WATERLOO, Iowa -- The city's plans to borrow $20.9 million next week will be among its largest annual bond issues ever.
Waterloo City Council members voted unanimously Monday to clear the way for a May 17 bid opening on the bonds, raising cash to pay for large capital projects, equipment and economic development efforts.
Several residents, including council meeting regulars John Sherbon and David Dreyer, took issue with the size of this year's bond issue, which is expected to push the city's overall debt load well over $100 million for the first time ever.
But Chief Financial Officer Michelle Weidner said the structuring of the new debt is not expected to boost either property taxes or sewer fees next year.
Some $9 million of the debt is expected to pay for a long list of projects -- building improvements, flood levees, vehicles and equipment -- to be repaid with property taxes and tax-increment financing revenue. Another $1 million is for sewer work to be funded with sewer fees.
Those bonds are repaid with interest over 15 years.
Another $8.1 million in bonds will be issued to fulfill the city's obligation to Finanical District Partners, which is turning a vacant building at the downtown Cedar Valley TechWorks campus into a hotel and conference center.
The principal on those bonds will be paid from the increased sales and hotel taxes generated by the project, while the developer is responsible for the interest payments.
The remaining $2.8 million in bonds will simply refinance existing debt to take advantage of lower interest rates, which should reduce the cost of paying them off.
Weidner also defended the city's use of general obligation bonds to pay for projects, noting Waterloo's debt burden was current fifth-highest out of the state's 10 largest cities.
"The proper way to look at this city's debt is that this is our mortgage on the fixed assets that we purchase," she said. "This is not credit card debt; we do not borrow money to pay salaries or operating expenses."
Council members last month voiced concerns about the lack of input they had in selecting the projects to be financed with bonds this year and quibbled over how much to spend on sidewalk construction versus police tasers.
Those questions were absent this week, although resident David Deeds questioned how much the city was planning to spend demolishing blighted houses next year. The city had budgeted $300,000 to be used either for demolition or housing incentives.
"We are asking people that will live in Waterloo for the next 15 years to pay for our demolition today," Deeds said.
