After listening to a presentation about the issuance of general obligation bonds, the Shelbyville City Council tabled action and will consider it at a future meeting.
David Pistorius, representative of First Midstate, Inc., discussed the general obligation bonds as an alternative revenue source for the city. The bonds would restructure the existing debt at a lower rate and create alternative revenue to finance several water and sewer improvement projects.
"I suggest selling the bonds for $4 million," Pistorius said. The projects are estimated at $1.75 million to $2 milllion.
The first step would be for the council to select First Midstate Inc. as underwriter and Chapman and Cutler LLP as bond counsel. The second would be to authorize the issuance of general obligation bonds.
"You would pass an ordinance of intent in which you would describe the projects and pledge the revenues. An audit would have to show sufficienct revenues. You're not raising taxes, but raising taxes is a backup should you not have the revenue. I've not seen the need to do that in 18 years of doing this," Pistorius said.
Council members questioned selling $4 million in bonds.
"As I understand we don't have to take the extra amount so we're not overborrowing," said Commission Gib Smart.
"Right. You only pay for what bonds are sold," Pistorius said.
Pistorius added that the interest rates are projected at 2.5 percent to 3.25 percent. The cost to the city is 3 percent to 4 percent.
"I haven't been told what these projects are," said Commissioner Brent Fogleman. "I hate to vote for $4 million when I don't know what it is for."
Fogleman also argued that there was money in the bank to pay for some of the proposed water and sewer projects and that he did not see the need to issue bonds for them.
Mayor Jeff Johnson also noted that some of the projects will be paid for by Business District funds, but it would benefit them to lock in the dollar amount and rates with First Midstate.
"I think with the paperwork involved we should go ahead and approve this," Commissioner Bill Shoaff said.
Pistorius responded that there was no harm in delaying the paperwork.
"I think we are putting the cart before the horse," said Fogleman. "I going to vote no."
Council members noted that they would like to include Commissoner Thom Shafer and City Attorney Jack Kiley, who were both absent, in the discussion and a motion to table action on this matter was passed 4-0.
Steve Bainbridge of BGM & Associates recommended the bid by Cahoy Pump Service in the amount of $106,283 for construction of the Water Well No. 10. Estimated cost of the project was $180,000. The Council approved the award.
Bainbridge asked to advertise for bids for the raw sewage and return sludge pump replacement. Bids would be opened before the November 7 meeting. The Council approved the request.
Bainbridge also explained the EPA requirement to eliminate the combined sewer overflows and reduce the number of bi-sewer overflow points.
"It's a statewide project and will take an estimated $65-$75,000 to start. We're probably looking at $1.5 million for the project," Bainbridge said.
The Council approved starting the project.
Drew Scranton of Sensus presented teir proposal for the upgraded water meter reading system. The system involves remote readings of water usage on the Shelbyville system. The system would be able to detect leaks anywhere in the coverage area in real time, saving consumers on their water bills. Scranton estimates the meter replacement project would cost $1.06 million.
The Council approved the ordinance designating the Enterprise Zone for the grant application. The Zone includes almost all of the City of Shelbyville.
Mayor Johnson commented on all the building projects continuing in town.
"It is a busy and exciting time in town, and we're not finished yet," he said.