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Here’s The Scoop…5/26/09 LBTS Commission Meeting…#7…To Keep The Debt Or Not Keep The Debt…. That Is The Question……

HOW BIG A SLICE OF THE PIE?……….

Dear Readers…Agenda item 6 a…The Finance Report brought forward some interesting dialogue and some interesting facts …along with a big slice of confusion over whether or not to pay off part or all of the 8 million dollar debt the Town currently has…

Comm. Dodd- “I see on page 27 we have a projected debt service of $1.589 million this year and at the same time you have been telling us we are in the black and could pay off our debts. Where in the revenue part of the accounts are the figures that show our interest made on the money in hand that could be used to pay off the debt of 8 million.  Since I’m not an accountant I would logically expect somewhere in these accounts a revenue of at least $1.58 million if we are in the black and could pay off our debts if we wanted to. I asked at a previous meeting whether you have enough money in the accounts to pay off our debt and I was assured that you have.  We as a commission are responsible to the tax payers and should not be carrying an 8 million debt even if you feel you have an extremely good interest rate and extremely low repayment of the loan. We are not in the banking business.  Other municipalities went bankrupt because they thought the same thing. I would like to see a proposal as to how we should move forwards towards being “debt free”, which accounts have the surplus 8 million in order to pay off the current debt.  Personally I believe we should only take out a loan when we have a capital improvement project that can be justified to the residents and the money should only be used for that purpose.   I would like to publicly ask  that the Town Manager prepares a short financial report showing how she can turn the handle and pay off all the loans since we are “In the black”

BC- The Vice Mayor ever the “protector” of the Town Manager called for a point of order to head off Comm. Dodd getting a  response from the Town Manager by asking if Comm. Dodd gave her 24 hours saying this was “a lot of questions to ask the Town Manager with no preparation” saying ” it’s not fair”…Comm. Dodd asked the VM if this was going to be like the 24 hours required to ask questions of the VFD Chief? (a requirement that was finally dropped after it was pointed out that only Comm. Dodd was following the requirement)…

Town Manager Colon- ” Commissioner Dodd, Commissioner Dodd first of all if you recall we had a undesignated fund balances on the books at the end of 9/30/08. I believe approximately 8 million dollars. As you also recall all the loan proceeds for Capiital Improvements have been spent on all projects in the intracoastal in the north part of town. If you’re asking me if we can repay this Capital Fund debt down today with the funds we have on hand yes we can. Is it a prudent thing to do at this time? No it’s not! Present cash values on interest rates are lower than the rates that we obtained our loans. That if you and the consensus of this Commission is the desire to pay off this Capital Fund debt we have the funds to do that”

Comm. Dodd- said he was really asking about if we have a better rate “So what you’re trying to tell me we’re making a marginal profit on the fact that the value of the loan we took out ?”

Town Manager- ” I did not say that , I did not say that. What I said was the curent prevailing rates if you use the present value calculation of the money that’s out there today to get loans,  promissory notes it is a lower interest rate today than it was when we obtained the promissory notes. You asked me where is the interest on the loan proceeds and I am replying there is no interest as the loan proceeds have been used in the Capital Improvement projects in the north beach area. In other words if we borrow 10 million dollars and we spent 10 million dollars on Capital Improvements can you explain to me how I’m supposed to draw interest when the cash is not in the bank? We did Capital Improvement projects. What I am telling you that if you want to pay off your current debt for Capital Improvement the Town may do so because we have other funds available in their fund balance accounts which are designated as indicated in your 9/30/08 audit report.”

Comm. Dodd- said he thought we should pay down the 8 million debt and shouldn’t be playing one balance against another….

Town Manager- ” Well, I would disagree with you, that I think at this time the Town doesn’t have many funds available for Capital Improvement funds.I believe 3 about 3 years ago  went out, we renegotiated our debt issue. We obtained additional funds for Capital Improvement projects and the rates we obtained were lower than the original rates on the books at that time. Currently the rates are less than 2%. So if this Town want s to continue to do Capital Improvement projects, if you can renegotiate a debt issue at that amount or less which is less than our prevailing rates we could probably bring in more funds and continue Capital Improvement projects or infrastructure improvements and negotiate if we can a payment equal to our principal interest that we’re currently paying. You might want to pay off debt. We can pay off debt, but you also have to remember what your present value calculation is. They’re not gonna let you hypothetically on a mortgage wher you owe 10% and get  a 5% that’s not how our economy  works in this country.”

