April 16, 2014 9:27:08 AM
Nathan Gregory - email@example.com
Columbus councilmen Tuesday passed a resolution of intent to issue a $5 million capital improvement bond.
That means that within the next 30 days the city must publish advertisements notifying citizens of its intention to raise taxes in order to pay back a $5 million loan aimed at improving infrastructure in Columbus.
Then, next month, councilmen can approve the financing plan, which would be supplemented by a 1.1 mill tax increase for city residents. The loan is meant to finance repairs to streets, sidewalks and drainage.
If a petition garners 1,500 Columbus residents' signatures within the next 30 days, however, the matter would be taken out of the council's hands and put on a ballot for residents to vote on. Sixty percent of voters would have to vote to approve a bond issue.
The intent passed Tuesday with a 4-2 vote. Councilmen Bill Gavin and Kabir Karriem were opposed. A counter-motion by Karriem to table the issue one more month in order to gather more information was met by applause from the audience. Gavin seconded the motion but it died with no other support.
Modifications were made to the resolution since some of its details were presented Thursday during a public hearing. Some residents who attended that hearing questioned councilmen about whether there was a list of specific projects that the loan would pay for and whether the improvements would last as long as the 20-year plan proposed to pay off the debt.
One change was shortening the 20-year plan to a 15-year plan for the same amount. Bond consultant Steve Edds said the change would result in larger principal and interest payments for the city but the tax increase would remain 1.1 mills. A list of projects is still not set. However, the resolution requires that the city's engineering firm, Neel-Schaffer, present a master plan before the council can pass the resolution on May 20. The interest rate of the loan would also improve from 3.45 percent over 20 years to 3.11 percent with a 15-year payoff, Edds said.
While percentages and fees are not included in the resolution of intent, Columbus Mayor Robert Smith said Neel-Schaffer's fees would be 4.85 to 5 percent, while city project managing firm J5 Broaddus would receive 4 percent, while both city and bond counsel would each receive a fee worth 1 percent of the $5 million. Added up, that's 11 percent, or $550,000 of the $5 million in administrative costs. Mobilization of equipment to do the work was not included in the estimate.
Edds added that because of the city's debt portfolio and the structuring of the debt, the city will be able to free up more than $200,000 a year beginning in 2016 from the debt service into its general fund.
"You can set that aside to maintain roads in the future," Edds told the council. "The $220,000 does increase somewhat over time, so what we've really done is come up with a plan where we can deal with your immediate needs and solve them with the $5 million, and then provide enough money on an ongoing basis subject to some unusual circumstance that you would be able to budget ultimately $250,000 to $300,000 a year for street improvements with the hope that they would be sufficient to avoid having to issue any further debt in the future for streets."
Karriem asked Edds if the council had to pass a resolution right then to lock in a low interest rate. Edds said the sooner the council issued them, the more the city would benefit from an interest rate that is currently low but has been and will continue to be on the rise.
Karriem then said he believed another month was needed to address the concerns of the residents from Thursday's hearing.
"We just received in the last five minutes a plethora of information and this is the first that I've heard of it," Karriem said. "As far as planning and as far as lowering the years that we're going to pay back the loan and now we've got money going to the general fund to go to maintenance of the roads, all of that is good, but that's a lot of information that we just got."
Gavin also said more time was needed to consult with Neel-Schaffer on a specific plan in fairness to the residents who had questions before adopting a resolution.
Councilman Charlie Box said that could be accomplished in the next 30 days before the matter comes back to the council.
"This resolution...will not actually be passed until 30 days, so we actually have the 30-day period that it lays on the table to get all this information that has been requested," Box said. "I think we came a long way tonight in getting information for people."
Gavin then asked city attorney Jeff Turnage whether the city was obligated to work with and pay J5 Broaddus for any work regarding the project.
"The contract (the city and J5 agreed to last August) says they will serve as our project manager for all public works projects," Turnage said. "The contract says 6 percent and they've agreed to do it for 4 (percent)."
The mayor then contended that the percentage of administrative costs taken off the top would be noticeably lower than the last time the council passed a bond issue for road improvements. The city used $3.8 million of an $8.8 million bond issue approved in 2010 for similar improvements.
After Smith adjourned the meeting, Columbus resident Denise Good said residents' concerns from Thursday's hearing were ignored.
"I'm not convinced that we have all the answers we asked for at the forum," she said. "There were several concerns laid out, and some of them were answered tonight, although they were answered on the surface and really didn't give us enough information. Some people feel good about this and some do not ... When the motion was made to table it, I was totally in favor of that. Table it for 30 days, get some more information and then let's come back and see where we are, but that was voted down. Why? Now in 30 days, they're going to do something without all of the information and the people's opinion didn't matter."
Nathan Gregory covers city and county government for The Dispatch.