Funds may be refused|Mayor questions if city can afford to accept loan, grant

Published 12:15 am Saturday, February 20, 2010

Contributing Editor

Washington has been selected to receive a $4 million loan and a $100,000 grant from the federal government to help pay for a new police station, but there are questions about whether the city should accept the funds.
The money, provided through the American Recovery and Reinvestment Act, will come from the U.S. Department of Agriculture’s community facilities program. The city has plans to combine the federal funds with $1 million from other sources, reads a news release from the city.
Two years ago, a previous council determined that building a new police station was among the city’s top four priorities. That determination came at the council’s planning session held Feb. 20, 2008. That previous council, replaced by the existing council in December 2009, decided to aggressively seek federal stimulus funds to help pay for the new police station.
Mayor Archie Jennings said the city may not want to accept the federal funds at this time. Jennings said he and some City Council members are worried about “gotten the cart before the horse” in regard to building a new police station.
“We’re not ready to build a police station yet. We haven’t selected a site,” Jennings said.
The mayor also said there is no design for the new police station and that he and council members want to further explore all facets regarding the construction of a new police station and how the city would pay for it.
“Without any of those decisions being made, I don’t see how we can’t act on the USDA award,” Jennings said.
The mayor said he and the council are not sure the city, at this time, can afford a $4 million loan.
“My recommendation would be that we not borrow that amount of money. I don’t think we can afford to borrow that much money,” Jennings said.
The mayor did say it’s “good to know there’s a source of funding for those type of projects.”
Jennings’ concerns with a new police station go back to at least August 2009. At a council meeting that month, Jennings, then a councilman, expressed concern about the city moving too quickly when it comes to finding a site on which to build a new police station.
Councilman Doug Mercer has view similar to the mayor’s.
“I’m surprised we got the grant to begin with. … I don’t know that we can accept the grant because we don’t know what we are going to build and where we are gong to build it.”
Without knowing that information, it’s difficult to know how much the new station will cost, he noted.
“I’m not sure we can either,” Mercer said when he learned of the mayor’s comment on whether the city can afford to accept the loan.
“You’ve got to cut costs somewhere,” he said.
Mercer worries that accepting the loan add to city’s mounting debt-service costs. Paying back the loan over 40 years would cost the city $100,000 plus interest each year during the pay-back period, Mercer said. That amount, on its own, likely would be affordable for the city, but adding that debt to other existing debt could present a financial burden to overcome, Mercer said.
Mercer noted that it would take about a 2-cent increase in the city’s property-tax rate to pay for an additional $100,000 in debt, if no other funding source to pay for that additional debt existed.
The loan and grant will allow for construction of a new police station to replace the 34-year-old existing police station on West Third Street, a station that’s in flood plain an insufficient to accommodate the needs of the city’s law-enforcement activities, reads the release.
In December, the council received a report concerning 18 possible sites for a new police station. Since then, the council has been reviewing the report and other information related to building a new police station. The council appointed a subcommittee to study the financing of a new police station. That committee is scheduled to meet at 9 a.m. Tuesday in the mayor’s conference room.