Bonds are a loan to the city by bond investors, they are not intended to pay operating expenses. The city generally uses them for capital items with an expected use of 10 years or more.
All bonds for more than $750,000 need to be approved in a referendum by the voters. Consequently, it has been common practice for the Council to split expensive projects into multiple pieces which individually are below that threshold.
During discussion of one of the Keigwin School items, Councilman Tom Serra pointed out that if the money was taken out of the operating budget, it would lead to an increase in the mill rate, "I think this is a better way to go."
Finance Director Carl Erlacher explained to the Commission that the city was in an excellent condition to borrow money, even with the anticipated cost of joining the Mattabessett Sewer District. He said that the city is retiring about $10M in bonds every year, and that the current indebtedness was about $61M. He said that based on the annual tax receipts of the city, it could borrow as much as $750M, "we are doing extremely well."
Bonds greater than $500,000 require two separate votes by the council, the first of these will likely take place at the Council Meeting on Monday.
Here are the bonds under consideration:
- $3,000,000 will be used to fund a settlement with the U.S. Environmental Protection Agency for the remediation of the Omo Manufacturing superfund site, located on Walnut Street.
- $750,000 for the Tax Assessor's Office, to fund a physical inspection and revaluation of all real property located within the city for the October 1, 2013 Grand List. The estimated tota cost of the revaluation has been $1M, but the actual cost will not be known until the bids are opened in a few weeks. A few years ago, Mayor Giuliano fought to include $300,000 in the budget for each of three years to pay for the revaluation, but only $200,000 has been set aside so far. At the last Council meeting, the argument was made that elements of the revaluation would be good for more than 10 years, and hence the money for the revaluation was not funded as an operating expense of the city.
- $165,000 will be used to replace the Keigwin Middle School Fire Alarm System. Councilman Klattenberg questioned the director of School Facilities Ken Jackson why this kind of expense was needed this year. Jackson, and Finance Director Carl Erlacher explained that the $110M expense of the new high school had for several years precluded funding for other school capital expenses.
- $435,000 for asbestos abatement at Woodrow Wilson. The floor and mastic of the classrooms, hallways, and offices is showing signs of wear, and needs to be replaced.
- $450,000 for the replacement of the Keigwin Middle School parking lot. Jackson explained that the city would be paving the street in front of Keigwin, and it made financial as well as practical sense to have the parking lot replaced at the same time by the same contractor.
- $749,250 for renovations and improvements to Russell Library. The head of the library, Arthur Meyers, told the Commission that the stone on the outside of the building was in bad shape. Serra pointed out that no work had been done on the library in many years. Klattenberg encouraged Meyers to apply for a grant for preservation of historical buildings.
- $736,000 for the purchase of information storage infrastructure. Director of Information Technology Bill Oliver explained that after consultation with the State, he realized that the city needed further storage for digital archives.
- $685,000 for purchase of a new telephone system for city buildings. Serra explained that the Public Safety Commission had been discussing this ever since the flooding of a manhole on Main Street had put all Fire Department phones out of service in August.
- $625,000 for purchase of "various city information technology services and devices". This equipment includes data modems for public safety vehicles, upgrades to the Council Chambers broadcasting system, as well as a host of other items. When prompted by commissioners, Oliver solemnly stated that none of these three IT bonds were related, "Each of them is a completely separate project."