City of SC to fund 2018 cap­i­tal projects with added bor­row­ing

Prairie Post (East Edition) - - Front Page - BY MATTHEW LIEBEN­BERG — mlieben­[email protected]­t.com

The City of Swift Cur­rent will use debt to fund some of the projects in the 2018 cap­i­tal in­vest­ment bud­get.

Coun­cil­lors ap­proved a mo­tion at a reg­u­lar coun­cil meet­ing on Aug. 27 to ad­vise the pub­lic of coun­cil's in­ten­tion to con­sider a bor­row­ing by­law for fi­nanc­ing within gen­eral gov­ern­ment and util­ity op­er­a­tions.

The bor­row­ing by­law will re­sult in the cre­ation of an additional $1,267,692 in debt. Kathy Hopfner, the City's Gen­eral Man­ager of Cor­po­rate Ser­vices, said this bor­rowed amount is fully funded in the 2018 bud­get.

“When coun­cil worked on the 2018 cap­i­tal bud­get, part of ap­prov­ing ev­ery project is it's de­ter­mined how it's go­ing to be paid for,” she said af­ter the meet­ing. “Some projects will be paid for through sur­pluses in our util­i­ties and other projects are paid for through debt. So it's de­ter­mined at bud­get time. When coun­cil ap­proves the bud­get, they also ap­prove how they're pay­ing for it.”

A $495,000 por­tion of the debt will be funded through solid waste util­ity rev­enue and $772,692 of the debt is cov­ered by in­come re­ceived in the gen­eral gov­ern­ment fund as a re­sult of the 2018 tax in­crease.

“Gen­eral gov­ern­ment of $772,692 is funded through the tax in­crease that you re­ceived on your 2018 tax no­tice,” she said. “That one-time in­crease will make the in­ter­est and prin­ci­pal pay­ments through the term of the debt.”

The bor­rowed money will be used to fund dif­fer­ent projects in the City's 2018 cap­i­tal bud­get. A por­tion will be used for the con­struc­tion of a storm wa­ter re­ten­tion pond and slope grad­ing at the East land­fill, as well as the con­struc­tion of a scale house at this land­fill site.

Another part of the bor­rowed money will be al­lo­cated to the gen­eral gov­ern­ment por­tion of the bud­get for the pur­chase of an additional hy­drovac truck and to fund the de­sign of the new fire hall.

The City will re­pay debt over a 10 or 20-year pe­riod, de­pend­ing on the use­ful life of an as­set that is funded with bor­rowed money.

“Some of the as­sets that are funded through debt have a life ex­pectancy more than 20 years, but that's the max­i­mum term we'll take out on debt,” she ex­plained. “The debt that's funded through 10 years is our charge­able equip­ment, which has a life ex­pectancy of 10 years.”

In the doc­u­ment that was pre­sented to coun­cil it is men­tioned that if debt is used to fi­nance in­fras­truc­ture in­vest­ments, it will dis­trib­ute the cost of long-term as­sets across gen­er­a­tions of res­i­dents who will use these as­sets.

“It's a good tool to use to pay for as­sets,” she said. “It's not a lot dif­fer­ent than when you take out a mort­gage on your home. You pay for your home over a por­tion of the pe­riod that you live in your home.”

The doc­u­ment also pro­vided de­tails to coun­cil­lors about the City's cur­rent debt sit­u­a­tion. The prin­ci­pal amount of debt for gen­eral gov­ern­ment and util­ity op­er­a­tions was $64,383,097 on Dec. 31, 2017.

De­spite tak­ing on this additional debt of over $1.2 mil­lion in 2018, the City will still be re­duc­ing its out­stand­ing debt by the end of 2018. The gen­eral gov­ern­ment and util­ity op­er­a­tions debt is sched­uled to de­crease by an amount of $3,599,027 and the out­stand­ing debt will be $60,784,070 on Dec. 31, 2018.

“In this par­tic­u­lar year we paid off more debt than what we took out,” she said. “An­nu­ally we have debt pay­ments, prin­ci­pal pay­ments of around $4 mil­lion. So be­cause we paid down our debt by $4 mil­lion and took out $1.2 mil­lion and we're tak­ing the debt out later in the year, our debt will de­crease by $3.5 mil­lion.”

Even though the City's 2018 cap­i­tal bud­get was al­ready ap­proved at the start of the year, it only takes out the additional debt of $1.2 mil­lion when the work is done.

“We take the debt out when we start ac­tu­ally spend­ing the money,” she said. “So the cap­i­tal bud­get is ap­proved early in the year, but a lot of the cap­i­tal projects don't get go­ing un­til the mid­dle of the year. So we don't take out that debt in Jan­uary if we're not go­ing to use it un­til Au­gust or Septem­ber.”

The City has sched­uled a spe­cial coun­cil meet­ing for Sept. 19 to give three read­ings to the bor­row­ing by­law.

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