Crestwood to consider measure to put bond issue on April ballot
January 05, 2005 - By MIKE ANTHONY
An ordinance placing a general obligation bond issue on the April 5 ballot to solve the city's general fund crisis is scheduled to be considered next week by the Crestwood Board of Aldermen.
The Board of Aldermen will meet at 7 p.m. Tuesday, Jan. 11, at City Hall, 1 Det-jen Drive.
Aldermen discussed placing a general ob-ligation bond issue on the April ballot during a nearly four-hour work session last week, but arrived at no clear consensus on an amount for the proposal, which would require a four-sevenths supermajority vote for approval.
City Administrator Don Greer projected the dollar amount of the proposed bond issue at $6.2 million, which would allow the city to retire its line of credit with Southwest Bank, establish reserves sufficient to meet the city's cash-flow needs and reconcile debts the general fund owes other city funds.
Aldermen previously had discussed placing a $5 million bond issue on the April 5 ballot that would require a property tax-rate increase of 26 cents per $100 of assessed valuation for a 10-year period.
Greer's projection of a $6.2 million bond issue would require a property tax-rate increase of roughly 33 cents per $100 of assessed valuation for a 10-year period.
The city's current property tax rate is 25 cents per $100 of assessed valuation.
As projected, a $6.2 million bond would be used as follows: $2 million would be used to retire the line of credit, $2.6 million would be used to fund the city's non-expendable trust fund and $1.6 million would be used for reconciliation costs. The $1.6 million would allow the general fund to repay the parks and stormwater fund roughly $1.54 million and repay roughly $96,500 to the sewer lateral fund caused by "blending'' available cash from all city funds.
Throughout the Dec. 29 work session, aldermen discussed various scenarios and amounts for the bond issue ranging from $5.6 million to $6.2 million.
Ward 3 Alderman Don Maddox continually challenged Greer's projection of a $6.2 million bond issue, particularly the funding of the non-expendable trust fund, which is designed to serve as the city's cash-flow account.
Maddox said, "I'd like to point out that the amount that you have there for the non-expendable trust, the need for it, is incorrect. It's incorrect because it includes a carryover of $600,000 from fiscal year 2004.''
The highest outstanding balance of the line of credit, $1.92 million, included $600,000 in carryover debt from fiscal 2004, he said, adding, "So your actual number for this year is $1.3 (million).''
Noting that he disagreed with Maddox, Greer said, "... Your math may be correct, but if I didn't pay off the $600,000 from last year, where does that money come from?''
Maddox said, "You don't need a $2.6 (million) in non-expendable trust to carry from year to year.''
After further discussion, Maddox asserted that $1.3 million in the non-expendable trust fund would meet the city's cash-flow needs, but Greer emphatically disagreed, saying that amount would not be sufficient.
"... You've got to pay off the line of credit. You ought to establish the non-expendable trust and you've got to correct all of that blending (of funds) from prior years. Those three things I think have to be done to get us in the shape that we can operate annually,'' Greer said.
Maddox later noted Greer's presentation showed that approval of the general obligation bond issue would allow all city funds to operate within their annual re-sources.
"... Under that slide, you showed statements on general fund able to operate within its resources and I think it also said capital improvements fund operate with its resources and made a similar statement about parks and stormwater,'' he said, contending that the parks and stormwater fund currently does not operate within its annual resources.
Greer said, "I also said that we weren't done. I said we had work to do.''
Maddox interjected, "Don't get mad.''
Greer continued, "Well, but you're challenging everything that I've said and that's ...''
Maddox interrupted, "No, I'm not.''
The city administrator said, "OK, I'm wrong. I apologize. I'm wrong. But I said we aren't done. The general fund can operate on its own. The capital improvements fund can operate on its own. The parks and stormwater fund will be able to operate on its own as soon as we do the appropriate amount of work to get us there. We're not done. We're a far cry from being done on an operational basis. The question that we are faced with today, I believe, is one of reacting to the fact that the board does not wish to cut services. They don't wish to reduce services.
"If we don't reduce services in some fashion or another, we have to increase revenue. If we're going to increase revenue, what is the best way to do it? What is the most efficient, most effective way of doing it? I believe this is it. That's why we're where we're at today. But I am in no way, shape or form suggesting to you — nor have I ever suggested to you — that we are done on the expense side with regard to managing the operations of the city of Crestwood,'' Greer said.
Maddox said, "That is just the way I read this chart and I want to make it clear we aren't there.''
Ward 3 Alderman Jerry Miguel said, "I would venture that the most efficient way to manage is not to borrow because every dollar that we borrow, as I said earlier, we have to pay interest on every dollar we borrow. It doesn't resolve the immediate problems we have, but what we are doing here is we are borrowing $5.6 million, as an example. Over 10 years, we're borrowing an average of $560,000 a year. That, in turn, is costing us $688,000 a year. We are paying on the average $125,000 a year of interest.''
Ward 2 Alderman Tim Trueblood interjected, "What's your solution?''
Greer asked, "What should we do then?''
Miguel said, "I don't have a solution at this time ...''
After further discussion, Maddox later noted the general fund owes the capital improvements fund nearly $800,000, while the capital improvements fund owes the general fund roughly $900,000. Alder-men voted in April to adopt an ordinance calling for the repayment of $901,000 to the general fund from the capital improvements fund over a 10-year period.
At one point, Maddox suggested adding the amount the general fund owes the capital improvements to the bond issue, which would increase the reconciliation cost by $800,000.
Aldermen reached no consensus on a final amount for the proposed bond issue.