City reported to be in good shape on debt service front

LACONIA — City Manager Scott Myers told the City Council this week that after reviewing the principal and interest payments on the city's outstanding and projected borrowings that it would be possible to borrow for the reconstruction of the Central Fire Station and purchase of the Laconia State School property without raising annual debt service above the self-imposed limit set to comply with the tax cap.
Myers said that Finance Director Donna Woodaman prepared a projected debt schedule of outstanding principal and interest payments as well as servicing a borrowing of $850,000 to resurface the Smith Track at Opechee Park and complete the Weirs Community Park, which is proposed in the 2013-2014 budget. In addition, the schedule projects the debt service on borrowings of $4-million for the Central Fire Station and $2-million for the purchase of the State School property.
The schedule indicates that the additional debt can be accommodated within the $3.2-million limit on total annual debt service, which the council has adopted, except for three years — 2015, 2016 and 2017 — when principal and interest payments would reach $3.4-million. Myers said he expected to recommend the reconstruction of the Central Fire Station in the 2015-2016 budget.
The city previously purchased two lots along Tremont Street to accommodate expansion of the fire station.
Meanwhile, Myers suggests adjusting the $3.2-million limit to reflect growth of the property tax base by applying an annual increase in the Consumer Price Index of 1.5-percent, which he described as a "very conservative assumption." If the limit on annual debt service were adjusted, payments on projected borrowings would remain well within it.
"The city has a reasonable and manageable level of debt," Myers said. He said that the $1.8-million in capital outlay funded with cash within the operating budget proposed in the 2013-2014 budget represents 8 percent of all city appropriations, a level which maintained on a regular basis contributes to managing the debt burden.