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The Daily Tar Heel
Town Talk

Chapel Hill Town Council members talk debt financing

The Chapel Hill Town Council discussed capital project priorities and debt financing at its Monday business meeting. 

Ken Pennoyer, Chapel Hill business management director, presented information about the town's current debt and debt-financed projects. 

"One of the most important milestones in our process is the council's debt management fund," Pennoyer said. 

The management fund separates tax revenue for debt service and reduces the need for the town to add tax in order to fund major capital priorities. 

The current debt in Chapel Hill, as of June 30, 2014, is $52,606,000. 

Pennoyer said this level of debt is considered manageable, and Chapel Hill falls in the lower end of debt per capita compared to other cities in North Carolina. 

"We are on the low end of the spectrum, but we plan on issuing large amounts of debt in the next five years," Pennoyer said. 

Pennoyer said the town is predicted to issue $20 million in 2017 and $30 million in 2020. But Chapel Hill will remain below the average debt per capita level even with these expenses. 

The projects recommended for debt financing include public safety projects, streets and sidewalks, solid waste transfer stations and transit bus replacement, Pennoyer said,

"The number one ranking service, in terms of importance in the system survey, was the overall flow of traffic and congestion," Pennoyer said. 

For the transit bus replacement, Pennoyer said the town is looking to replace 42 buses at an estimated cost of $21 million total. These buses are beyond an age that necessitates replacement. 

Mayor Mark Kleinschmidt said the town must constantly reevaluate the transit system as buses become outdated. 

"Really, we have to commit ourselves every year," Kleinschmidt said. "After 10 years, we'll have to replace the buses again." 

Councilwoman Maria Palmer said the town should look at using electric buses in order to avoid having to continually replace the buses.  

"As we replace the buses, we can also make it more sustainable and not find ourselves in the exact same position," Palmer said. 

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