Northern New York Newspapers
NNY Business
NNY Living
Sun., Oct. 4
Serving the communities of Massena and Potsdam, New York
Related Stories

Town will talk with County IDA regarding 60k facade project payment schedule


MASSENA - One town councilman’s concerns have led the town board to seek to renegotiate the terms of a nearly $61,000 payment schedule with the St. Lawrence County IDA for the town hall facade improvement project.

Town officials authorized a capital note for $60,666.51 at 1 percent interest on Wednesday, but will soon be talking with the IDA about reworking details of the contract.

“The original bond resolution that was done in May of last year typically would have covered the portion of the project that was done by serial bonds, not by this kind of specialized financing vehicle called a capital note. In order to do the capital note, you actually have to adopt a capital note resolution that would specifically authorize the issuance of capital notes,” town attorney Eric J. Gustafson said.

“That sets forth the basic terms of the transaction, but the local finance law requires kind of a lot of verbiage to actually adopt a capital note. One of the other things is, the estimated cost of the project at the time was $185,000, and that was the amount that was authorized to be spent and I think that from what (Bookkeeper Nancy Fregoe) was indicating to me was roughly $257,687.32 was spent.

“So what I’d like to do is just do the capital note resolution, authorize the expenditures up to $258,000 - nice round number to keep things less confusing for the lawyer - and just make sure that we’ve adopted everything so that it’s consistent with what the local finance law requires.”

As part of the initial resolution, the board would be required to pay $1,035.14 per month, commencing Feb. 1, 2014 and ending no later than Dec. 31, 2015.

It would also include a final installment due in the amount of $36,696.47, referred to as a “balloon payment” and the installment payments would be based upon a 60-month amortization schedule.

The balloon payment worried Councilman John F. Macaulay. “I don’t understand the necessity of the balloon payment at the end. It says, ‘Installment payments are based upon a 60-month amortization schedule’ and then $36,696 balloon payment at the end. I don’t understand that,” he said.

“Those are the terms in which they offered. I’m just saying, I think that’s what they’re asking for. I don’t know why,” Town Supervisor Joseph D. Gray responded.

“Next December, we have to write a check for $36,000 after we’ve been going along at $1,000 a month. I don’t think that’s a very good idea. ... ‘Installment payments are based upon a 60-month amortization schedule thereby necessitating the aforementioned balloon payment.’ That doesn’t make any sense that the 60-month amortization schedule makes it necessary to pay it off after two years? That language just doesn’t make any sense to me. A 60-month amortization schedule says you pay it off in 60 months - not if there’s a balloon.”

According to the capital note, the financing went toward the town hall’s immediate repairs which posed a hazard to the health and safety of the public. This hazard has been due to the deterioration of the building’s facade and also a “structural compromise” of the access steps leading to the front entrance.

Mr. Gustafson explained that the inclusion of the balloon payment would allow the town to keep in check with their other budgetary needs. “At the end of 60 months you would have paid it off in full, but you’re not going the full 60 months. The authorization for the grant was for 60 months. You could do it at a 24-month amortization rate if you desired to, but this is saying you don’t have to. If you want to wait until the end to make the payment, you can do that.”

The contract also notes that the unpaid principal sum shall accrue at a 1 percent interest rate per annum daily for a year.

Mr. Gray said that the balloon payment has already been set aside for the project. “We, in essence, have money set aside for this project,” he said.

“We’ve already paid for it. We financed the whole thing out of general fund money. We’re just paying the general fund back,” Ms. Fregoe said.

After Mr. Gustafson read through the entire text of the capital note, the board approved the document and authorized the payment of $60,666.51 to the IDA.

Following more discussion regarding the payment schedule, the board came to an agreement that they would reach out to the IDA and request to rework the details.

“This resolution, if I’m understanding it correctly, just allows them to accept the loan, the terms of which basically we’re saying we’ll talk about later,” Ms. Fregoe said.

“In that discussion, we ought to be asking them whether we want to pay 24 equal payments with a 1 percent interest calculated at 24 payments, not 60,” Mr. Macaulay added.

Commenting rules:
  1. Stick to the topic of the article/letter/editorial.
  2. When responding to issues raised by other commenters, do not engage in personal attacks or name-calling.
  3. Comments that include profanity/obscenities or are libelous in nature will be removed without warning.
Violators' commenting privileges may be revoked indefinitely. By commenting you agree to our full Terms of Use.
Syracuse Football Tickets Giveaway
Connect with Us
DCO on FacebookWDT on Twitter