By LAURA UHLMANSIEK

Staff Reporter

The Crestwood Board of Aldermen was scheduled to consider approving a $3 million line of credit with Southwest Bank at a special meeting Tuesday night — after the Call went to press.

As proposed, the city’s Government Cen-ter would be used as collateral for the line of credit.

The city’s previous $2 million line of credit with Southwest Bank expired Sept. 28 and the Board of Aldermen voted Sept. 27 to approve a “bridge loan” not to ex-ceed $2 million to repay the line of credit until the bank could prepare the documents for a new line of credit. City officials said that the line of credit had to be increased to $3 million to keep the city operational this month and in return, the bank asked the city to pledge city hall as collateral.

Aldermen voted 5-1 to adopt an ordinance approving the bridge loan.

Board of Aldermen President Tim True-blood of Ward 2 voted against approving the bridge loan, while Ward 1 Alderman 1 LaBore and Ward 2 Alderman Jim Kelle-her were absent.

In voting “no,” Trueblood questioned whether the city would be in violation of the state Constitution once it approved the line of credit to replace the bridge loan.

Director of Finance Diana Madrid told the board that the extra million dollars needed for the line of credit was necessary to pay for the defeasance of the city’s $9.83 million in certificates of participation originally issued to fund the construction of a new police building. Aldermen voted unanimously to defease the certificates after the lowest base bid for the project totaled roughly $1 million more than the cost estimated by the project’s architect. The project also had become a focal point of residents’ dissatisfaction with the city’s precarious financial condition.

“The city’s cash-flow needs are in excess of $2 million until Nov. 1,” Madrid told the board. “… The bank for the last two years has provided the city with an approximate $2 million line of credit that has been un-collateralized. They are still willing to offer a uncollateralized line at $2 million. However to increase that, they are requesting the City Hall property.”

The bank will hold City Hall as collateral until the loan is paid off and it could be years before the city is able to do that, she said.

“Without a drastic reduction in the expenses or a significant increase in revenue, I don’t see that happening any time in the foreseeable future,” she said.

Trueblood said that although the bridge loan is not considered a long-term debt, the line of credit that will replace the bridge loan may be considered long term.

Therefore, he said the city would violate the Missouri Constitution for authorizing long-term debt without voter approval. He also noted that if the city didn’t approve the line of credit, the city may have to go into receivership.

“If we go into receivership, what happens?” he asked. “Who takes over our services? Who runs it at that point? We don’t. Someone else does. If we allow this second — if we get this line of credit of $3 million dollars, we’re in violation of the Constitution. Who out there is going to take us to court for breaking that Consti-tution issue with the city, and force us to stop doing that?”

Under the Missouri Constitution, governmental entities are limited on how much debt they can incur without submitting the issue to voters.

Mayor Roy Robinson told the Call that he doesn’t believe the line of credit would violate the Constitution.

“It’s a short-term loan, which is part of doing business of the city,” Robinson said.

Madrid explained Sept. 27 that South-west Bank was scheduled to meet Sept. 20 to discuss the terms of the $3 million line of credit that would have replaced the city’s $2 million line of credit that expired Sept. 28. Bank officials informed the city that the bank’s board was unable to meet, but offered the bridge loan to the city until the bank could determine the terms of the line of credit.

“Has the loaning institution given you or Ways and Means any indication of what their expectations of the city are?” True-blood asked Madrid.

Madrid responded, “They have not said what their terms will be. They will have that to us sometime in October…”

“I want to clarify a statement,” Robinson said. “Ways and Means and the mayor have not had any contact with the bank on this line of credit, period. I have not, I have had no meetings, no discussions, only through the finance director and the city administrator has anything gone on with the line of credit, so I don’t want there to be a misunderstanding there.”

“Part of the issue here is the defeasance,” Madrid said. “I just wrote UMB Bank (a) $1.1 million (check) … The increase is be-cause we just made an outlay of $1.1 million dollars.”

“Eventually that money is not going to be encumbered,” Ward 4 Alderman Joe O’Keefe said.

“I don’t think we will realize that (the savings of the defeasance in the capital improvement fund) until 2007,” Madrid said. “The reason being the capital im-provement fund did not have enough funds to write the $1.1 million check. The general fund wrote a check for $380,000 and the park and stormwater fund wrote a check for $200,000 for the defeasance. So in 2006, the capital improvement fund will need to pay back the other two funds …

“I believe it’s going to be very difficult for the city to decrease this line of credit without a significant decrease in expenses or influx of revenue or both,” Madrid said.

Trueblood said that if the voters had approved the general obligation bond issue not to exceed $6 million in April, the city would not be in this situation. Proceeds from the bond issue would have been used to retire the city’s line of credit with Southwest Bank, establish reserves sufficient to meet the city’s cash-flow needs and reconcile debts the general fund owes other city funds. The city’s current 25-cent-tax rate would have been increased 24 cents per $100 of assessed valuation for 10 years to retire the bonds.

“Would the board and this administration be willing to again approach GO bonds to pay for those things so that this debt can be done away with?” Trueblood asked. “If not, you’ve got a long-term debt ahead of you.”

Ward 3 Alderman Don Maddox said that with time the city will be able to pay off the debt, but will have to follow a strict budget.

“One of the things the board will have to do is we will have to say that our freeze on hiring is a freeze on hiring, period,” Mad-dox said. “No exceptions, whatsoever, the only exception I can think of is the city clerk and hopefully we don’t lose anymore de-partment directors but beyond that, if we lose someone that you think we need to have replaced, well, you’re just going to have to say, OK, somebody else pick up the slack.”

“I don’t know how we can sit here and talk about staff cuts when we have doubled up in one staff position that is now expanding into another and that would be (Police) Chief (Don) Greer’s position,” Trueblood said. “I think it’s a mistake. The cat’s out of the bag, but I guess we’re going to have that money extra … It was a campaign promise that’s been met, but now we have to pay for it.”

At the beginning of the meeting, Robin-son said that a panel he appointed to re-view applicants for the city administrator’s position was going to begin meeting soon.

The position currently is filled by Greer, who has been doing double duty as both city administrator and police chief since De-cember 2002. During his campaign, Robin-son said one person should not serve in both positions and pledged to hire a city administrator at no additional cost to the city.

Robinson told the Call that he appointed five members to the panel: John Foote, who will serve as chairman; Jim Brasfield, former mayor and alderman; Tracy Huston, a former alderman; LaBore and Ward 3 Alderman Jerry Miguel. Foote was a member of the Crestwood Smart Growth Alliance and is identified as a member of the Crest-wood Citizens for Fiscal Responsibility in a handout distributed at the July 12 Board of Aldermen meeting by the citizens’ group.

Aldermen voted to establish the panel Sept. 27, but did not vote on approving the appointments of the panel members.

“They authorized the panel to review the applicants and make their recommendations to me,” Robinson told the Call.