Bay eyes plan to refinance ’05 bond
By Dwayne Bremer
Jun 4, 2014, 00:55
The Bay St. Louis City Council on Tuesday again delayed a decision on a measure to refinance a $1.6 million utility bond.
The bond, which the Favre administration obtained in 2005, had four years remaining on its term and a $397,000 payment due at the end of this month.
The council on Tuesday tabled a decision refinancing the bond until after another special budget meeting scheduled for 6 p.m. today.
On Monday, the council debated whether to refinance the bond with a five-year or ten-year term.
Under the five-year plan, the city will pay an extra $197,000 in interest. The ten-year plan would cut the payments in half, but it would cost the city a total of $438,000 extra in interest, officials said.
By refinancing the bond, the city will be able to skip this year's payment, which will provide it with some much needed cash-flow relief.
In addition to the $397,000 payment due in July, the city must also pay by November the remainder of a $500,000 line of credit secured in last December.
Mayor Les Fillingame said Monday that if the city did not refinance the loan, then it would have to raise utility rates by as much as $12 per month per household.
Councilmen said they voted to refinance the bond because of the city's tight budget, but they wanted a plan to pay off the line of credit by November, also.
"I want to make sure we do not have to make another bond next year," Ward Five Councilman Joey Boudin said. "We went up on utility rates last year and we knew we had this payment coming. We are saving some cash now, but we still have to figure out a way to pay the line of credit off."
Fillingame said the line of credit should be paid off if the city receives an expected $170,000 payment from FEMA and generates the expected amount of revenue from utilities in the coming months.
"This is a good management decision," Fillingame said. "If we have the consumption we anticipate, we will have all the funds. If not, we will deal with whatever is left over next year."
After discussing the merits of refinancing the bond on Monday, the council went through the city's budget to see what service and employees could be cut or consolidated.
Boudin said he was "disappointed" that city clerk David Kopf has been absent from budget meetings for the past month.
"Do even have a city clerk right now?" Boudin asked. "We are in the middle of a financial quandary and he is not here."
Three weeks ago, Fillingame told the council that Kopf was taking "some much needed vacation."
On Monday, Fillingame said that Kopf has been absent because of some medical issues.
"When he comes back, we will consider what his future will be," Fillingame said. Kopf was in attendance at Tuesday's meeting.
Councilman Lonnie Falgout said Monday he believes a lot of the problem with the utility fund is the large number of employees being paid out of the utility budget.
Falgout said the utility fund shows an $800,000 payroll, but there are only 14 employees who actually work in utilities.
"If the payroll would be in accordance with where the employees work, then the utility fund would be in the black," Falgout said. "I think we are putting a heavy burden on utility customers by not moving people over to the general fund-side of the ledger."
Fillingame said that all of the employees listed under the utility fund payroll actually work in utilities.
"If that is what the payroll says it is, then it is," he said.
Falgout also quizzed Fillingame about what he believes is "overstaffing" in the city's building department.
"I'm not saying that we don't have good people, because we do," Falgout said. "The fact is, we have almost $200,000 in payroll in that department and we have only generated $40,000 in fees."
Fillingame said he will be moving some employees out of that department to different departments and that the city will continue to cut costs through attrition.
Councilman-at-Large Mike Favre said that despite the financial crunch, he would like to see more police officers on the street.
"When someone retires, can we take that position and move it over to the police department?" he asked.
Ward One Councilman Doug Seal said balancing the budget with adequate services will be a challenge.
"We have a lot of services we need to provide," he said. "Where is the money going to come from?"