03/21/1995 Meeting Minutes - Laserfiche WebLink

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Council Minutes of 3/21/95 ,. the residents have "bit the bullet" and they know what is good for the community: a mixture of residential development and commercial development. Mr. Lambert said he felt the residents should be rewarded for what they've done. He knows these problems go back long before Mayor Boyle came into office, but he hopes that everyone will do the best they can to keep the rates down. Martin Mooney, 23980 Elm Road, clarified two statements he made at the Finance Committee meeting. 1. He had asked what would happen to the surplus next year when the sewer rate increase was in effect for the entire year as opposed to nine months this year. It was explained to Mr. Mooney that the surplus would be eaten up by future costs. 2. Since the crty debt is approximately $51 million, he que~ioned what the legal limit was in Ohio. It was determined that the legal limit was 11.01 mills; and with the city at 9.54 mills, that leaves 1.47 mills that can be borrowed. Mr. Mooney commented that the 1.47 mills would support $10 million of borrowing, but he said borrowing $10 million would be `Tinaneial suicide." Mr. Mooney and Mayor Boyle engaged in a lengthy discussion regarding the retiring of three and four percent notes and replacing them with five and six percent bonds. Mr. Mooney expressed concern that this would eventually require another rate increase. Mayor Boyle explained that the expiration dates for the short-term notes were coming up this summer. The notes will probably be renewed with other short-term. notes to secure a low interest rate and then bonded next year to secure a Iow interest rate for a long period of time. The Mayor further explained that the new rates had keen determined with the goal of reversing the negative fund balance into a positive balance with a five to seven percent carryover by the end of 1996. It is hoped that these rates will hold until the end of the decade. Mr. Burns commented on the statement made earfier by Mr. Limpert that the city was close to $2 million on our debt limit. This was a calculation that was done in haste by our bond counsel without needed information by the bond underwriters. Based on that number, which gave us 3 tenths of a mill remaining capacity, that would have limited the city to $2 million after anticipated borrowing for this year's projects. After receiving the needed information, bond counsel has calculated the future capacity at $10 million to $12 million. Each year the city debt is reduced because of payments made on the principal. These principal payments along with the increase in property tax valuations increase the borrowing capacity. It is important to note that most of the debt issued during the last five years has its own revenue source. The sewer program has a revenue source as does the street program However, beginning this year the income tax that has been set aside for the street program will no longer support the debt service of the future debt. And that will be part of what is going to be needed out of the General Fund to help cover that debt. As deficits are erased, money is made available from the General Fund. Normal increases in revenues will basically cover increased costs of doing business--labor costs and utility costs will be increasing. As acost-saving measure, the city was able to replace a bond with a 12 3/8 % rate with a bond at 6.35%. Perhaps one thing that was not done in a prudent manner was not keeping to the 15-year rehabilitation program Instead many streets were fixed sooner than anticipated and much of the flooding has been abated sooner than anticipated. These actions benefited the city because the borrowings were 11