2/7/07 City building projects may not result in big debt

(As published by Cortland Standard, Corey Preston reporting)

A large upgrade and expansion of City Hall and construction of a new fire station would not necessarily result in a drastic tax hike, the city administrator told the Common Council Tuesday night.

Andy Damiano, city director of administration and finance, handed out a packet including examples of possible ways to phase the borrowing for about $7 million to be paid back over a 10-year period in an attempt to limit the financial impact.
“The message that I’m trying to send is that, if we do this in a planned, phased manner, which means very strategically with our borrowing and our planning, we can do these projects with minimal impact on our debt,” Damiano told the council. “I wanted to take the fear factor out — I wanted the council to focus on the need.”
A five-phase project could spread the borrowing out between now and 2010, according to Damiano’s rough estimates.
The city would only pay interest until 2010, Damiano projected, and then begin paying off the principal of the debt the following year.
Turning to the city’s current debt payments, in 2007 the city is already going to pay $1,261,337 in principal and interest to cover existing debts. That amount would continue to decrease as outstanding debts are paid off, and in 2011, the city would be paying about half of what it is paying now.
Assuming that the payments on the money borrowed for a new project would be about $500,000 a year, Damiano’s projections actually show a decrease in the annual debt service after 2011, which would cost $1,141,030 in that year.
“I arbitrarily picked the number of $7 million, because that’s probably where the project’s going to go,” Damiano said, adding that it would “hopefully be less.”
Damiano said this morning that it would take 20 years to pay off the $7 million bond.