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Council takes on debt for bond
So it has come to this: the City of Bainbridge Island has been forced to go into debt with a $1.75 million bond in order to pay for a dozen small capital projects, about two-thirds of which have already been funded out of the city’s operating budget.
No one attending Wednesday’s City Council meeting offered any enthusiasm for nor surprise about the city’s need to issue councilmanic bonds to fund the projects; council members seemed resigned to going forward, while most members of the public who spoke castigated them and the administration for putting themselves in such a financial bind.
“We have no choice but to pass this bond,” council member Chris Snow said prior to the council’s 6-1 vote in favor of it. He said there was no doubt the city’s finances “are in disarray,” but that it would be irresponsible not to support the bond issue. Not passing the bond would only “create more problems for ourselves, and trying to wrestle with those doesn’t make any sense.”
At one point during the lengthy discussion, councilor Kim Brackett asked Finance Director Elray Konkel what choices the council would have if it didn’t issue the bond.
“We’d have to cancel the projects that haven’t started and stop or cancel others,” Konkel said. “Or we’d have to reduce our operations. And we would have to reopen the 2008 budget completely, I think, and make more reductions to offset what has been spent.”
The bond passed by the council included 13 projects with the amount of debt ranging from $14,000 needed to finish roadwork on Madison Avenue Northeast to $281,777 already spent on reconstruction of Fort Ward Hill Road. The bond also allows the city to pocket about $1 million in matching grants, three-fourths of which comes from a federal grant for Strawberry Plant Park.
The bond, for which the city hopes to have a purchase agreement on Sept. 10, also included road improvements near Blakely and Wilkes schools; two different bathroom projects; Waterfront Park dock repairs; work on open space and trail projects; and $250,000 for design of the Bainbridge Island Senior Center expansion.
Most of the capital projects were carried over from 2007 and were ongoing when the city realized a few months ago that revenues were not keeping up with expenditures, which has led to reducing the 2008 budget by several million dollars by cutting costs in operations and capital projects.
In defense of the council’s actions, Barry Peters said: “We have reduced expenditures to rebalance the budget. We have made many corrections and we have further reduced this bond from $4 million to $1.5 million. We expect to have a balanced budget at the end of the year. We are not borrowing money for operations, only for capital projects.”
Many members of the audience weren’t buying the explanation, including former council member Bob Scales.
“Bonds should be used for major, major projects, something worth 20 years of debt,” he said. “I don’t think any of these projects fill that need. A lot of these projects were funded with cash in 2007 but weren’t finished, so now the cash is gone. I have no idea why you are even considering this proposal.”
Several council members said they think they are making the best of a bad situation
Councilors Bill Knobloch and Kjell Stoknes blamed the $4.1 million councilmanic bonds issued in 2007 to purchase two properties to be set aside for parks.
“We inherited that $4 million debt and that was a debacle,” Knobloch said. “We had no idea in January what kind of shortfall we would have. I think we’re going to end up at the end of the year with a $4 million shortfall. We’re going to have to reduce the budget more or we’re going to spiral into a debt situation where we can’t do any projects.”
Stoknes said the current council is dealing with a problem that isn’t of its making.
“I am disappointed when I hear the amount of criticism we get,” he said. “The $4.1 million in unplanned spending the council approved last year for the parks... that’s where the money went.”
Debbie Vancil cast blame, in part, on the administration and its staff.
“The fact is,” she said, “we are not looking at the same numbers we were looking at in 2007. We rely on staff to advise us, and when we go in a different direction we are criticized even though we are relying on their information. We were assured we could pay for the projects (in 2007), but when the revenues started coming... well, we know now.
“We have tried to make corrections with the new council coming aboard and we have. We have been willing to change course, though some thought we should do it more dramatically as the year has progressed and the economy continues to go down,” she said.
The senior center drew the most attention from council members, all of whom favor the project but were undecided on whether part or all of the $250,000 should be included in this year’s councilmanic bond.
At one time, Knobloch said he couldn’t support the bond, saying that it was “riding the coattails of the senior center. We need to balance our expenditures against our expenses. This wish list is way beyond what we can afford. This is nuts. Putting the senior center in there is a hijacking to me.”
He favors letting voters decide rather than including the senior center piecemeal in a councilmanic bond.
But with time running out during the four-hour meeting, Vancil made an amendment to the motion to approve the bond, putting all of the $250,000 needed for the next design phase of the senior center.
“Of any on the whole list, this belongs,” she said. “Bonds should be for major capital projects. The senior center needs to be improved and it’s now in the third stage of a three-year design.”
Both the motion and the amendment passed 6-1, with Stoknes voting against placing the senior center in the bond, although he supports the project as a whole.
“Basic services are at risk and I have trouble supporting anything right now that’s not a basic service,” he said. “We’re in a basic-service mode and I don’t have confidence to move on this one.”
The bond did not include Rockaway Beach Drive project, which is not ready, and repairs of roads damaged in the December 2007 storm. Konkel said the city’s share of the work ($237,311) will be funded by a public works trust fund loan with the state. Interest for the state loan is 3 percent, compared to 4.5 percent for interest on the councilmanic bond.