By MIKE ANTHONY
An ordinance approving a “bridge loan” with Southwest Bank not to exceed $2 million was scheduled to be considered earlier this week by the Crestwood Board of Al-dermen.
Aldermen planned to meet Tuesday night — after the Call went to press.
The city’s existing $2 million line of credit with Southwest Bank was scheduled to ex-pire Wednesday.
In her Sept. 23 operations report submitted to City Administrator Don Greer, Di-rector of Finance Diana Madrid wrote, “The Southwest Bank board did not meet as planned on Sept. 20, 2005, to discuss the city’s revolving loan renewal. The city ad-ministrator and I met with representatives from Southwest Bank. The bank informed us that they would be extending a bridge loan to the city until the bank’s board determines the terms of the new line of credit.”
In a memorandum to the Board of Alder-men, Greer wrote, “… In order to maintain the city’s cash flow, a ‘bridge’ or temporary line is being offered through the period Oct. 31, 2005. By the time of this expiration, the bank will have completed their renewal process for the line of credit.
“Assuming approval of this bridge loan, the board will need to review and approve the actual line of credit sometime during the month of October 2005 following the bank’s Board of Directors’ approval,” he wrote.
The city has been operating with a line of credit from Southwest Bank since Septem-ber 2003 when the Board of Aldermen approved an ordinance establishing a $1.25 million line of credit. The line of credit was to be repaid on or before June 30, 2004.
In May 2004, aldermen adopted an ordinance extending the line of credit until Sept. 29, 2004. Aldermen last September approved an ordinance to extend the line of credit — in an amount not to exceed $2 million — until Sept. 28, 2005.
Aldermen voted in January to place a general obligation bond issue not to exceed $6 million on the April 5 ballot.
Voters, however, defeated the bond issue, which required a four-sevenths supermajority vote for approval. 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. During a March 22 Board of Alder-men meeting, Greer said that issuing $4.732 million in bonds would accomplish those goals. A 24-cent tax-rate increase for 10 years would have been required to retire the bonds. The city’s current tax rate is 25 cents per $100 of assessed valuation.
The defeat of the bond issue later was cited by a Southwest Bank official in a letter to Madrid.
In the June 23 letter, Southwest Bank Assistant Vice President Mark C. Niemeyer noted that the city’s line of credit was renewed last year “without incident, thanks in large part to the bank’s knowledge of the general obligation bond proposition, which served as a concrete plan of action to im-prove the city’s financial condition.”
“With the bond issue failing to pass this April the city currently lacks a defined plan of action to make marked improvement in its overall financial position,” Nie-meyer wrote. “Please understand that Southwest Bank values the relationship we have with the city of Crestwood, however, when it comes time to begin the renewal process on the city’s line of credit later this summer, it will be imperative that the city provides a concrete plan of action to im-prove the current financial situation.”
“Again, the bank is happy to continue its relationship with the city, but a clear plan of action to make improvements to the city’s finances must be in place. Please keep me informed of the latest developments concerning this situation,” he wrote.
Aldermen recently voted to place three propositions on the Nov. 8 ballot that, if approved, would generate nearly $300,000 annually. Personnel reductions totaling roughly $536,000 also are being considered.