South St. Louis County News

St. Louis Call Newspapers

South St. Louis County News

St. Louis Call Newspapers

South St. Louis County News

St. Louis Call Newspapers

Ward 3 aldermen discuss their views about bond issue at town-hall meeting


Staff Reporter

Crestwood Ward 3 Aldermen Don Maddox and Jerry Miguel want to use only part of a proposed $6 million bond issue, not the whole $6 million, and say the city needs a tax-rate increase to solve its financial dilemma.

During a Ward 3 town hall meeting last week attended by roughly 175 residents, the two also served up alternatives to the retrofitting of City Hall to include a new police facility — scrap it and rent space, downsize it, defease bond-like certificates issued to fund the project and pay for it as it’s built or wait to build it until the aquatic center certificates are retired in 2012.

Maddox and Miguel couldn’t agree on a specific suggestion for either the bond issue or the police facility, two unrelated issues, and Mayor Tom Fagan doesn’t agree with either of them.

Crestwood voters will consider the bond issue in the April 5 election. A four-sevenths supermajority vote will be required to approve the bond issue, which would increase the city’s property tax rate by roughly 30 cents for a 10-year period until the bonds are retired. The city’s current property tax rate is 25 cents per $100 of assessed valuation. Approval of the bond issue would authorize the city to issue up to $6 million in general obligation bonds.

Proceeds from the bond issue would be used to allow the city to retire its 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.

While voter approval of the bond issue would authorize the city to issue up to $6 million in general obligation bonds, the exact amount of bonds and the corresponding tax-rate increase would be determined if voters approve the proposal, according to City Administrator Don Greer.

Maddox, who voted to place the bond issue on the ballot, said the city should borrow $2.3 million to pay off its line of credit and repay money owed by other funds to the general fund. He doesn’t want to borrow to create a cash reserve, however.

“Does it make sense to borrow money for possible future disasters? No it does not make sense,” he said to applause.

Anyway, he said, “This cash reserve fund is being established. Couple of years ago, we decided that the capital improvements fund had been supported by the general fund to the tune of about $900,000. That $900,000 is being paid back to the general fund and that money is being used to directly grow the cash reserve. This cash reserve is growing because of that repayment from capital improvements.”

Fagan later said, “If the bond issue passes on April 5, the Board of Aldermen after that time will then have to decide how much the bonds will be issued for.”

Miguel, who abstained from voting to place the bond issue on the ballot, wants to borrow $1.1 million-plus for the same reasons, but isn’t sure how much actually is owed to the general fund.

“These are book balances. These are not cash balances,” Miguel said. “These are the balances that you would have in your checkbook that you have at home. What you have in your checkbook if you’re a sloppy bookkeeper may not be the same as what the bank will tell you if you come to them and ask for your account balance. And I will tell you one of the problems we have had is reconciling the book balances to the cash balances. It’s an ongoing issue that we continue to address …”

He said, “I don’t think we can afford another $6 million … I’m concerned that future boards will need to spend this money for operations and spending (borrowed) money for operations is not good fiscal policy. And I think I already pointed out that the repayment for this $6 million general obligation bond is $730,000 year.”

Defending his abstention, which has drawn criticism from other city officials, Miguel said, “I had real doubts when this came to the board. I told the board on Jan. 11 I could not support this issue unless it were in conjunction with paying off the bonds on the police building. I wasn’t absolutely positive of my position when I abstained from voting. In the time since then, I’ve come to the conclusion that the right thing to do is to defeat the tax proposal, fully examine all city expenditures, reexamine and stop or at least reduce the police building retrofit and pay down part of our long-term debt instead of increasing it.”

Instead, he said, “… Let’s put a no-bond tax issue to re-store funds over time on the August ballot.”

Fagan said the bond issue is needed now. Because the bond issue would pay off the city’s line of credit, it would relieve pressure on the general fund, freeing up cash for operational expenses.

“It is important that we deliver services that we have promised, and if the bond issue doesn’t pass, frankly we’re going to have to cut services,” Fagan said. “It’s not what Tom Fagan wants or what the Board of Aldermen want, it’s what you the residents want. And if you want a smaller Police Department and smaller Fire Department that’s entirely your prerogative because that’s what’s going to happen after April 5 if the bond issue does not pass.”

But, he added, “We have to diversify our tax base. And if we don’t look at alternative approaches we’re going to be lacking for years to come. It means we need to get new residents in high density areas if we can. We need to redevelop some areas, commercial. It means that we have to make sure that sales tax that we currently derive from our businesses stay up to snuff and attract new businesses.”

Responding to Fagan’s remarks, Maddox said. “The general obligation bond issue is not to be used for operations. It has nothing whatever to do with cutting services from the Police Department or the Fire Department.”

Resident Frank Spinner agreed, saying, “Our problem is shrinking sales tax revenue and increasing expenditures. The proceeds from the bond issue don’t solve these problems. If borrowing money is income, then the next time you take out a home equity loan, don’t forget to put that borrowing on your tax return … What we need to do is defeat the bond issue. That’s the first order of business. Then, in August we can vote for a tax increase.”

Maddox also said a tax-rate increase is the most viable option.

“A tax increase has to happen for the general fund to continue to operate in the future,” he told the Call after the meeting.

During the town-hall meeting, both aldermen also contended the retrofitting of City Hall for a new police facility is excessive.

“Renovation really’s not the right word,” he said. “It really is a reconstruction. If you’re going to tear down a third of the building and build a new, make a significant addition to it, I think that’s reconstruction, but that’s my opinion … I think the design is too costly and that it seriously overextends the capital improvements fund. It jeopardizes future capabilities to maintain other capital improvements, such as street maintenance and equipment needs.

“I have to say that from the beginning I have supported this project, and what really turned me around was when I saw what we were receiving in the way of our sales tax income for fiscal year ’04,” Maddox continued. “In fiscal years ’02 and ’03, the sales tax took a hit I thought primarily because of the problems with 9/11 and what was going on with the economy during that time. I really expected in fiscal year 2004 that it would come back and that we would see a radical change in our sales tax. That didn’t happen and that’s what scares me. At that point, if we were still losing sales tax income when the rest of the country and the rest of the state was doing better, that means that the total amount of money available for streets and other improvements is in real jeopardy when we have over $700,000 set aside for the next 20 years for providing this facility. At that point, I had decided that this needs (to be) fixed. To build it as we’re currently proposing I believe is a serious mistake.”

“If we need more space and I think we do, there is rental space in Crestwood Shopping Center. One of the things this project calls for renting 14,000 square feet of space in the Crestwood Shopping Center. Of course we’re going to have to renovate that in order to have our people go into that space and use it for the 18 months of construction. If we can do that, why can’t we use that space on a permanent basis?” he said, noting it costs $40,000 per year to rent the space.

“You could rent for 20 years for what we’re presently paying on interest in principal,” Maddox said. “We’re paying over $730,000 per year.”

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