MADEIRA BEACH — The city will soon have a large infusion of money to pay for stormwater control and road improvement projects, which some say have been promised for years.
In a rare unanimous vote, the City Commission approved at its July 9 regular meeting a $15 million loan that will be used to finance the projects. Half of the money, $7.5 million, will go to fix the roads on Crystal Island, with the rest going to other problem areas in the city, City Manager Jonathan Evans said. Those projects will be prioritized on the basis of need, he said.
Commissioners had committed to funding the project at an April workshop session, with the assurance the money will be used for the road project and stormwater control efforts.
A closing on the loan was held July 11 and the money is in a city account.
Finance Director Walter Pierce said the loan is “the largest the city has ever faced” and “will take a huge bite out of the stormwater issues we have.” Its approval had been unanimously recommended by the city’s Budget Review Committee.
The loan’s approval also has another big advantage.
“We could not be borrowing the money at a better time,” said Pierce.
Long-term interest rates “are near historic lows,” said Nick Rocca, the city’s financial adviser.
Pierce called the 3.07 percent interest rate on the loan excellent.
“It is advantageous to lock in long-term interest rates that are very attractive,” Pierce said.
The city plans to reinvest part of the loan money until it is needed, and short-term accounts are paying “very good interest,” said Rocca.
While the $15 million loan has advantages, the payments on such a large loan are also high. Too high, it turns out, to pay from existing revenues.
Under questioning from Commissioner Doug Andrews, Pierce said “we can’t take on the loan without increasing something.”
“The city millage (tax) rate, which has not been raised in four years, will need to be increased to at least 2.50 mills next year, and raised to 2.75 in 2021.”
The current rate is 2.20 mills. One mill is equal to $1 for every $1,000 of assessed property value.
Evans said the city has a healthy reserve fund balance and a possible alternative to raising the millage rate next year is to use money from the reserves to pay for the loan. He said the city can avoid a millage rate increase in 2020, but in 2021 the rate will have to be increased to 2.75 mills.
The roadway and stormwater improvements will be welcome news to residents living in the affected areas. At the April workshop, they spoke of the roads’ bad conditions.
If the work isn’t done soon (on Crystal Island), “all of a sudden our roads will be floating in the water,” said Jan Watenpaugh.
Added Chuck Lambert, “We’ve been forgotten over there (on Crystal Island Drive).”
Commissioner Deby Weinstein, whose district has some of the major problem areas, said at the workshop said the city needs to proceed with the project.