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| 3/3/2010 4:14:00 PM | Email this article • Print this article | Funding set for 2nd fire station
Council votes to use $900,000 of reserves for project
Tere Dunlap
MONROE - The Monroe Common Council voted unanimously Tuesday to stop the sale of $950,000 in general obligation bonds for the construction of a west-side fire station and to pay for the facility with cash on hand.
The Finance and Taxation Committee recommended Monday that the city draw from its $5.1 million in undesignated reserve funds to cover the cost of the new facility, budgeted at $900,000.
The move will save the city an estimated $654,000 in interest costs over the life of the 20-year general obligation bond issue.
"This funding option is not entirely new," said Daryl Rausch, Monroe Fire Chief. "It was discussed in our earliest proposals but could not be pursued until after the 2007 and 2008 audits were completed.
"This funding model allows us to fill a critical need with essentially no additional cost to the taxpayer as we suggested back in September of 2008. I appreciate the council and mayor's willingness to consider all possible solutions, and I especially appreciate the effort put forth by the comptroller's office to bring this option to the table."
Property owners will be saved from an increase in taxes for debt service on the bond sale. The bonds would have added about 9 cents per $1,000 of equalized property value, or $9 on a $100,000 home, per year.
Alderman Thurston Hanson, a past opponent of building the new facility in view of the current economic hardship on the city's residents, voted for canceling the bond sale.
"It is clearly better for the city to pay "cash" for the fire station rather than financing it," Hanson said. "The council spoke - they want this fire station, even though I, and countless citizens, do not share that view. Since the council spoke, it is much better to pay cash for it rather than finance it, because it saves the city approximately $600,000 in interest and fees."
Council had authorized the bond sale on Feb. 17 in a resolution that Hanson voted against.
"Personally, I would rather see some of the city's unreserved funds used to pay for infrastructure needs on the 8th/9th street project, rather than hitting the taxpayers with water or sewer fee increases now or in the future," Hanson said. "Barring infrastructure improvements, I would then prefer to use these unreserved funds for property tax relief for the taxpayers."
At its meeting Monday, some Finance and Taxation Committee members indicated they were considering the possibility of dipping into the reserves to help the Water Utility fund an additional $350,000-400,000 in extra costs to replace water lines in the 8th and 9th streets reconstruction project next year.
A proposed 29 percent water rate increase includes only about $181,000 for the project.
The committee was also considering a one-time $200,000 relief in property taxes for the utility. The committee postponed any action on the utility's rates and budget constraints until March 16.
In a report to the city on its cash position and undesignated general fund balance, financial advisor Ehlers and Associates recommended Monday that the city keep at least $2.5 million in an undesignated reserve fund for unforeseen emergencies and to keep the city's A2 rating by Moody's Investment Service.
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