Lindsay dips back into loan discussion
A multi-million USDA loan was back on the agenda and under discussion by the Lindsay City Council last week.
Following a third quarter budget report, Finance Director Tamara Laken asked the City Council for two budget amendments for fiscal year 2012-13. The first was the purchase of a new $7,800 vacuum for the Aquatic Center. Laken said the vacuum has been broken for about three weeks. She said it would cost $800 just for a repair man to diagnose the problem but a new vacuum would save the city on labor costs in the future. Laken said the old pump must be operated by one of the male lifeguards for a minimum of 2.5 hours per week. The new vacuum is automatic and could run while the pool covers were on. The vacuum would be paid for with a small portion of funds from the $3.6 million USDA loan used to build the Wellness Center.
Councilmember Steve Mecum, who voted against using a portion of the loan to repave the Lindsay Memorial Building parking lot earlier this year, again questioned the use of the loan for replacing a piece of equipment.
“Is there any way to do this without borrowing money?” Mecum asked.
City Manager Rich Wilkinson explained the money would come from a $35,000 equipment replacement fund set up as part of the $3.6 million loan. Wilkinson told Mecum regardless of the City Council approving items out of the repair fund at the meeting, the entire $35,000 would be kept and used for repairs to the facility as needed.
“The money has already been loaned and the payment mechanism has already been set on this loan,” Wilkinson said.
Laken described the USDA loan as a line of credit that the City withdrew money from and then paid back principal and interest on the amount it has drawn. However, she said the $35,000 was set up as a reserve for repairs and equipment replacement on the suggestion of USDA.
“If we didn’t set aside any many to maintain the facility we wouldn’t be very good stewards by not protecting our investment,” Laken said.
Laken said the loan will be repaid with revenues from the Wellness Center, which the City expects to increase going forward. However, Laken said the Wellness/Aquatic Center is one of the few departments where expenses are outpacing revenues. During a third quarter budget report, Laken said the Wellness Center had already used 81% of its $474,000 budget for the fiscal year ending in June and has only collected 36% of revenues since the fiscal year began last July.
Laken said the loan principal and interest payments per year is about $150,000. The Lindsay Hospital District pays for about $124,000 of the loan repayment and $109,000 for programming at the Wellness Center.
The City pays about $26,000 per year on the loan. Following the purchase of circuit training equipment at City Park ($37,000) and the parking lot repaving ($229,000), Laken said the City has a $616,000 available balance on the USDA