The town has decided to pursue a money-saving lend-purchase agreement for a geothermal heating and cooling system in the Hicks Memorial Municipal Center and library instead of the initial plan, which was February's voter-approved bond.
The switch is expected to save taxpayers up to $500,000.
Voters authorized the town to issue up to $3.6 million in bonds. The savings will come via federal stimulus cash.
Speaking at Tuesday night's meeting, Town Manager Steven Werbner said the state had approved Tolland for a program through which 70 percent of the interest costs for a lend-purchase agreement for the project are reimbursed from the $19 million in federal stimulus money that Connecticut has received.
Werbner estimated the savings to taxpayers over the 15 years of the agreement to be between $400,000 and $500,000.
The project is eligible for funding with money generated from the sale of qualified energy conservation bonds issued by the Connecticut Development Authority. The town would pay back the money over a 15-year period as part of its debt service budget.
Despite the projected savings, not every member of the council was quick to embrace a lend-purchase agreement for the project.
Councilmember Jack Flynn said he felt “uneasy” about going with a lease-purchase agreement because that was not the fund mechanism that voters had approved for the project. Voters had authorized the town to issue general obligation bonds of the town to pay for the project.
Flynn said he was concerned that town council’s in the future could use the lease-purchase system to sidestep the town’s bonding requirement for large projects.
There is no requirement for a referendum on a lease-purchase agreement, Werbner said, noting that more typically they are used for purchasing expensive equipment like a fire truck. The agreement is with a lender that offers the best deal in terms of the cost of the lease.
In the end, the council voted 6 to 1 in favor of authorizing Werbner to pursue a lease-purchase agreement to cover the project’s costs from design to installation. The $3.6 million will include the cost of removing the existing heating and cooling systems.
Voting in favor of the agreement were Chairman Frederick Daniels, Vice Chairman MaryAnn Tuttle, Dale M. Clayton, Francis Kennedy, Craig Nussbaum and April Teveris. Only Flynn voted against the measure.
Speaking during the time set aside for pubic participation in the meeting, resident Rich Bozzone praised Flynn for drawing attention to the potential conflict between the town’s $1.9 spending threshold that triggers a bond referendum and the lease-purchase which does not require voter approval at referendum.