Road bond raises more fiscal queries
Concern voiced over Casella's bond rating
August 10, 2010
SOUTHBRIDGE — After a fairly brief debate and a citizen's warning to keep an eye on Casella's bond rating, the Town Council hasvoted 7-1-1 to approve the final bonding for the access road project.
The bond is worth $7.2 million, although the road's actual cost is $6.5 million. The project was originally bid at $5.4 million, but the total also includes the cost of engineering services, removing excess glass from the roadbed (of which $167,300 was already paid by Casella) and the bonding process itself, Town Manager Christopher Clark said.
The project opens up "land that would constitute half of our industrial park," he said. "Phase two is the other half."
This is actually the second bond for the project; back in 2008, the council OK'd a temporary bond to get it started. Clark said Monday's vote creates the permanent one, akin to a final mortgage. But because the Casella contract arranges for the road's cost to be paid by the landfill company annually and it will benefit financially from the project, under normal circumstances, the IRS would require the bond to be taxable and assessed a higher interest rate.
One exception, Clark noted, is that the IRS allows tax-free bonding for municipal solid waste projects. The total cost difference over the 20-year bond life is about $1.4 million — a tax-free bond pays $2.2 million in interest, while the taxable one pays $3.6 million.
See Thursday's Southbridge Evening News for complete coverage of community news.