WESTFIELD — At its meeting on Jan. 20, the City Council voted unanimously to appropriate $2.2 million from free cash to a reserve account to cover anticipated debt payments.

At-large Councilor Brent B. Bean II said the appropriation will cover the debt the city will have to pay when it bonds two large projects in the coming years. He said right now, the city pays about $7 million in debt service annually, but with the elementary school project that just passed its final reading on Jan. 12, and potentially a new police station project, that payment will have to increase, and the $2.2 million appropriation will help “fill that delta.” Bean said as other projects are paid off, the city should return to its normal annual debt load in the $7 million to $7.5 million range.

City Treasurer Matthew Barnes first proposed the appropriation at a Long-Range Finance Committee meeting on Nov. 17, 2021, chaired by at-large Councilor Dave Flaherty. At that meeting, the committee brought in key staff members to talk about bonds and the city’s future obligations, prior to recommending approval to the City Council of the bond order in the amount of $61.2 million for the construction of the new elementary school.

Barnes said for the elementary school and a new police station, which was being estimated at $24 million not including land, he would like to sell those bonds right away to lock in the current 3 percent interest rate, before rates started to climb. He added that there was no guarantee that the 3 percent rate would continue, and that every 1 percent difference is $53,000 in debt service per year for the 28-year term of the bonds.

He said the police station project was still at the feasibility study stage, and the cost had not yet been determined, but that $24 million was an estimate based on the $800 per square foot that other recent police station projects in Massachusetts cost.

Barnes also talked about the proposal to put $2.2 million from free cash into a debt decline stabilization fund, and keep it at that level to pay off the bonds, a motion that Flaherty said he would be making at a future City Council meeting.

“This strategy would allow the city to reserve funds in advance to help reduce the spikes in annual debt payment costs in upcoming years,” Flaherty said after the meeting.

“The city generally reserves $7.2 million per year in the annual budget for debt payments, about 5 percent of the operating budget. Due to the costs of the school and police station projects, on top of all the other already bonded projects, the annual costs would approach $8.6 million per year in [fiscal] ’25 and [fiscal] ’26. By using the debt decline stabilization account, the city can save money in advance, and then draw $1.4 million in those peak years to bring the annual budget obligation back down to the $7.2 million range,” Flaherty added.

During the unanimous Jan. 20 vote for the stabilization strategy, at-large Councilor Cindy C. Harris said she would vote yes, but added, “It’s a shame we couldn’t use free cash to lower all of our citizens’ real estate taxes a few months ago.”

Harris was referring to a motion by former Mayor Donald F. Humason Jr. during the Nov. 17 City Council meeting to use $2 million in free cash to lower property tax rates. The plan was rejected at the meeting in a 4-7 vote with no discussion, with Harris, James Adams, Dan Allie and Bridget Matthews-Kane voting in favor. The city had $9.5 million in certified free cash available at the time.