Comm. Dodd thanked her…and the Vice Mayor chimed in to say if he (Dodd) felt “strongly about it to make a motion on the 8 million”…(The hall erupted in laughter)..Comm. Dodd made a motion “to reduce the debt as fast as we can”…asking if he had “a 2nd or if his fellow Commissioners wanted to carry on in debt?.”…

The Mayor said there was a motion made by Dodd and Comm. Dodd said it died for lack of a 2nd…The VM again chimed in to say “The Mayor runs the meetings.”….(The hall erupted in laughter)…

Comm. Silverstone- “I think there during this whole discussion there we got lost in the original question of , are you on page 28 Commissioner Dodd? Are you looking at the fund balance of 1.7 (million) negative? Comm. Dodd replied he was on pg 27…looking at the debt service payment of 1.58 million…Some confusion on the pages…with Silverstone saying that was not on his pg. 27..it was on his pg. 26 and Comm. Dodd jokingly asked Silverstone if his computer was faster ..Silverstone replied “My computer’s not but the rest of me is! …He laughed and said “sorry”

BC- Many people have been commenting about Silverstone’s growing sarcasm, mean spirited comments and bitter behavior on the dais…

Comm. Silverstone- ” The um, the issue here, ah, I think what the Town Manager’s looking for and I’ll ax (ask) that question again. Town manager do we have enough cash in the bank right now to pay off all our debts?..(The TM said “yes”)….”Okay, If we do that and I talked to the Town Manager earlier today we had a discussion about this and I was actually gonna make a motion to start paying down the debt. Until I found out that as she explained the current interest rate is higher or is lower than the rate that we got , the original loan on. So by paying it back we’re actually going to be penalized on it. Doesn’t make a lot of sense to pay it off in my opinion. But if somebody wants to place a motion out here, I’m not going to 2nd it, I’m not going to vote for it. I think it’s a bad, it’s, it’s not ah, the right thing to do here. But, um just so everybody knows out there if you look at the budget report this year and the budget report for the same time last year the revenues coming in um, last year was 72.7% of what we expected to come in. This year it’s 79.2% so we’re actually ahead of it then we were last year. So we have more, greater amount of revenues coming into the General Fund than we did last year and roughly 10,8-10 million of that is um, advalorem ah, taxes in there which is 90% of our, of our budget of our revenues coming in. Um, expenses ,you have revenues , you have expenses an expense side. We had 81.3% of the budget spent this year to date same timef rame we have 79.2%. So we’re spending less money than we did last year. So again, I, I don’t know how to make it anymore clearer. I know I’ve been accused and personally attacked up here that I don’t know anything about accounting but I’ve done everything I can to explain it. And we had a CPA up here before explaining it and basically he said the same thing. Ah, the revenues that were projected are coming in, the expenses going out are within budget. We have enough money to pay off all the debt right now. I can’t, our economic situation is probably stronger than most towns in Broward County at this time ans most towns probably in America because of what’s going on out there. So I think the situation we are in and I don’t know how to explain it anymore simpler tha that, and I yield.”…

BC- Thanks to Comm. Dodd for bringing this to the dais…

Why did the Town Manager not act proactively about renegotiating the debt loan?…

Are the increased funds going into the General Funds really “transfers” from other funds?…

Why was it correct to move 1.3 million dollars from the proprietary fund…taking assessed sewer funds and depositing them in the General Fund?…The same was done with parking funds….

We have 674 thousand dollars in the Capital Improvement Fund at the present time…and with the 1.3 million sewer assessment funds…why not put it back in the sewer fund for town wide sewer infrastructure?…

What Capital Improvements are we in need of in the next year? We hear there is talk of building a VFD fire garage where the trailer is after its removal from next to the Public Safety Complex…any truth to this?…

Are we facing a penalty for early repayment?…(We never did find out if there was a penalty paid for early removal of funds from the state insurance pools)…

Why did no one follow through about a line of credit?…

As we face the budget workshops more questions should be asked and more creative proactive ideas should be coming from the administration…

more to come………

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