The expansion of City Hall is at least five years off, but the Weyauwega Common Council is already getting an idea about how such a project would impact the taxpayers.
Possible financing options were discussed during a recent special meeting of the Common Council.
They were brought forward on behalf of the city by Phil Cosson, of Ehlers & Associates.
“We would structure it around your current debt,” he said.
The city was interested in seeing how such a project would affect the owner of a $100,000 home.
Cosson presented both 15 and 20-year General Obligation bonds options for possible $1 million, $1.5 million and $2 million City Hall expansion projects.
Three expansion options previously presented to the council ranged in cost from $1.69 million to $2.08 million.
With a 15-year financing, the additional cost to the owner of a $100,000 home would be $100 each year for a $1 million project, about $145 for a $1.5 million project and about $192 each year with a $2 million project.
The additional cost to the owner of a $100,000 home would be about $80 each year for a $1 million project, $118 for a $1.5 million project and $160 for a $2 million project, under a 20-year financing option.
Cosson said the city’s monthly payments would be lower with a 20-year financing option but the city would then pay more interest.
For example, the principal payments would total $1.535 million if the city financed a $1.5 million project with 20-year General Obligation bonds, and interest payments would total $617,408.
Financing a $1.5 million project with 15-year General Obligation bonds would result in $1.535 million in principal payments and $373,708 in interest payments.
The owner of a $100,000 home would pay a total of $2,167 over the course of the 15 year, compared to $2,381 over the course of a 20-year financing.
Cosson told the council there is also a federal lending program through the USDA for community-building projects.
“They are a viable option for financing these types of programs,” he said.
Such financing would be a term of 40 years.
“Here, you are looking at extending the debt longer, but the impact on taxpayers is less,” Cosson said.
Under that scenario, a $1.5 million project would result in the owner of a $100,000 home paying between $71 and $86 each of the 40 years.
Cosson said that when the council gets closer to making a decision, he will update them on interest rates and how to structure the new debt around existing debt.
He said the city currently has $1.8 million in outstanding debt and about $4.1 million in borrowing capacity, based on the city’s equalized valuation of $82 million.
“You have sufficient capacity right now,” Cosson said.
He also said that any municipal building projects involving a bonding of greater than 10 years must go to a binding referendum.
Municipalities that choose to finance with notes, rather than bonds, do not have to go to referendum, Cosson said.
Interim City Administrator Bill Forrest told the council that actual construction for the expansion of City Hall is scheduled in the 2017-19 timeframe.
“I don’t know, from your perspective, if that’s realistic or not,” he said.
Forrest said the purpose of the city’s financial adviser explaining possible financing options was to show what the “financial impact would be. It gets you thinking down the road as to how it fits with community priorities and how you would proceed with the project itself.”