SALEM — A good deal to replace water meters in town through an inexpensive state loan may get even better thanks to federal stimulus funding, according to Finance Director Jane Savastano.
The town has pre-applied for a $2.3 million loan to replace residential meters — something the state has been trying to get Salem to do for years.
The 10-year loan from the New Hampshire Drinking Water State Revolving Loan Fund would have a 1.8 percent interest rate, Savastano said. She explained the loan at a selectmen's meeting Monday night.
The loan would allow the town to complete the project all at once. It would not have to be paid back until the project were completed or in two years, whichever comes first.
And now, thanks to unspent federal stimulus money, half the loan's principal may be forgiven.
"I think that's definitely a selling point," Savastano said.
The state is using the unspent federal American Recovery and Reinvestment Act money to forgive parts of loans based on how certain projects are ranked.
The Department of Environmental Services said new meters are high on the state's priority list, increasing the chance the town's loan would be partially forgiven, Savastano said.
"I think we'll rank pretty high, it's just a matter of who else will apply," she said.
The loan needs a two-thirds vote from the town, and will be discussed at the first deliberative session Feb. 6.
It will appear on the ballot and be voted on March 9.
If the loan fails, the town would ask voters at the second deliberative session to approve a phased, five-year cash plan to replace the meters.
That would cost the same amount, $2.3 million, but without the possibility of any of it being forgiven.
Savastano said it would cost significantly more than the loan at about $459,710 per year.
"It's dragging it on for five years and we're paying cash," she said.
"And obviously, the (water and sewer) rates are going to have to cover that amount for five years, plus any increase in operating budget."
She said the impact to the rates would be higher under the cash option.
Selectman Mike Lyons said at Monday's meeting he would urge voters to pick the cheaper option.
Chairman Arthur Barnes agreed.
"One way or another, we have to replace the water meters," Barnes said.
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