Claremont
Though no one specifically brought up the claim of a “missing” $3 million, council members Bruce Temple and Allen Damren, the former school district business manager, both asked Walter to explain the $3 million BAN (bond anticipation note) that was used by the city during the $14 million project for the mill district that went hand in hand with about $25 million in private investments.
Walter said the money was borrowed to begin work on building the parking garage and the city did pay interest on the BAN. But once it received a $10 million bond in 2007 for the project, it used $3 million to repay the BAN.
Damren suggested it would be possible to mistakenly believe that money was missing without a full understanding of how BANs work and how the city used it.
Walter’s presentation laid out in detail where the $14.5 million was spent, including $11 million for Water Street reconstruction and the parking garage. She also listed various revenue sources, in addition to the bond, including grants and money from state revolving loan funds.
Walter avoided using accounting terminology for the most part but did say the TIF district was set up as a capital project fund with double entry accounting.
“On capital project funds, (entries) keep accruing until you close out the project,” said Walter, noting that the state’s three largest auditing firms have reviewed the TIF district finances.
“We’ve gotten clean audits,” she said.
The council was more focused on addressing the annual deficit in the district. The projected increase in assessed value from the renovation of three mill buildings on Water Street was supposed to generate enough tax revenue to make the annual bond payments of about $775,000. But condominiums planned for one of the three buildings were never built after the real estate market collapsed in 2009.
“We are only taking in two-thirds of what we need in taxable value,” Walter said.
The TIF district has had to borrow money from the River Road TIF the last several years and has accumulated a $1.5 million deficit that will have to be repaid. The River Road TIF closed June 30 and Walter estimates they will need $330,000 from general fund taxes next year to make the next Downtown TIF bond payment.
“That is 50 cents on the tax rate,” she said.
Walter said they will need about $8.5 million in additional assessed value in the TIF district, which includes a large portion of downtown, to generate enough tax revenue to make the annual bond payments.
City officials are holding out hope that the Peterson building, where $2 million in improvements were made but condominiums never built, could see some activity in the near future.
“It is one of the few buildings with possible growth,” Walter said.
The presentation included a look at how the district has grown and developed the last 10 years and increased the assessed value of the area where it would have cost $2 million to tear the mill buildings down, leaving vacant space.
Patrick O’Grady can be reached at pogclmt@gmail.com.
