The Town of South Berwick has just released the following press release to news outlets:
PROPOSED BOND FOR ROAD CONSTRUCTION
Why consider bonding our road reconstruction work?
MONEY
Traditionally South Berwick has funded its road improvement work entirely through annual appropriations. Since 2002 road construction costs have risen dramatically and annual appropriations have been able to accomplish fewer road construction projects. In order to maintain a 20 year road plan, the Town would (in today’s dollars) need to appropriate $560,000 annually for maintenance, repair and reconstruction of our existing roads.
Until last year, the town has consistently expended in the $400,000 range to provide for both routine paving as well as major rebuilds of the roads. Decreased revenue in the current budget year, combined with LD1 limitations resulted in minimal appropriations to the roads account and forced the Council to consider alternatives to financing construction projects (not regular maintenance such as shimming and paving). By bonding $2 million dollars the Town can perform five years of construction work in two seasons, thereby saving the community a minimum of $400,000 which would otherwise be lost to inflation.
The table above shows an average annual increase of 20% per year in road construction related costs.
If, instead of bonding $2 million we were to project the same rate of inflation looking forward to fund $2 million of construction work over 5 years, a $400,000 appropriation adjusted for inflation over five years will yield…
Total debt service on the proposed bond is estimated at $2,576,875, the total cost of the same amount of construction work if not bonded is $2,976,640. This bond will result in a minimum savings to the town of $399,765.
Additional savings may be gained if Town Meeting appropriates additional funding over the bond payment amount to continue to perform maintenance. Road maintenance costs have increased on average 26.5% each year since 2002.
NEED: The Public Works Director headed a citizens committee of three road engineers including himself and a professional road contractor. Together they created an inventory of all roads, their repairs and maintenance needs over the next twenty years and prioritized the next 14 years of road work.
This bond would fund:
$1,000,000 to reconstruct the majority of Emery’s
$400,000 to reconstruct
$250,000 to reconstruct a section of Boyd’s
$250,000 to reconstruct a section of
$100,000 to reconstruct a 1500’ section of
The long range plan includes the construction work listed above in addition to annual appropriations. (Please see the 13 year road plan.)
The Council is presenting this option as an economical solution to funding road construction. Ultimately, the choice will be made by the citizens of
Download a pdf of the press release
Read earlier post at the 236 Diner about the bond issue, including maps of roads
It was great to see the additional information released by the town on the proposed road bond. Thank you. After reading it, I came away with some questions that I’d like to learn the answers to before or at the meeting next week.
Why have road maintenance costs increased an average of 26.5% each year since 2002? Have road maintenance costs risen similarly across the country or are we unique in this regard? What is the state average? What is the national average? Shouldn’t there be some correlation between actual inflation and increased cost for projects such as road construction? Is the disparity between road construction and inflation created by oil prices? Based on information found on InflationData.Com the total combined inflation rate over the past six years is 16.2% and the average per year is 2.67%.
2002 – 1.59%
2003 – 2.27%
2004 – 2.68%
2005 – 3.39%
2006 – 3.24%
2007 – 2.85%
6 Year Total = 16.02%
Does the town put all road projects out to competitive bid?
At this juncture and based on the information I have before me, I’m in favor of putting a temporary hold on the majority of these road projects. Spend the $200,000 already appropriated, spend it wisely, and be sure we’re getting the best price for the quality of job we want done. Let the new Town Manager get to work straightening out our finances. After he gets his arms around our town, look to him for a recommendation on how we should proceed.
I’ve driven some of the roads on the list daily for many years now. One more year in their present condition would not concern me. If the roads already require a total rebuild, I can’t see how waiting another year would add cost to the projects except by way of inflation or oil price increases. With regard to inflation and oil prices, can we be sure these will go up in future years, or might they go down?
I particularly agree with Bill Page’s comment:
“Let the new Town Manager get to work straightening out our finances. After he gets his arms around our town, look to him for a recommendation on how we should proceed.”
Let the new Manager get here and start doing his job. This all seems to have come up too quickly, and is “ad hoc” at this point, and with the new manager due here in a couple weeks, I’d think having him “figure out the lay of the land”, including working this out with public works, etc. and putting together a big picture is needed. Bonding is a big deal, and the new Manager should be part of it.