DeKALB – The DeKalb City Council on Monday approved to borrow no more than $12.7 million to pay for the new police station.
However, the council is stepping away from borrowing to pay for improvements at local fire stations.
Fourth Ward Alderman Brendon Gallagher said he wants to see concrete numbers for any improvements on the fire stations.
“I think setting a number like we have – we’re at $250,000 right now being issued in this debt over here – might not be the most prudent move at this particular point,” Gallagher said.
The ordinance only places a ceiling on how much the council can borrow; it can choose to borrow less than $12.7 million.
The council also waived a second reading – making Monday night’s vote final action.
At the Aug. 27 meeting, the council indicated it would borrow $12.25 million to pay for the police station and improvements at Fire Stations No. 2 and 3.
But the city might have to pay out $450,000 for “underwriting costs,” such as the cost of issuing the bonds and attorneys.
The money might be needed in case interest rates rise in spring. The bonds will be issued in two amounts at two different times – with $9.85 million issued in October and $2.4 million issued in May 2013.
The interest rate for the October bond is 2.875 percent, but that might be different in May, said Assistant City Manager Rudy Espiritu.
Espiritu described the extra $450,000 – now $700,000, because the council is not going forward with fire station improvements at this time – as a contingency fund.
At previous meetings, the council had set other limits on the police station. They had voted to spend no more than $12 million on the station’s construction and pay back the bonds at a maximum $900,000 in debt service a year.
And because of the debt service limit, instead of paying back the money within 19 years as previously discussed, an extra year was added because of unknown costs.
Sixth Ward Alderman David Baker suggested raising the debt service cap so the city could pay off the bond faster at a lower interest rate. But his motion was not considered by the council.
First Ward Alderman David Jacobson voiced disappointment in going over the $12 million ceiling.
“Let’s keep the bonds at $12 million,” Jacobson said. “We’ve been very tight with those numbers all the way through ... .We’ve done this from day one the way we wanted to do it, the way it needed to be done. Let’s not change everything at the last minute.”
Sometime in January or February, the city council will meet to discuss what direction they want to go with in regards to borrowing more to pay for the improvements at the two fire stations, Mayor Kris Povlsen said.
"We're going to be looking at a variety of alternatives between now and then to determine where we can get that money from," Povlsen said.
Fire Chief Eric Hicks previously described the improvements at Fire Station No. 2 at 1154 S. 7th St. as being sorely needed. Fire Station No. 2 would have its living space for firefighters increased and would be better outfitted to handle increased electrical needs. This station was built in 1957.
Meanwhile, Fire Station No. 3 at 950 W. Dresser Road. has not had any maintenance performed on it since it was built in 1994.
Jacobson also did not want to issue bonds to pay for the fire stations, as the buildings would become irrelevant in 20 years regardless of what repairs were made. Baker disagreed with that sentiment, referencing a fire house tour Hicks gave Baker and Fifth Ward Alderman Ronald Naylor earlier Monday as evidence.