By eliminating nine positions, canceling capital improvements and delaying equipment purchases, we have reduced the projected shortfall to $150,000. The 2011-12 staff reductions and cuts in projects and purchases will bring this deficit down to zero.
In 2006, the city issued $15 million in Brownfield redevelopment bonds. The money the city borrowed was invested in infrastructure (streets, water and sewer lines, storm sewers), parking and environmental cleanup in the north end of the city. That value is already working to the benefit of Grand Haven residents.
The Grand Landing project was a planned part of the payback mechanism — new taxes on their new property investment would pay the annual debt service.
Unfortunately, the mortgage crisis of 2008 caused that investment to be of less value than otherwise anticipated; something no one could have predicted.
Payments due on bonds will overtake funds available in 2015. City Council would need to come up with $1 million per year to make the necessary payments if we do nothing. Further general fund spending cuts will be made; however, our best projections have us coming up short of needed funds in four years.
When north end property is developed, all property tax revenues generated will be used to repay the city’s general fund for any dollars used to pay bonds today. No funds will be used to reimburse private parties for anything; all funds will be used for bond obligations.
The question before council is: do we levy a smaller (0.75 mill) tax now (and in ensuing years) or do we wait for 2015 and levy a significant sum (2 mills per year) at that time?
City Council intends to answer this question on May 16.
— By Pat McGinnis, Grand Haven City Manager