Dunkirk debt report a concern
Just how much does the city of Dunkirk owe in bond debt, and how much more will be added were two questions the Common Council Finance Committee heard some answers to when it met Monday in City Hall.
Councilman Michael Michalski asked Fiscal Affairs Officer Richard Halas to prepare a report for the committee analyzing the city’s current debt and payments, along with projected debt and payments.
The city currently has seven bonds it is paying back, including an energy performance bond that is spread across the three operating funds; general, water and wastewater. That payment is part of the Siemens energy project the city undertook with the payments offset depending on the city’s energy use.
The general fund also contains the bond that paid for the Boardwalk Market, which will be paid off in 2021. The city still owes $530,000 on that bond at 3.02 percent, with payments ranging from $76,037 in 2015 to $80,625 in 2020.
The wastewater fund will make the final payment of $60,087 on one of its three current bonds in 2015. Another $3,410,000 is still owed on a sewer reconstruct project that will be paid off in 2033, with $320,356 due in 2015.
The water fund now owes the largest amount, but most of that debt is for the consent order work and is in bond anticipation notes currently totaling $12,466,000. When that amount is converted into bonds, the payment will jump from $186,990 in 2015, the last year for the bond anticipation notes, to $810,290 in 2016 under figures assuming a 40-year-note at 4 percent.
In addition, the seawall project could add another $2 million in debt to the general fund. Paying that back over 40 years at 4 percent would add $130,000 to the 2016 budget with the amount decreasing each year.
Halas also presented figures covering some borrowing that is being discussed.
A study of the city’s fire halls is underway. Any expense for that would be added to the property taxes and be paid by about 50 percent of property owners, the rest of the properties being property tax-exempt. A bond of $5 million would add $325,000 in debt service to the general fund the first year.
A wastewater treatment plant project being contemplated could come with a nearly $9 million price tag, although all users would contribute to that bill. That would add $578,500 in debt service the first year of payback.
Right now, the total bond balance for all three funds is $17,669,849 with annual payments topping $1,348,835 in 2016, before starting to drop. If the city were to go ahead with all projects being discussed, the total bond balance could reach $41,750,000, with a 2016 payment projected at $2,902,335.
Committee members Councilwoman-at-Large Stephanie Kiyak and Councilman Adelino Gonzalez, along with Councilwoman Stacy Szukala were present for the meeting, questioning the figures and wondering if taxpayers could handle a large increase in property taxes.
According to City Treasurer Mark Woods, raising the tax rate $1 per thousand of assessed valuation would result in an additional $280,000 per year. Previous water rate increases would cover borrowing the city has already done for the consent order work.
Michalski said the report was “very sobering news.”
“It’s not something that we want to hear but it’s something that we need to hear,” he added. “We need to know where we stand currently regarding our debt. It’s something that we need to look at as far as where we’re going. We have to consider all things and we need to know the big picture of the city’s financial situation and that’s something we need to look at. We can’t just do it piecemeal with the right hand not knowing what the left hand is doing.
“We needed this, I think it was good for the committee to look at the big picture of the city and where it’s heading financially with its debt.”
If the city does additional work on its water filtration and distribution system to increase its capacity from 6 to 10 million gallons per day, more borrowing may be necessary.
“I think the biggest factor in the water rate is going to be where we go with the water district. Do we go in that direction or do we look at adding users on our own?” Michalski stated. “I think that’s something we’re going to need to consider. Obviously, the more users you have involved the less burden it is on each existing user.”
Council is scheduled to meet in regular session May 6.
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