Warren on verge of bond vote
WARREN – Now that a repayment compromise is in place, council appears to be ready to vote on the three bond proposals that will allow the city to buy a downtown area building, renovate others and improve streets.
Council has been debating the passage of bonds totaling $2 million for the new building, $4 million for the renovations of city-owed buildings and $2.5 million for the road projects.
The vote on the bonds is scheduled for Sept. 25. However, the administration already has said it will not ask for a vote on the new building bond until a contract is negotiated with the owner of one of the buildings being considered.
The city has not announced which buildings are being considered for purchase.
Earlier this month, several council members suggested having maximum payment schedules of 10 years on each bond. They argued that paying the bonds off more quickly would save on interest and rid the city of the debt more quickly.
Auditor Dave Griffing, however, opposed the short payment schedules, suggesting the city should take advantage of the low interest rates available to it so the annual payments will be lower.
The city’s annual debt repayment budget is about $1.3 million. If council decides to pay the three bonds in 10 years, Griffing believes it will require the city to pay about $1.2 million a year on debt payment, leaving only $100,000 a year to use if there is an emergency and new debt is required.
As a compromise, Griffing suggested a repayment of 20 years for the new building, 15 years for building renovations and 10 years for the roads.
“Shortening the length of the payments would allow the city to have a payment of $790,000 annually, plus the $150,000 annual debt the city obtained last year,” Griffing said.
The annual bond debt would then be $940,000 per year, leaving money available if a catastrophic event happens and the city has to obtain more debt.
Griffing said he knows the city can handle the new $790,000 annual bond debt because it will have a bond debt of $750,000 per year dropping off its books in 2014.
While several council members suggested they still would like shorter repayment schedules, 15 years for the new building, 15 years for the renovations and 10 years for the roads, most said they could accept Griffing’s compromise.
The most discussion has revolved around the payment of the proposed new building. Although the administration is asking council to pass a $2 million bond to pay for it, the legislation before council says the purchase can be up to $3 million.
The administration says it is still negotiating with several building owners and a purchase price has not has been settled.
At least one of the buildings being considered has federal offices in it and these offices are expected to remain in the building even after the city’s purchase.
Councilman Vince Flask, D-5th Ward, agreed with Griffing saying the city needs to have flexibility to do other purchases.