Tuesday, April 10, 2012

Spending CIP Surplus Dollars for the Event Center

Most municipalities don't have the luxury of trying to decide how to spend surplus dollars in their capital improvement plans. Based on what the city's lead auditor said in an April 2, 2012 Fiscal Committee Meeting, the city has enjoyed a $2 to $4 million dollar annual surplus in the capital improvement program each year except 2009.

The directors submitted their recommendations on how to spend the $4 million surplus in the CIP to the mayor.The mayor elected not to accept director recommendations on their CIP recommendations and instead submitted an ordinance to redirect the $4 million of unobligated CIP funds remaining from 2011 to the Event Center construction debt.

When asked by Councilor Jamison at a Fiscal Committee Meeting if the council could be given the director's recommendations, he was told by Finance Director Turbak that the mayor decided to pay down the debt so essentially the answer was no. The Council was not going to get to know what the directors submitted as recommendations on how to address their infrastructure needs using the $4 million surplus in the 2011 CIP.

No wonder 6 of the 8 councilors voted no on the mayor's proposed ordinance to use the $4 million in unobligated CIP funds from 2011 projects to go towards the Event Center construction debt at the City Council meeting on Tuesday, April 9th. Voting no were Councilors Brown, Jamison, Anderson, Erpenbach, Aquilar, and Karsky. Voting yes to the mayor's plan was Entenmen and Rolfing.

In presenting the Mayor's plan to direct the CIP surplus as a cash down payment that would reduce the amount of debt for the project by $4 million, Finance Director Turbak stated: "The plan that was presented to the voters was the best plan that we could get, the best plan we could develop at the time. It wasn't a perfect plan. That was acknowledged on a number of occasions, perfection of course is rarely achieved. If we would've waited for the perfect plan to come along, we wouldn't move forward on many projects ever but in spite of the fact that it was not a perfect plan, the voters did approve the project and authorized us to move ahead."

Excuse me?????  That is the justification of the administration to now apply the CIP cash surplus towards a debt that has already been planned for and presented to the public as debt we as citizens could afford but it really wasn't a perfect plan? If that is not doublespeak, I don't know what is.

If the city was so worried about the amount of debt, they sure didn't indicate that to the general public when they were selling their plan to finance the Event Center through tax exempt and taxable bond debt. To acknowledge that the public and some of the council members complained that there was no cash down payment as a justification to now use the surplus CIP money to buy down some of that debt is most interesting. Why buy down debt that is already planned for and is moving forward?

The city presented a plan to finance the construction of the Event Center through the sale of bonds. $102 million in tax exempt bonds have already been sold at a very attractive interest rate. The remaining amount will need to be sold as taxable bonds although no sale has been scheduled because the naming rights are being negotiated and the finance director says he needs to know about the $4 million dollars first.

Isn't it interesting how the plan keeps changing from what was presented to the general public during the campaign to get the public to vote yes on the EC election.  Obviously, 6 of the eight city council members don't buy the mayor's plan to use the surplus unobligated CIP money for this "new" plan, especially when the mayor already presented his plan to the public on how the event center construction was to be financed - through debt obligation of bond sales. It was a good idea then, but not a good idea now?

The Council's Fiscal Committee is going down the right path when they state there needs to be a policy regarding remaining unobligated CIP funds in a calendar year so they do not have to revisit the issue each year. The directors know what needs to be addressed in terms of infrastructure needs, whether that is unexpected, unplanned capital needs or projects that were delayed or moved out due to other priorities. The bottom line is that there are plenty of CIP needs and/or priorities that the surplus money can be used redirected towards this year.

The city already has a plan of action for the Event Center construction costs. They sold that plan to the public and the public approved the plan to finance the Event Center construction cost of $115 million by selling bonds and incurring the a debt for the next 22 years.

At some point, we need to move on and deal with the other infrastructure needs that still exist outside this big Event Center. Streets, water, sewer, parks, libraries, fire stations, traffic lights, building maintenance needs - the infrastructure needs are endless.

The mayor sold a plan to finance the event center construction. The public bought his plan, hook, line and sinker. Now, we hear it was not the perfect plan and we should be worrying about all that debt over the next 22 years and should use surplus CIP money to save us from all that debt. If the administration was so worried about finding additional money to fund infrastructure needs maybe they shouldn't have worked so hard to sell the debt idea to the general public as a no worry plan because we can afford it.

Use the surplus money to take care of infrastructure needs as identified by the directors. Thank you to the six councilors who voted no to the mayor's plan to redirect the CIP surplus funds to his event center and who clearly see the need to address the city's other infrastructure needs.

1 comment:

  1. It's no suprise that Entenmen & Rolfing voted to go along with Huether's wishes to use the $4 million towards the Event's Center debt, they are both as bad as he is . Kudos to the other 6 councilors who had the nerve to do the right thing and say no.