STONE HARBOR – The Borough Council on July 15 introduced two bond ordinances that authorize $7.2 million in general fund debt and $3.2 million in debt for the borough’s water/sewer utility to fund 2025 capital plan projects.

Two weeks prior, at the July 1 council meeting, external auditor Michael Garcia told the governing body that the borough is also planning to issue general fund bond anticipation notes this summer for $3.7 million for work already completed but for which bonds have yet to be issued.

The combined impact of the debt actions for the general fund budget will be roughly 1.9 cents added to the local purpose tax rate, an amount that Garcia said would equal about $190 more in the tax levy for a property assessed at $1 million.

The impact on water/sewer fees is estimated at $55 per ratepayer added to the new $125 per-quarter fee that was incorporated into the water and sewer rates during the borough’s 2025 budget process.

General Fund

On July 1 Garcia said there are three categories of borough debt. These were debt already on the books and in repayment, debt that will have bond anticipation notes issued for it this summer because the work has been completed and needs to be in repayment, and the new debt being authorized on July 15 in the amount of $7.2 million, for the 2025 capital plan.

The $7.2 million is spread over four large categories of capital expense. Almost $700,000 is linked to various street and road improvements, $1.1 million is for improvements in parks and playgrounds, almost $4.4 million is slated for stormwater drainage improvements, and $1.4 million is listed for improvements to mitigate flooding at borough-owned property, including the marina boat ramp.

The borough’s level of debt will climb for the next few years because debt already on the books is not yet at a stage where it will allow level debt when the borough adds new bond anticipation notes or the newly authorized projects.

At a point two to three years out, the old debt should begin to decline, Garcia said, and that is when the borough can take advantage of the decline to deal with what he said is another $16 million in desired capital projects that have been deferred to future years.

Water/Sewer

The second ordinance introduced on July 15 was for $3.2 million in water/sewer utility debt, which is repaid through water/sewer user fees, not property taxes. As with the general obligation debt, the utility also will be issuing bond anticipation notes to fund work already completed prior to the 2025 capital plan.

Adding complication, during the 2025 general fund budget proces, expenses were added to the water/sewer budget that had been part of the general fund budget in previous years. These were portions of general fund expenses that the chief financial officer and the council felt should be shared by the water/sewer utility as indirect costs.

This shifting of expenses off the general fund budget to the utility was also part of the strategy of moving expenses out from under the state’s appropriation cap in the general fund. The strategy allowed the borough to pass a budget that did not require an appropriation waiver from the state Local Finance Board. It did, however, result in adding a $125 additional fee per quarter to water/sewer bills for the remaining three quarters of 2025.

Garcia spoke of the impact of new debt on the utility by incorporating the $125 added fee as permanent for all four quarters in 2026 and beyond.

With that assumption, Garcia estimated that the new $3.2 million in authorized debt in the ordinance introduced on July 15 would lead to an increase in the quarterly water/sewer bill of roughly $55 above the current fee level, which already includes the $125.

The $3.2 million is for upgrade of existing and installation of new water and sewer pipes in and along various streets and locations, he said.

The two bond ordinances, the bond anticipation notes expected to be issued this summer, the $16 million in capital projects that were deferred and the strategy of moving within-cap general fund expenses to areas that are not constrained by the state appropriation cap are all part of an effort to reorganize the borough’s expenses and its debt levels.

Both introduced bond ordinances are scheduled for public hearings and a possible vote to adopt at the council meeting on Aug. 19, at 5 p.m. in Borough Hall.

Contact the reporter, Vince Conti, at vconti@cmcherald.com.