On Monday, February 24, Milford City Council voted to rescind their decision to begin the process for a referendum which would have allowed the city to borrow $3.5 million for water projects at 1.5 percent interest. According to City Manager, Richard Carmean, the Public Works Commission met and discussed ways that the City could perform the necessary repairs without borrowing and adding to the expense of taxpayers.
“We were offered a really good interest rate, and it would have made it easy for us to do these necessary repairs,” Mr. Carmean explained. “Councilman Shupe came to me and said he was concerned about asking taxpayers to fund another project when they were already being taken to a referendum for the new school, which the city definitely needs. We sat down and reviewed the numbers, and found that through frugal city management, we have over $5 million in water reserves.” Mr. Carmean explained that council set a requirement that $1 million remain in reserves, which meant that there was $4 million available that could be used to fund the water projects.
“When we went to referendum in 2006 for the new water tower and treatment plant, we began planning for when the payments on that loan would come due,” Mr. Carmean explained. “By building our reserves as we have, council would then have the discretion of paying a large sum on the principal for the new water tower, which is in the bidding process now. It really makes no sense to take on more debt when we have such a large balance in reserves.”
Mr. Carmean also explained that there were other savings that could be realized as the City would not be required to pay prevailing wage and by saving an additional $500,000 in interest payments. Councilman Doug Morrow pointed out that the city could save almost $1 million by not borrowing the funds.
“Now keep in mind, Baltimore Air Coil is having serious water issues, and we are looking at running a new main out there,” said Mr. Carmean. “If we end up needing an additional water tower in the northern section of town due to the new main, we will have to borrow at that time, but we think we can manage with what we have in reserves for now.” Councilman Skip Pikus asked if the city needed to borrow for the new water tower, would the interest rate remain at 1.5 percent, and Mr. Carmean said that he doubted it.
“If we can do this with reserves, we should do that without adding to the burden of our taxpayers,” said Councilman Bryan Shupe, whose thoughts were echoed by Councilman Garret Grier. Councilman Dirk Gleysteen said that the city was very fortunate to be in the position they were due to savings, and that, although the interest rate was attractive, other savings outweighed the borrowing.
“We are very healthy, but I worry about using so much of our reserves as that’s what keeps our credit rating high,” said Councilman Pikus. “We are approving new building all the time, and we are probably not looking at seven years down the road that we will need a new water tower, and we will probably not get such a low interest rate when that time comes. However, I see the need to keep the burden low on our taxpayers, so I reluctantly agree we should rescind the decision.” Councilwoman Katrina Wilson said that she was pleased that the council could come together and help citizens by making the right recommendations.
The decision to rescind the water bond bill and cancel the referendum passed unanimously.