Undergrounding Project Finance Update

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At the April 13th Town Council meeting, Council members reviewed the proposed assessment methodology that is being considered to repay the General Obligation Bonds that would be secured to fund the project. The methodology used is following a similar formula to what other municipalities have done to finance undergrounding projects. The Town tweaked the assessment methodology that could result in a reduced annual assessment for condo owners of about $49 and an increase in the annual assessment to single family homes by about $90.  The Town is also working with the assessment methodology to see how properties with above ground equipment such as transformers can be given a credit that would go towards reducing their assessment.

Due to the ongoing lawsuits, the Town cannot secure the General Obligation Bonds needed to fund the project.  Due to inflation, for each month the project is delayed the cost of Phase 1 increases approximately $29,000 per month. The Underground Utilities Task Force recommended that the Town Council seek proposals for a one, two or three year line of credit to help fund the beginning of the project until the bonds can be secured.  By seeking a line of credit for the initial phases of the project, the Town will be saving millions of dollars in the overall project budget due to current low interest rates and use of assessments to reduce the amount to be borrowed.

The Town Council took two actions regarding undergrounding financing:

  1. The Town Council made a motion which directed staff to draft a resolution for implementing the proposed assessment methodology. The motion only directed staff to draft the language and was not a vote in approval of the methodology. The Town Council will be voting on the assessment methodology resolution at a later Town Council meeting following public notice requirements.  The motion passed.
  2. The Town Council made a motion which directed staff to issue a request for proposals for a line of credit from banks and financial institutions. The line of credit would be used to fund the undergrounding project until the General Obligation Bonds can be secured. The motion was only to seek proposals which would then be presented to the Town Council for a vote. The request would take approximately 60 days to complete and then presented to Town Council for final approval. The motion passed.