Outstanding debt: Town's borrowing has declined from $140 million to $60.7 million over last two decades
Town debt peaked and has been in decline for more than a decade. Looming capital expenditure needs could change that, although town officials work to limit borrowing and try to time major projects so they don’t balloon the debt.
Ridgefield’s outstanding debt has fallen from a peak of about $140 million after borrowing for the $90-million school bundle — renovations and expansions at eight school buildings approved in 2000 — came on top of the $34 million borrowed for the construction of Scotts Ridge Middle School in 1999.
From that $140-million peak, town debt had fallen to $60.7 million as of the close of the last complete fiscal year, 2017-18, last June, according to Board of Finance Chairman Dave Ulmer.
Debt service payments are projected to be about $11 million this year, 2018-19 —with $9 million of that paying down principal and $2 million in interest payments, Ulmer said.
“Both the Board of Selectmen and the Board of Finance track debt servicing and outstanding debt balance closely on an ongoing basis with the goal of reducing annual expenses [paying down principal with interest] and maintaining needed town infrastructure, all of which must be approved by the voters [taxpayers],” Ulmer told The Press in a Jan. 31 email.
Debt will soon bump up as a result of a $12.4 million bond issue by the town in December. The $12.4 million in new borrowing is partly offset by the $9 million in principal being paid down in this year’s debt service payment — leaving $3.4 million to be added to the debt.
That $3.4 million, on top of the previous outstanding debt of $60.7 million, is projected to put the town’s debt to $64.1 million at the end of the current fiscal year, June 30, 2019.
Debt service is projected to stay about the same in the next fiscal year, 2019-20 — about $11 million that includes $9 million in principal payments and $2 million in interest, according to Ulmer.
“From there debt servicing will go down, both principal and interest,” Ulmer said. “We will pay off approximately $8 million a year in principal. Debt balance will go under $50 million briefly.”
But town officials generally ask voters in the May budget votes to authorize roughly $3 million a year in additional borrowing for what might be called routine capital purchases and projects — from trucks for the highway departments to building repairs and renovations. This gets tacked on the debt — although it is generally less than $9 million or so principal is being reduced by the annual debt service payments.
On top of that are what Ulmer described “big ticket items.”
One of the big ticket items coming along is the $48 million sewer plant renovation project — approved by voters last November, but not yet at a stage where borrowing needs are that great.
Most of the $48 million cost is expected to be covered by a combination of state grants and increased fees paid by sewer users. But the town’s general taxpayers will be expected to carry as much as $8 million of the project’s cost. Although the project was approved by voters last November, the money isn’t likely to be needed — or bonded — until fiscal year 2020-21 or later, Ulmer said.
Town officials have also been talking about a police station project — renovations, or a new building — projected to be undertaken about the fiscal year 2020-21.
Those expenditures are expected to push the town debt back up over $50 million, Ulmer said.
“That is a manageable level, especially as we get a boost in 2023 with the expiration of the last of the bundle bonds issued in 2003,” Ulmer said.
Of course, other things can come up. The town is in the midst of a study analyzing all that needs to be done to bring town properties and programs into compliance with the federal Americans with Disabilities Act (ADA).
Town officials do not currently have a projection of what all that work will cost, or how much time they will have to accomplish it.
The borrowing that created the town’s debt has a variety of sources. A debt summary in the official statement for the December bond issue listed $32.7 million in outstanding borrowing described as “general purpose” bonds for what are described as “public improvements.” And it lists another $19.7 million in remaining “school debt” for “school improvements.” Both categories include “refunding bonds” — from occasions when the town refinanced previous debt to take advantage of declining interest rates.
December’s $12.4 million borrowing will cover $1 million in remaining obligations form the Schlumberger purchase, as well as $11.4 million bonding for the more routine capital projects and purchases approved by voters in annual budget referendums in 2016, 2017, and 2018, according to Ulmer. (The borrowing covers spending approved over several budget votes because the town uses short-term borrowing, or covers bills out of the roughly $14 million fund balance, until it has enough borrowing needs to justify the cost of putting together a bond issue, which carries a variety of legal and accounting expenses.)
The official statement on the December bond issue includes a statement of the town’s fiscal history: “The town of Ridgefield has never defaulted in the payment of principal or interest on its bonds or notes.”