As the city of New London retires its existing debt over the next few years, it is looking toward the future as to which capital projects to tackle next.
“The retirement of the TIF is opening up some doors for the city to do some things it has been putting off in the past in order to keep taxes at the level they are,” said Judy Radke, treasurer/finance director for the city of New London.
One project that the city is currently doing preliminary planning for is a new city garage. Kent Hager, city administrator for the city of New London, said the current city garage originally was used by the school district, the city, and the county. The county eventually built a new garage, as did the school district.
“We were left with the old one and we’ve been trying to maintain that,” Hager said. “It’s probably a 1940-ish building. It’s become very expensive to try and keep that up.
“It’s on a wish list of capital projects that have been around for a long time and that one kept getting put down, down, down [on the list]. It’s finally rising up [the list].”
Hager said preliminary drawings for the new garage have been done, and a tentative site has been chosen. The tentative site is near the sledding hill.
Radke said the garage has to be built on a new site due to floodplain issues at the current garage.
The new garage will cost $3-$3.5 million, Hager said.
Both Hager and Radke said the possibility of a new city garage would not be possible without the city taking a conservative approach to accumulating debt. According to data compiled by the Taxpayers Alliance, New London’s debt is only 25 percent of the total that it could borrow according to guidelines set by the state. This figure is below average. It is also lower than surrounding communities of similar size.
“It’s extremely conservative with the lowest possible number of years for payback,” Radke said. “So we look at the current debt structure anytime we go out with debt. We like to not exceed the current dollars per capita per taxpayer for the current debt structure. What we’d like to do I just keep it flat. We don’t want to see our debt spike immensely for the purposes of the taxpayer.”
Radke said some debt is healthy, but it’s important not to borrow too much because it impacts the total cost paid for debt.
“What this has an effect on is your bond rating,” Radke said. “Now when you see us go out on our current bonding, our rating is very good. So the amount of money you are paying for your debt is really affected by the amount of debt you have. Those communities who have 80-some percent [in debt] I can guarantee they are paying for their debt immensely.”
The city council recently approved $900,000 in new debt, with a portion of that amount scheduled to be used for the repair or replacement of roofs on five city buildings.
“It’s one of those projects we’ve been putting off so long we just can’t [put it off] any longer,” Radke said.
Another portion of that amount will be used to pay for the technology building addition to city hall. The city’s computer and phone systems will be moved from a basement to this new building addition.
Radke said financing $900,000 was possible because existing debt was coming off the books.
“All that is doing is taking over for a debt that has been retired,” Radke said.
Prior to the $900,000 financing, the city’s debt was schedule to be paid off in 2016 when the TIF 2 District is retired. The $900,000 financing is scheduled to be paid off in 2022. Hager said when the TIF 2 District debt is retired, that is when the city will be able to take on new debt.
“It’s going to open up an opportunity for us to leave the tax rate level but fill in with additional debt,” Hager said. “The taxpayer won’t see any increase. But we’re going to be able to accomplish some things that have been backing up for awhile. One of the main ones coming up is the city shop. I think that’s important for people to understand.
“We are doing this plan for a major new capital project and ideally the situation is going to be such that the taxpayer won’t notice a difference because some debt is going to be coming off and we’re going to be rolling some back on.”
“[The city garage] is a huge project for the city,” Radke said. “I have never seen that kind of a project happen in the 18 years I’ve been here. I think visually they are going to see it happening. You don’t want people wondering where the money is coming from. ‘What is going to happen to my taxes?’ As a citizen, obviously those are going to be your questions.”