Babylon Town will take on more debt than it retires in 2020, after amending its longtime borrowing policy to allow it to do so.
Since 2005, the town has restricted borrowing to less than the amount of debt paid off in any given year. With the exception of bonding for more than $34 million over what they retired in 2013 due to superstorm Sandy in 2012, Babylon has largely stuck to the policy and in the past five years has bonded for nearly $78 million while paying off almost $84.3 million.
The town board voted last month to amend the debt retirement policy to allow the town to borrow an amount that equals or exceeds the amount of debt Babylon pays off every year.
The policy change acknowledges that under “extenuating circumstances” the town may need to borrow the same or more than it pays off to maintain the town’s infrastructure. If so, the town can now exceed the amount of debt paid off by the lesser of either $2.5 million or 15% of the retiring debt. If there is a state of emergency in the town, the amount of debt taken on will be at the discretion of the board.
The town ran the amended policy by bond rating agencies, such as Moody’s Investors Service, and they were “comfortable with it,” said Deputy Supervisor Tony Martinez.
The town board is expected to vote this week on $17.56 million in bonding for 2020, but the town expects to retire only about $15.27 million, a difference of $2.29 million.
The largest chunk of that borrowing — $10.8 million — will be for road repaving and reconstruction. Martinez, who heads up the town’s capital improvements team, said that after the town did a study that found officials needed to nearly double their investment in road repairs, from $6 million to $11 million per year for the next decade, the team realized borrowing would have to increase.
“Doing more roads means there’s less money for the other capital improvements in the town,” he said.
Babylon has typically categorized projects by priority and then had a “wish list” of other projects. “But we don’t have wish lists anymore because it’s just so tight,” Martinez said.
Besides roads, the town is bonding for software updates, lighting and parking improvements and to make repairs on various facilities, including Venetian Shores spray park in Lindenhurst and the Anthony Sanchez Pool in West Babylon.