The financing of projects was the top priority on the agenda for the Common Council of the City of Brazil Tuesday night.
Sue Beesley, partner with Bingham McHale, LLP, Indianapolis, introduced an ordinance setting the terms of a revenue bond for water projects.
"The bond will help the funding of additions and improvements to the water utility, which has been discussed in recent weeks," Beesley said. "The terms of the bond caps out the potential borrowing at $5.45 million."
While the ordinance would allow the city to borrow the full costs of the projects included in the water system plan, Dan Hedden, CPA Principal for Umbaugh and Associates, Indianapolis, told the council it may not be necessary to borrow that much.
"The bond is something the city can fall back on because it helps finance what is not obtained through grant funding," Hedden said. "Should the city receive enough grant funds for the entire plan, the bond would not be necessary, but the recent water rate increases are in place to absorb the bond."
Although Beesley said the ordinance did not have to be passed on the first reading, the council was eager to get the projects started and suspended the rules to do so.
"It's time to go with this," council member Brad Deal said.
Meanwhile, the council passed a resolution approving a temporary loan of $150,000 from the water utility to be split between the wastewater utility and General Fund.
Hedden said this is common with local governments to cover potential shortfalls until they receive property tax distributions.
"I spoke with (Clay County Auditor) Mary Jo Alumbaugh, and she said we should be getting our distribution almost on time," Brazil Clerk-Treasurer Karen McQueen said. "The city's funds are in good shape as well, we are just making sure everything is covered with our creditors and another payroll period coming up.
Hedden added the loan would be repaid by the end of the year, but most likely after the city receives the tax distribution, as many municipalities do.
The council also discussed reestablishing the rate attached to the Cumulative Capital Development Fund to $.05 per $100 of assessed value.
The current rate is set at $.0286, which Hedden said is because of adjustments based on changes in the assessed value of property in the city.
"The dollar amount the city can receive in the fund from the tax levy is regulated and the rate tends to degrade over time," he said. "The rate can be reestablished up to its maximum of 5 cents per $100 of assessed value, which could generate an additional $20,000-$25,000 in funding that can be used for roads, new equipment, and public safety, among other things."
He added the last time the rate was reestablished to its maximum was in 2005, and while the council did not make a decision during the meeting, Hedden said one must be made by Aug. 1, to be in effect for 2010.
"This can help the city solve some of its financial problems long-term," Hedden told the council. "It is a minimal increase on the tax roll for residents, at most $20-$25 on a home with an assessed value of $100,000, but it is a definite benefit for development within the city."
In other business during Tuesday's council meeting:
* Kenna Consulting and Management Group, Inc., Indianapolis, Vice President Angie Pappano, notified the council the city is receiving $1,435,350 in grant funding from the Neighborhood Stabilization Program, which is half of what was requested and Brazil was one of 21 requests that were accepted out of 86 applicants. She also said a request for reimbursement of Disaster Recovery Funds is being submitted, which should bring $13,232.54 back to the city,
* The council approved tax abatement reviews from Britt Tool, Inc., Genesis Enterprises, Inc./Eutectic Resources, Inc., Morris Manufacturing and Sales Corporation, Timberland Home Center, Inc./Brad Emmert, Kim Emmert-O'Dell as they were all found in compliance through their statement of benefits. This allows the respective abatements to be active for another year, and
* The council tabled the potential approval of a Pre-Disaster Multi-Hazard Mitigation Plan in order to receive further explanation of the plan and the possibility of it opening up more options to apply for grant funding.
The next meeting of the Common Council of the City of Brazil is 7 p.m., Tuesday, July 14, in the Council Chambers at City Hall.