By Mary Thurwachter
Rather than borrowing money from a bank, the town of Lantana will finance the extension of natural gas lines to Hypoluxo Island using money from its general fund.
In March, the Town Council directed Town Manager Deborah Manzo to take necessary steps to obtain financing for the design, construction and installation of natural gas lines. After consulting with Lantana Finance Director Stephen Kaplan, Manzo determined that the most cost-effective financing available would be for the town to underwrite the project itself.
Both the general fund and the utility fund have sufficient balances to accommodate the loan, Manzo said during the town’s April 28 meeting. As of Oct. 1, 2013, the general fund had $4,109,878 and the utility fund had $5,545,807.
Based on estimates from SunTrust and TD banks, the prevailing interest rates range from 3.75 to 4.5 percent. The cost estimate to obtain bank financing for the $590,000 project is $47,000 over the 10-year assessment period, of which nearly $30,000 could be avoided through town financing. Assuming an interest rate of 4 percent over 10 years, the maximum annual assessment per property would be less than $270 per year.
But the total cost and amount of the special assessment will ultimately be determined by the Town Council. With the town financing the loan, the average annual interest revenue to Lantana will be about $12,000 a year for 10 years.
“It’s a win-win situation,” said Rod Tennyson, one of the islanders who led the push for natural gas. “The town’s going to earn some revenue and we’ll save money.”
While the town is providing the financing, Hypoluxo Island residents will pay for the gas line extension, Mayor Dave Stewart said. “The majority of the people on the island wanted it.”
In October, the town sent letters to all 309 property owners asking for a yes or no vote on whether they wanted a natural gas line extended. By deadline, 197 yes votes came in, 11 more than required for passage.