City finance committee moves forward on projectsPublished 9:46am Tuesday, July 2, 2013
Funding for police cruisers, computers and the demolition of Memorial Hall were discussed at Ironton City Council’s finance committee meeting last week, with the committee giving a thumbs up to taking advantage of Lawrence County’s Neighborhood Investment Program.
Lawrence County Treasurer Stephen Burcham attended the meeting on Thursday to explain the premise of the program, where he buys bonds to be issued by municipalities at a lower interest rate than the city would be able to get on its own.
Burcham said the program is a win-win for the county and the city.
“The money that would be paid to the county would stay within the county and then be able to be used for other projects for the city or other municipalities within the county,” Burcham said.
Burcham said he has completed 13 projects throughout the county with the program. One of those was buying a $200,000 bond from the Village of Proctorville, providing the village with terms of five years at 2 percent rate, more than 3 percent less than the terms of a bank.
Kristen Martin, city finance director, presented a plan for the city to refinance a current debt and borrow additional money for four new projects.
The debt that would be refinanced is the remaining $300,000 of a $700,000 loan for a backflow preventer and Vaccon pump. Currently, the interest rate on that loan is 3 percent with $13,000 monthly payments.
With the Neighborhood Investment Program, Martin said the interest rate could be lowered to about 0.9 percent.
“That looks to save between $10,000 and $15,000 in interest in the next two years on just that one project,” Martin said.
“So it’s not like we are dealing with an out-of-town bank,” Kevin Waldo, finance committee member said. “It sounds like an absolute win-win to me.”
Through the program, the city would sell about $525,000 more in bonds for four new projects: five police cruisers, one sanitation truck, computer and server upgrades and the demolition of Memorial Hall.
The purchase of five new police cruisers was approved by council earlier this year, but financing for the $175,000 project has not been sought yet. Through the investment program, interest on the loan would be about 1.5 percent with a monthly payment of about $3,700 coming from the police department’s funds.
The sanitation truck was also approved by council earlier this year and is in the process of being built, Martin said.
Cost for the truck is about $128,000. The debt payment would be about $2,700 per month from the sanitation fund.
A new project on deck is replacing out-of-date computers, servers and printers in various city departments.
For about $72,000, Martin said the goal is to replace about 10 computers, one server and five printers in the police department; 15 to 20 computers and some local printers throughout the income tax, water and finance departments; and a few scanners, printers and computers in the fire department.
Martin said the city needs the hardware upgrades in order to use compatible web-based software to use a time clock system.
The repayment would be about $1,500 per month spread over the various departments.
The final project is the demolition of Memorial Hall. Martin included $150,000 in the loan amount, estimating that bids for the project may come in high. The monthly payment would be about $3,200.
The project would remove all debris except the sandstone and Mayor Rich Blankenship said he would start the process to advertise for bids.
“That building is going to hurt somebody,” Mike Lutz, committee member, said. “It needs to get down.”
Aaron Bollinger, also a finance committee member, agreed that the projects should move forward.
“All of these are important projects I think we have to do, so I would definitely be in support of these,” Bollinger said.
Dave Frazer, city council member, asked Martin if the city could afford all the projects.
Martin said yes, explaining that the repayments would come from the appropriate departments, with the Memorial Hall demolition repayment to come from the general fund.
In total, the city would have two separate bonds for a total of $825,000 through the investment program. One bond for the refinanced amount would be for one year at 0.9 percent with a monthly payment of $17,719. The remaining amount would be at 1.5 percent for four years. That payment has not been determined.
The next step is to have council have three readings of an ordinance that would sell the loan to the county treasurer.
In other business, council had second and third readings of two ordinances that would refinance two long-term loans, with a third ordinance combining the two loans into one piece of debt.
One loan was for $1 million, the approximate remaining balance for the city center. The other loan was about $1.3 million, the amount left on the fire station.
Martin said the city should save about $25,000 per year by refinancing with an interest rate between 3 and 3.4 percent. Over the remaining life of the loan, the savings would be about $275,000, Martin said.
The bonds are being refinanced with the Robert W. Baird & Co firm.