Crestwood aldermen will have to wait a little longer to see how much excess cash the city’s general fund has before deciding whether to use that excess to prepay debt or keep in reserve.

City Administrator Frank Myers last week informed aldermen that Mark Graves of the auditing firm Schmersahl Treloar & Co. now plans to attend the board’s Feb. 12 meeting. He had been anticipated at the board’s Jan. 22 meeting to present an approximation of the city’s general-fund cash in excess of a federal requirement through the city’s refinanced debt.

Crestwood aldermen will decide in the coming months whether to use excess cash in the general fund to prepay debt on an annual-appropriation note to Royal Banks of Missouri to refinance and pay off remaining debt through a tax-rate increase approved in April 2006 by voters contains an Internal Revenue Service provision that limits the city’s general-fund balance to no more than 5 percent of the previous year’s expenses.

Financial adviser Carl Ramey of Stifel, Nicolaus & Co. told aldermen on Jan. 22 that the city has three options to use its excess general-fund cash:

• Prepaying existing debt that would otherwise be paid by residents through the 2006 Proposition S tax-rate increase.

• Converting the excess cash above 5 percent into a separate taxable note.

• Converting the entire annual-appropriation note with Royal Banks of Missouri into a taxable note.

Mayor Roy Robinson said last week that city officials were aware of that 5-percent limit when they presented aldermen with the note proposal in October 2006.

However, he said they also did not expect to be above that threshold in the general fund.

“When we took on the Prop S loan, we knew that we had some kind of a requirement that was IRS,” Robinson said. “And we felt at that time that we were probably lucky if we had that kind of money left over. But we’ve done a lot better than we thought.

“So then we come into a problem with more money on hand than we had planned. And now it’s either risk … if the mall did not have a problem … and if we had a better handle on what the revenue is, then we wouldn’t even be making this discussion. But we want to make sure we don’t have to fall back and say hey, we’re running out of money and we can’t make payroll because we have allowed this to happen.”

The city’s cash position was the topic of considerable discussion at the Board of Aldermen’s Jan. 22 meeting as aldermen ultimately denied authorization to move forward on a five-year loan to pay off the city’s new communications system.

Aldermen voted 4-3 against pursuing a five-year loan of $356,386.06 with Montgomery Bank for the system. The proposed loan would carry an interest rate of 4.67 percent for a total interest cost of $41,609.94.

Board President Gregg Roby of Ward 3, Ward 1 Alderman Mac McGee, Ward 3 Alderman Jerry Miguel and Ward 4 Alderman Steve Nieder voted “no.”

Ward 1 Alderman Richard Bland, Ward 2 Alderman Chris Pickel and Ward 2 Alderman Steve Knarr voted “yes.”

Ward 4 Alderman John Foote was absent.

Roby proposed that instead of paying off the communications system with a loan that the city should instead use monies from recent settlements the city will receive from AT&T and Sprint/Nextel.

Crestwood will receive $210,586.41 from AT&T and $128,036.35 from Sprint/Nextel. The settlement agreement includes a 2-percent payment, or $6,772.46, to the St. Louis County Municipal League.

Roby suggested using the combined $331,850.30 that the city will receive in the two settlements after the Municipal League contribution to help pay for the $356,386.06 cost of the new communications system instead of pursuing the loan and paying more than $41,000 in interest across five years.

Nieder added that if a recent administrative estimate that the city has roughly $4 million of cash on hand is correct, then he sees no reason why the city could not pay for the communications system out of its capital-improvements fund instead of taking out a loan.

“At this point, we have close to $4 million sitting in there now at December, according to this current sheet I have here,” Nieder said. “And that’s not even counting the money that Alderman Roby talked about … So I don’t see at all where we have a problem with paying that off.”

But Robinson and Myers stressed that because of the city’s uncertain economic position this year with the pending sale and redevelopment of the Westfield Shoppingtown Crestwood, it would be more prudent to hold onto the cash the city has instead of paying off the system now.

“We’re heading into a critical couple of months,” Myers said. “If the board decides — and I would argue that yes, there certainly is a substantial cash balance in our capital-improvement fund — if the board was to decide to take this loan and as we move forward over the next several months we see that our cash position remains stabilized, we’re always in the position to accelerate and pay that loan off a lot sooner.

“What taking out the loan simply does is it gives us that security blanket to get us through the next year, which we know has some uncertainty to it.”

Knarr said it would be “fiscally irresponsible” to pay off future city expenses instead of keeping cash in reserve to combat any economic slump.

“I don’t think the city’s ever faced a downturn in revenues that it’ll probably see this year,” Knarr said. “And we have no way of predicting that … So why are we in such a hurry to spend the cash we have on hand? What is it? It’s like it’s burning a hole in our pocket.

“And the way I look at this, as Alderman Pickel said earlier, this is an insurance policy. It’s a way to get our new communications system that we’ve needed for 20 years now probably by financing it.

“… All the projections we’ve looked at are bad compared to the last five years, the last 10 years … I have a feeling we’re going to be in worse shape by the end of the year than we are now. And I can’t honestly support spending cash that we’ve worked so hard to accrue to pay for these things when they can be more better managed over a time payment when we have more time to deal with the situation at hand with the mall and our revenue stream. And I just think it’s pie in the sky to think that: ‘Well, the cash is there. Let’s spend it.’ I mean, I think that’s fiscally irresponsible.”