Norfolk’s debt service explained

By Susan MacEachran

Norfolk’s debt service for the fiscal year beginning July 1 is approximately $480,000, accounting for 11 percent of the town government portion of the budget. The total cost to run the town will exceed $9 million in 2024/25. Town government is 47 percent of the budget, and education costs are 53 percent. 

Norfolk has faced significant costs related to its infrastructure over the past several years. Medium- to long-term debt financing is essential to accomplishing these large projects.

The town’s largest loan is for the costs of the reconstruction of Maple Avenue ($2.1 million) and the new roof on Botelle School ($1.9 million). A year ago, Norfolk borrowed $4 million from Dime Bank at 5.88 percent interest with a 25-year term. In May, this bank loan was refinanced with a 25-year $3.945 million bond at a rate of 3.46 percent. The principal and interest payment in fiscal year 2024/25 is $344,261. The annual payment will decrease each year until the final payment of $117,300 in June 2049.

The town also borrowed $495,000 last year to pay for its 50 percent share of the Mountain Road bridge reconstruction expense. This 10-year loan from NBT Bank (formerly Salisbury Bank) is at a rate of 2.25 percent. The annual loan repayment is approximately $56,000, and the loan will be fully amortized in 2033.

Norfolk has a second loan agreement with NBT Bank to finance its share of the cost of reconstructing the River Place bridge. This is a significantly more difficult and expensive bridge project, although the town benefits from an 80/20 cost share with the federal government. Work began in April 2022 and was expected to be completed by Nov. 30, 2022. However, construction was halted over a year ago when it was discovered that the abutments needed work that the engineers had not identified at the start of the project.  

The River Place bridge reconstruction is now estimated to cost $3 million, which is double the original projection. The town arranged for a 10-year loan from NBT Bank at a rate of 2.25 percent to finance its share of the cost. Based on the current projections, the town will be obligated for $600,000. Riiska said that the CT-DOT has indicated they will pay for any cost overruns due to the redesign, and he expects work to recommence soon with a projected completion date of May 2025. 

In addition to the recent loans and debt financing, there are three years remaining on the bonds used to finance the 2017 ambulance building construction and Botelle School windows and doors. The total remaining amount due on the bonds is approximately $390,000. Funds available to the town from the termination of the defined benefit plan will be used to satisfy the remaining bond payments.