Question 1 – Open Space” tab.
Descriptions of the 4 open space properties mentioned above, along with all of Charlestown’s other open space properties, can be found in our Guide to Public Recreation/Conservation/Hiking Areas in Charlestown Rhode Island
You can learn more about the author Ruth Platner on her profile page.
The banner image is a photo of Black Pond in the Pasquiset Pond Preserve, which the town expanded in 2018 in partnership with The Nature Conservancy (TNC).