|
AN EXPLANATION ON THE FINANCING OF THE ACQUISITION OF
PRINCE COVE MARINA, HYANNIS GOLF COURSE AND
BARNSTABLE WATER COMPANY
(INCLUDING BARLACO)
The
Town of Barnstable has adopted the Enterprise Fund accounting
methodology for certain town operations including the Barnstable
Municipal Airport, Golf Course operations (including Olde Barnstable
Fairgrounds and Hyannis Gold Course), the Solid Waste Transfer
Station in Marstons Mills, the Water Pollution Control Facility on
Bearses Way in Hyannis, the Water Supply operations (formerly known
as Barnstable Water Company), the four town owned marinas (Bismore,
Gateway, Prince Cove and Barnstable Harbor), and the Sandy Neck
Recreational Park. The intent is to have these operations fund their
on-going operational and capital costs with user fees and no
taxation. Enterprise
fund accounting provides a clear delineation of the financial
activity of these operations resulting in better capital maintenance
policy, management control and accountability over these
businesses.
Recent acquisitions made by the town including the
Prince Cove Marina, Hyannis Golf Course and Barnstable Water Company
were folded into the Enterprise fund accounting methodology so that
the town could track all financial activity associated with each
operation separate and apart from all other General Fund
activity.
PRINCE COVE MARINA
In
January of 2003 the Town of Barnstable
acquired the Prince Cove Marina. No tax dollars were used for the
acquisition. Instead the town issued a one-year short-term note for
$1,850,000 and used these loan proceeds to pay the seller of the
property. Subsequently,
the town converted this short-term loan into a 20 year loan in June
2004. Additionally, a
new revenue source for the town was generated from the slips fees
and other revenue at the marina. The annual revenues
generated at the marina exceed the annual debt service requirements
on the short term and 20 year loan eliminating any general fund
support, or taxation, needed to repay the loan. Revenue from this operation
started to be collected in FY03 and the first loan payment was due
in FY04 (an interest payment on the short-term loan). The following schedule
illustrates the loan payments for the next 20 years and the revenue
generated over the first years of operations.
HYANNIS GOLF
COURSE
The Hyannis Golf Course was purchased for $9.5 million
dollars. This
acquisition was partially offset by a contribution $5.5 million from
the landbank fund. The
landbank program has issued $5.5 million in long-term bonds to cover
the cost of the purchase assigned to the conservation restriction
placed on the property.
The repayment of the $5.5 million bond will be made from the
surtaxes collected on real estate tax bills from the landbank
program (now known as the Community Preservation Program). The
remaining balance of $4 million will be paid with the issuance of a
combination of short and long-term borrowing. The interest payments on the
short-term borrowings will be made by the sellers of the property.
The principal and
interest payments on the long-term borrowings will be made from the
new revenue source generated by the golf activities at the course
when the town assumes control of this property. The long-term bonds of $4
million will be issued in December 2006 to retire the short term
loan with the first loan payments due in FY08, (July
2007).
BARNSTABLE WATER
COMPANY
Similar to the other two acquisitions combinations of
short-term and long-term borrowings are being used to finance the
acquisition of this purchase.
The water company was purchased for $10 million and the
BARLACO land for $1 million.
The town issued a $10 million 12 month loan to pay for the
water company and used no tax dollars. The short-term loan option
was used for three reasons; a rate study needs to be performed,
possible financing through the Mass Water Pollution Abatement Trust
is being sought, and a pending lawsuit that remains outstanding.
This loan will be paid
in June 2006 when the town issues a long-term bond. In FY06 the town will only
have an interest payment due of $375,000 and no principal
payment. In FY07 a
principal and interest payment will be
made.
The BARLACO land acquisition will be financed with the
issuance of a long-term bond and mitigation funds received from the
Cape Cod Commission.
The repayment of the long-term bond will come from
taxation. The annual
debt service on this bond is estimated to average $52,000 per year
which has a tax rate impact of $0.004 per $1,000 of valuation or $2
per year on a home assessed at $500,000. The borrowing authorization
being assigned to this acquisition has already been approved by a
previous town council in 1998 for open space land acquisitions, in
essence, dedicating this taxation for land acquisitions already.
information
provided by Town of Barnstable Finance Director, Mark Milne
| 
