Debt, debt and more debt

Toledo City Council has several items on their agenda for their meeting next Tuesday, including issuing debt for multiple purposes. Some of them, like bonds for street improvements, are relatively routine. Others, like the $12.2 million for new garbage trucks, are not.

Interestingly, the city is again refinancing the bonds for the repair work on the Martin Luther King Bridge (Cherry Street Bridge for those of you who still haven't gotten used to the new name). Here is the text of the ordinance:

Providing for the issuance and sale of bonds in a maximum aggregate principal amount of $10,000,000 to provide funds to pay costs of improving the Martin Luther King Bridge in the City by rehabilitating, reconstructing and replacing the bascule lift spans and the bascule piers, installing new mechanical and electrical control systems, and relocating and reconstructing the operator towers, in each case together with the necessary appurtenances and work incidental thereto; and declaring an emergency.

SUMMARY & BACKGROUND:
This is one of a series of ordinances that authorize the issuance of general obligation bonds that the City plans to sell in August 2009. The amount received from the sale of the bonds authorized by this ordinance will be used, together with other funds, to retire a prior bridge improvement note maturing on October 22, 2009. With the issuance of these bonds and the retirement of the prior note, the City’s outstanding debt will be unchanged. There will be no negative impact on debt limits.

Pursuant to Ordinance No. 723-07 passed November 13, 2007, a note in anticipation of bonds in the amount of $10,000,000, dated December 4, 2007, was issued for the purpose described in Section 2, which note was retired with funds available to the City and the proceeds of a $10,000,000 note issued in anticipation of bonds pursuant to Ordinance No. 146 08 passed March 25, 2008, as a part of a consolidated issue of $18,950,000 Capital Improvement Notes, Series 2008 1, dated May 29, 2008, which note was retired at maturity with funds available to the City and the proceeds of a $10,000,000 note issued in anticipation of bonds pursuant to Ordinance No. 548-08 passed September 9, 2008, as part of a consolidated issue of $18,760,000 Capital Improvement Notes, Series 2008-2, dated October 23, 2008, which note was retired at maturity with funds available to the City and the proceeds of a $10,000,000 note (the Outstanding Note) issued in anticipation of bonds pursuant to Ordinance No. 130-09 passed March 31, 2009, as part of a consolidated issue of $16,840,000 Capital Improvement Notes, Series 2009-1, dated May 28, 2009, which Outstanding Note is to mature on October 22, 2009.

Note how many times the city has issued notes in anticipation of bonds, paid off bonds with new bonds and paid off notes with new notes?

Each time this is done, the length of time we pay interest on this money is extended.

And we're doing the same thing with bonds to pay for a paving project on Blackstone Drive between Homer Ave and Manhattan Blvd.:

Providing for the issuance and sale of bonds in a maximum aggregate principal amount of $115,000 to provide funds to pay costs of improving Blackstone Drive from Homer Avenue to Manhattan Boulevard by grading, draining, curbing and paving; and declaring an emergency.

SUMMARY & BACKGROUND:
This is one of a series of ordinances that authorize the issuance of general obligation bonds that the City plans to sell in August 2009. The amount received from the sale of the bonds authorized by this ordinance will be used, together with other funds, to retire a prior Blackstone Drive improvement note maturing on October 22, 2009. With the issuance of these bonds and the retirement of the prior note, the City’s outstanding debt will be unchanged. There will be no negative impact on debt limits.

Pursuant to Ordinance No. 162-06 passed March 28, 2006, a note in anticipation of bonds in the amount of $195,000 was issued for the purpose described in Section 2, as a part of a consolidated issue of $15,235,000 Capital Improvement Notes, Series 2006-1, dated May 25, 2006, which note was retired at maturity with funds available to the City and the proceeds of a $195,000 note issued in anticipation of bonds pursuant to Ordinance No. 555-06 passed March 27, 2006, as part of a consolidated issue of $12,260,000 Capital Improvement Notes, Series 2006-2, dated October 26, 2006, which note was retired at maturity with funds available to the City and the proceeds of a $195,000 note issued in anticipation of bonds pursuant to Ordinance No. 146-07 passed March 27, 2007, as part of a consolidated issue of $11,015,000 Capital Improvement Notes, Series 2007-1, dated May 24, 2007, which note was retired at maturity with funds available to the City and the proceeds of a $195,000 note issued in anticipation of bonds pursuant to Ordinance No. 639-07 passed September 18, 2007, as part of a consolidated issue of $10,770,000 Capital Improvement Notes, Series 2007-2, dated October 25, 2007, which note was retired at maturity with funds available to the City and the proceeds of a $155,000 note issued in anticipation of bonds pursuant to Ordinance No. 145-08 passed March 25, 2008, as a part of a consolidated issue of $18,950,000 Capital Improvement Notes, Series 2008-1, dated May 29, 2008, which note was retired at maturity with funds available to the City and the proceeds of a $155,000 note issued in anticipation of bonds pursuant to Ordinance No. 547-08 passed September 9, 2008, as part of a consolidated issue of $18,760,000 Capital Improvement Notes, Series 2008-2, dated October 23, 2008, which note was retired at maturity with funds available to the City and the proceeds of a $115,000 note (the Outstanding Note) issued in anticipation of bonds pursuant to Ordinance No. 129-09 passed March 31, 2009, as part of a consolidated issue of $16,840,000 Capital Improvement Notes, Series 2009-1, dated May 28, 2009, which Outstanding Note is to mature on October 22, 2009.

(I wonder how much it costs us to do each one of these transactions? I know we pay a bond counsel - attorneys - each time ...)

Now, these two items do not impact debt limits, but the $12.2 million in bonds for the garbage trucks and the $8 million in bonds for 2009 street improvements do. From those two ordinances:

The amount of the City’s outstanding debt will be increased by $12,200,000 by the issuance of these bonds. They will be subject to legal debt limits and reduce the City’s legal borrowing capacity.

and

The amount of the City’s outstanding debt will be increased by up to $8,000,000 by the issuance of these bonds. These bonds will be subject to legal debt limits and reduce the City’s legal borrowing capacity.

To top it all off, the city also wants to spend another $110,000 on an engineering study for solar fields on the landfill. They've already allocated $65,000 for this solar field study, and now their "logic" is that they need to do more of a study and do it right now so that maybe the project will be eligible for federal 'stimulus' funds. From the ordinance:

"By completing the planning and engineering for the project immediately, the City of Toledo may be able to make the project eligible to receive federal funds." (emphasis added)

So let's hurry up and go forward with this because we might get other borrowed money to help fund it ... better not worry about the lack of return on investment (ROI) or long-term operational costs that may make the project an unwise decision. Someone may give us other taxpayer money for it!

And they're going to use the Water Improvement Fund for this expenditure, though I don't see how building solar fields on a dump has anything to do with our water system....

It's just more spending and more spending ... and more debt to fund the spending.

Will it ever stop?