City pulls $1.8M from debt reserve

Balance has grown in fund that assists with debt service payments, budget official says

The city is using $1.8 million from its debt reser ve fund to help with its debt payment next year as its gears up to borrow more than $15 million for improvement projects.

While not clearly noted in the proposed 2020 budget, Albany of ficials said money accrued through interest on unspent bonds and related funds assists in paying the roughly $23 million debt ser vice pay ment scheduled for 2020.

Albany Budget Director Michael Wheeler said they ty pically use about $1 million from the city ’s debt reser ve fund each year to help with the debt payments, but were able to increase that contribution since the balance g rew.

“This is a restricted f und outside of the operating fund that can only be used toward debt ser vice payments,” Wheeler said.

The city builds the debt reser ve through interest earned on unspent bonds, premiums offered from borrowers and remaining balances from bonds, said city Treasurer Darius Shahinfar. Municipalities are restricted on what they can use the bonds for, as well as on the reser ve itself — which can only be used to pay down debt, he said.

“It ’s a way to build your fund balance back up with general revenues if you can use the debt reser ves to handle debt costs,” Shahinfar said, noting Albany has amassed $9.1 million in its fund balance.

The debt pay ment plan is outlined in Mayor Kathy Sheehan’s proposed 2020 budget released Oct. 1.

Common Councilwoman Judy Doesschate, who chairs its Finance Committee, said it ’s ambig uous for the administration to present the debt ser vice this way.

In Sheehan’s proposed 2020 budget, the debt ser vice expenditure is noted as $21.8 million, a fig ure that does not include the debt reser ve funding nor the city ’s amortized retirement debt. It does include nearly $6 million in debt associated with the Rapp Road Landfill.

“It ’s just the characterization of this in the budget and the dif ferent handling of that debt ser vice that I don’t approve

of,” Doesschate said. “I’m not comfortable with, because it doesn’t show the rea l year-to-year increase in the budget.”

The council also will weigh in on the more than $24 million in capital projects planned for 2020.

About $8.7 million of those costs will be covered by g rants, such as those Albany won through the state’s Downtown Revitalization Initiative.

This results in Albany only needing to borrow about $15.5 million next year.

Doesschate said that overall the capital improvements are necessar y — especially funding for street and sidewalk repairs — but contended that council members would like to see more money spent on improving existing parks rather than the creation of a new, multimilliondollar linear park, the Sky way.

Sheehan’s administration wants to borrow a combined $1.4 million for the Sky way.

Meanwhile, they ’re requesting $1 million for

Lincoln Park improvements.

“We are in a dif ficult financial situation and we need to be looking at what adds the most to our qualit y of life,” she said. “We’ll see what council members think as we need to make some tough decisions in this budget.” ■ ■