Kell concerned with city’s growing debt
By Bert Lehman
Chuck Kell, city administrator for the city of Clintonville, has recommended that the city scale back its proposed Capital Improvement Program.
Kell made his recommendations known to members of the Finance Committee, as well as members of the Clintonville City Council, via a memo dated Sept. 18. He reiterated his recommendations at a Sept. 21 Finance Committee meeting.
Kell stated in the memo that 2016 will be the third year of a three-year borrowing cycle that was approved in 2014 to fund capital improvements. This debt provided approximately $330,000 for capital improvements each year, as well as $200,000 for replacing water and sewer mains for this year’s Main Street project. That borrowing also allowed for the purchase of a new fire truck, which cost the city $335,778.
The memo also pointed out that approximately $691,713 of capital improvement funds is available for 2016, while city departments requested almost $2 million to fund capital improvement projects next year.
“In my opinion the city cannot afford this level of investment in capital projects for one budget year,” Kell said in the memo. “Even though the Ehler’s financial analysis determined that we could keep the annual tax rate for debt consistent with current levels while funding all the Capital Improvement requests the city departments put forward back in July, I am concerned that the debt level for the city escalates significantly and we barely start paying for some major purchases while adding additional significant debt for new requests.”
He recommended the following to the committee:
• Eliminate the $25,000 generator for city hall
• Eliminate the $26,923 parks utility vehicle
• Eliminate the first year of building a savings for a future hanger at the airport. This would eliminate $5,000.
• Delay the $27,750 Olen Park shelter remodel and direct the parks director to work with Clintonville High School to see if the project can be scheduled as a cooperative projects with students in 2017. Kell stated he also thought a private sector or corporate contributor could potentially be found to help pay for some of this cost.
• Delay until 2017 ordering a new fire truck, with delivery for 2018. This would delay the capital expenditure of $650,000 until 2018.
• Eliminate or delay the $55,000 HVAC system upgrade for the Recreation Center.
Regarding delaying the purchase of a fire truck, Kell stated in the memo, “I applaud the fire chief and fire department for developing a vehicle replacement plan and schedule for all of their major fire apparatus, however his schedule is very aggressive and requires the city to stack debt upon debt without making significant progress in reducing the debt from the 2015 purchase of a fire truck that was delivered this year. The fire department was able to take delivery of two new trucks in 2015 and I feel it is unrealistic to expect another new truck to be ordered in 2016.”
Kell added in the memo that he discussed the condition of the fire trucks No. 967 and No. 970 with the Public Works Department, which does the maintenance on the trucks, and was informed the vehicles are in “very good” operational condition and don’t have a lot of hours on them.
It was acknowledged by Kell in the memo that the fire chief expressed concern about the water handling system on one of the trucks.
“I don’t believe a one year delay in replacing these two vehicles is going to be problematic for the fire department,” Kell said in the memo.
He added, “I also want to guarantee adequate time and consideration of the specifications for the new No. 970 pumper so the specifications for this truck guarantee the ability of our local fire apparatus industry Seagrave, Marion Body, and Pierce to all bid on supplying this new truck to the city so the city is guaranteed a competitive price and bidding environment for this very expensive piece of equipment.”
During the finance committee meeting, Clintonville Fire Chief Shane Krueger addressed delaying the replacement of a fire truck.
“I’ll lend my support to that decision, however I want to put out some cautions with that,” Krueger said. “Based on some history with the fire department, the backing out of fire department purchases for apparatus is why we’re in this position to have multiple pieces of apparatus in need of replacement in short order.”
Krueger said that is why the fire department now has an aggressive replacement plan. He said realistically fire apparatus should be in frontline service for 15 years and in reserve for 10 years.
“We’re running them 25 years in frontline, which is realistic for our community and the volume of calls and financial capacity,” Krueger said. “So every year we delay a truck, we delay out the rest of the fleet.”
Krueger added that even though he agreed the purchase of the truck could be delayed one year, he said the truck needs to be a high priority next year and not forgotten.
Justin Mc Auly, director of the Parks and Recreation Department, also address the committee regarding the utility vehicle for his department. He said the utility vehicle isn’t a car or truck, but similar to an ATV, which the department wants to use year-round. In the winter it would be used to sweep sidewalks.
Currently the department is using a mower to sweep sidewalks, and Mc Auly said that mower is showing the signs of age.
“We’ve had to replace some major parts on it over the last couple years,” Mc Auly said. “I would like to not use our mowers for cleaning sidewalks.”
After more discussion, the committee suggested adding the utility vehicle back into the Capital Improvement Plan, while taking the replacement mower out of the plan for the Parks and Recreation Department. Mc Auly said he agreed with that change.
Back to the memo with Kell’s recommendations, it stated if his recommendations were approved the proposed capital expenditures funded by the tax levy for 2016 by a total of $789,673 bringing the total expenditures for projects recommended to be funded down to a total of $1.2 million. This amount would be funded by the $691,713 in current capital reserves and $502,998 of new borrowing.
He also recommended in the memo that $7.5 million be approved for Wastewater Utility, which includes the short term borrowing for the new wastewater plant, $247,800 for Water Utility and $268,700 for the Electric Utility.
At the end of the meeting, the finance committee unanimously approved Kell’s recommendations, along with delaying the purchase of a replacement mower for the parks and recreation department, and adding a utility vehicle for the parks and recreation department into the plan.
The recommendations will next go before the entire council.