Bonding the Whole Thing?
By Andrew Richter
Paying for new public buildings is never fun but in Crystal it has become a circus. Let me give you a quick history;
Crystal is in need of a new public works facility. The old building is falling apart. I can testify to this since I toured the building a few years back. Crystal, though, is a fully developed community which limits where a new building can go. Without going through all the details, Crystal decided to make the old Knights of Columbus building their new site. To do this, they had to buy the land and use eminent domain to acquire several businesses. One parcel of land is still in litigation.
At the time (around November 2013) the council had decided to use cash to pay for the project. Crystal has a building replacement fund and that has over $10,300,000 in it. Mayor Adams went on Mayor’s Minutes and reaffirmed the council’s decision. Since then, though, the council seems to have changed their minds about the financing.
The total bill for the project is as follows according to city documents I’ve uncovered;
Site Acquisition and Clearance $3,000,000
Construction Costs $8,8,00,000
Consulting and Furnishing $1,700,000 (believe it or not)
The council can still pay cash for the project by taking money from other funds to finance this, but now (at least with the current council until January) that doesn’t look likely.
The council seems to have three options before them
1) Pay all cash
This can be done by using the $10.3 million building replacement fund combined with funds from other areas. The Highway 81 levy (about $563,000 a year) could then be used to replenish the building replacement fund.
2) All bonding
An all bonding option would be the most expensive option. According to city documents the bonding payments will not begin until February 2017 and they won’t end until 2036! Over the life of the bond, the city will repay the principal of $13,500,000 and on top of that they will pay an extra $5,844,727.50 in interest for a grand total of $19,344,727.50! So , in other words, bonding the whole project will stick Crystal citizens with almost $6 million in debt!
3) Some combination of the two
The council has discussed bonding $4 million and paying cash for the rest. This vote requires a super majority or five of seven members. This option will cost about $1,000,0000 in interest payments.
From listening to work sessions it seems as though Laura Libby and John Budziszewski want to bond the whole thing. I can’t make a shred of sense on Libby’s reasoning. I’ve been trying all morning but I just don’t know how to summarize it. Budziezewski also wants to bond for reasons that make little if any sense. At the August 27 work session Budziezewski said that he didn’t want to discuss financing until he was “assured” that the Highway 81 wouldn’t used for anything except being returned to taxpayers. Quite frankly, this position really ticks me off. As I’ve explained before, this guy isn’t the protector of this money and has done nothing for it until his re-election bid. So we’re going to spend almost $6,000,000 of taxpayer money to save $563,000!! Make a lot of sense Johnny B! Budziezewski said near the end of the meeting that “he didn’t are if the entire project was scrapped.” Wow, what a guy! You vote to spend $3,000,000 acquiring the property and use eminent domain and then you want to scrap the project!
The rest of the council seems to have shifted their positions too. Mark Hoffman and Joe Selton originally wanted to pay cash for the project but they almost immediately started to back pedal. Even Casey Peak and Julie Deshler seem to have wavered a bit on the “all-cash” option. Only Mayor Jim Adams has steadfastly said he doesn’t want to bond.
I think city staff is also responsible for this “walk back” on the all-cash option. After the council agreed to pay cash for the project, staff began to voice their concerns about other things. All of a sudden the police department needed a new expansion ten years before they originally said. All of a sudden the community center “might need some work.” And all of a sudden the almost never used Becker Park Pavilion “may need a new roof.” Staff is clearly pushing the council to do some bonding and I think these scare tactics have influenced some council members.
My concern continues to be the “all bonding” option and I would like to delay action on this. My worry is that the bitter outgoing councilmen are going to push the “all-bonding” option just to stick to the next council. At the November 13 work session Julie Deshler tried to push a decision off until January since the council is so divided. Mark Hoffman, though, was hearing none of it. No, no, he doesn’t want the next council to have a crack at this. Hoffman also insinuated that if the vote to bond $4,000,000 fails, he will vote for the all-bonding option. And whatever Hoffman does, Joe Selton will follow suit since they’re joined at the hip.
A public hearing is scheduled for December 2 and supposedly a vote is going to take place on December 16 (as always the public hearing is last). Considering the awful conduct by four members of the council at the November 6 meeting, we really need to worry about what could happen here. Will the three outgoing council people and Laura Libby force a vote on December 2? Are they going force the all-bonding option sticking Crystal citizens and the next council with $6,000,000 in debt?
I’m not going to prognosticate on what will happen but I suggest that Crystal citizens get to the December 2 meeting and voice their concerns. Whether they are listened to or not is up in the air.