Linden approves six million dollar bond to fix streets

Monday, May 23 Linden City Manager Lee Elliott issued a release explaining the new six-million-dollar bond proposal to fix extremely warn and broken streets. In his release, he gave some details about how the money will be obtained, how the loan bond will work, and what the money will be used for. He also integrated information about the sewer lines, since the street repair and the sewer repair will at times interconnect.

“At a special City Council meeting Thursday, May 19, the Council unanimously decided to move forward with issuing debt of six million to fix the majority of our streets. After spending 11 months of hearing from citizens, having a study performed to rate the condition of our streets, and meeting with financial planners, the Council began the process to borrow money to fix our streets. Property taxes will be the revenue source which will pay for this debt since streets are a general fund service.

“At Thursday’s meeting, the Council approved a resolution known as a Notice of Intention (NOI). This enables Council to advertise two times in a local newspaper and begins the ability to borrow funds. During this process, the city will be rated by a bond rating agency to ensure we can pay for the $6 million dollar debt issuance. This process could provide us with better interest rates. By moving forward now, we should receive an interest rate anywhere from 4.25% to 4.5% which would be higher the longer we wait to borrow money per our financial planner. The debt for streets will be serviced over 20-years. The reason 20-years has been chosen is because that is the recommended useful life of a street per our City Engineer and Financial Planner.

“The Council had to make a very challenging decision whether to bond $3.5 million or $6 million. The $3.5 million would fix most of the really bad streets. $6 million will fix most of our streets. Keep in mind that most of our streets are so bad that our engineer rating the streets had to develop a hybrid rating scale. There seems to be unanimity amongst the elected leadership, if we all have to pay for any amount and the majority of our streets are this bad, we should all receive better street conditions. In my 20+ years of executive-level city government administration, this rates as one of the most difficult decisions a Council I worked for has had to make. An estimated financial impact for a $50 thousand home with the 20-year/six million bond will be $22.33 per month. The same bond terms for a home at $100 thousand will pay $44.67 per month.

“If he rating agency believes that $6 million is too much for our community to service, or if the Council believes we should borrow less, Council can reduce the amount which is borrowed during the upcoming debt process. The NOI resolution capped the street borrowing ceiling at $6 million.

“The best practice for street repairs is to fix your water and sewer lines first, then fix the streets. Unfortunately, we are 8-years into the USDA waterline repair grant/loan process waiting on closing instructions. We are probably 2-years away from construction being completed for water lines once we award the bid to perform the work. Council is advertising a sewer study.

“Currently, we have no sewer study or funding sources to repair the sewer lines. Sewer lines are the main issue under the pavement. Water lines are on the backside of the rights of way usually while the sewer is under the pavement. Per our 2014 Comprehensive Plan sewer analyses, the majority of our sewer lines are Depression Era long outliving their useful life. A majority of our streets are no longer traversed without negatively impacting an automobile. Unfortunately, we need to repair streets before the optimal time. Where we empirically believe sewer lines are in decent condition, we will fix those streets first to perform a best-case approach.

“The administration and Council would like to thank the citizens for all of their input with this difficult decision. There is unanimity amongst citizens to fix our streets. The challenging question was how much to borrow. Unfortunately, after 40-years of neglect, we can’t patch our way out of our street conditions.”