Debt becomes city’s economic development
Date posted: August 15, 2014
Re: Who is managing liabilities?
The Aug. 9 edition of The Press printed a public service ad titled, “There’s a lot going on in Sheridan.” This ad updates progress on five city construction projects.
The minutes of City Council for Aug. 4 show that council passed three resolutions, without discussion, on the consent agenda. These resolutions are to apply for a loan and two grants for construction projects.
In fiscal year 2012-2013, total revenues for the city were $12,181,276. If you look at the most recent audit for the city, dated June 30, 2013, the city had committed, in 2013, to $9.3 million in new construction projects and had outstanding debt of $54,392,544 on current projects.
The audit noted long term debt, not related to construction projects, of $15,314,069. The city can bond to debt, up to 4 percent of the city’s property tax evaluation. Sheridan’s present tax value is $166 million, so $6 million could be borrowed by issuing bonds. Construction and other contract debt are different from bond debt. This contract debt requires sound fiscal management. Here is the question. Do debt loaded construction projects contribute to economic development? The “if you build it, they will come,” “business ready community” idea. When council puts loan and grant applications on the consent agenda, I wonder, does council understand long-term debt?
The membership of city council has changed many times in the past 10 years. Former Mayor Dave Kinskey was committed to the grow business, economic development concept, much appreciated by bankers, contractors, developers and the chamber of commerce.
In June, the city locked in a two-year budget based on anticipated revenues of $15 million per year. This is the operational budget. Who is managing the $80 million in long-term debt? Hiring a chief of staff to manage staff, for $137,000 per year does nothing to address debt. Is it time for council to push away from the table and call, “check please?”