With an ordinance for $70 million in Terre Haute Sanitary District construction bonds facing certain defeat, Mayor Duke Bennett’s administration requested and the City Council Thursday agreed to withdraw the measure.
The administration will attempt to sell $15 million in bonds funded by sewer rates and pursue design work for Phase II of the city’s long-term pollution control project, City Attorney Eddie Felling told the council. The smaller bond passed by the Sanitary District Board does not require council approval.
Administrators of a state revolving loan fund, which finances the city’s wastewater treatment projects, had requested council approval of construction bonds prior to design work in order to ensure funding would be in place for the project.
Council members were concerned about recent cost estimates of $76 million after being told last year the project would run about $42 million. Members of the city administration have said they believe the actual cost will be much lower than $76 million and only the amount needed would be borrowed. But council members were reluctant to authorize more money than might be required.
The goal, Felling said, is to revisit a bond issue to fund construction in late summer 2018 once a design has been finalized and more is known about the cost of the project.
The city faces a May deadline to complete design and financing in order to comply with terms of a 2009 agreed judgment with the Indiana Department of Environmental Management approved in Vigo Superior Court. Felling said the city will likely need a “short extension” of the May deadline.
Asked by Councilman Todd Nation, D-4th, what role the council might play in the project, Felling said, “I believe the administration would be happy to have one or more council members be a part of that discussion as we analyze the design as we move forward.” Councilman Earl Elliott, R-2nd, chairman of the finance committee, said he would reach out to City Engineer Chuck Ennis to remain involved in the project.
He also reported on a meeting of Terre Haute Competes in which concern was expressed about the value of the wastewater treatment utility to potential private operators if it took on $70 million in new debt. Elliott is a member of Terre Haute Competes, a public-private efficiency panel that has recommended privatization.
As the council prepared to vote on withdrawing the ordinance, Pat Goodwin, former city engineer, took the podium to express “disappointment with the gamesmanship we’re seeing tonight.” He suggested the administration will advance the project “to the point where we can’t put the toothpaste back in the tube and then the council will have to have to say yes.” Goodwin said a $10 million estimate for consulting work should be in the $3 million to $5 million range.
“Apparently they’re going to go ahead and spend that so you’re not going to get a chance to say that was too much later on,” he said.
The council approved several financial matters related to a state order to eliminate a series of deficits in various city funds by the end of the year, but not without some bumps.
Extension of a $5 million loan of redevelopment funds to the city’s general fund until June 2018 was approved 5-4. The loan had been scheduled to be repaid by year’s end.
Council President Karrum Nasser, D-3rd, Councilwoman Martha Crosson, D-6th, and Councilmen Neil Garrison, D-5th, and Nation opposed the extension.
Felling and Elliott noted the administration expects to request a further renewal in June but for $2 million instead of $5 million. Elliott said the amount borrowed through tax anticipation warrants is also expected to be reduced next year, from $4 million to $2 million, reflecting continued improvement in the city’s finances.
The council also approved $8 million in various fund transfers, although Nation opposed the use of $5 million, which represents the redevelopment loan, for police salaries, police retirement and group health insurance.
“This is the last appropriation in a long list of shuffling money around to make up for years of deficit funding under this administration,” Nation said. “Depending on redevelopment money to bail out the bad decisions by the administration over the last few years is an unfortunate position for us to be in.”
City Controller Leslie Ellis said, “We all wish that we weren’t in this position, but she said other cities have raised funds through local income taxes, storm water fees and other means “that are hard for our community to do, but we don’t want to limit services.”
Ellis pointed out, as she has earlier, that the city’s 2018 general fund budget is $10 million less than in 2008, when state property tax cuts were implemented.
Nasser sought and received assurances from Fire Chief Jeff Fisher that his department would still be able to purchase three new ambulances and a new ladder truck even after a $1.1 million transfer from its emergency medical services fund to pay firefighters’ salaries.