Kokomo Tribune; Kokomo, Indiana

Local News

May 17, 2014

Can Kokomo afford flood control and new stadium?

City bonding $11 million for stadium and flood control

(Continued)

Cost of debt

Judged on revenue, Kokomo can more than afford to bond for $11 million.

The bonds haven’t been sold yet, but when they do, they’ll probably cost the city around 2.5 percent interest, meaning an annual payment of about $900,000, conservatively.

The bonds will be repaid through the city’s economic development income tax revenue. The city received about $1.6 million in EDIT last year, meaning there shouldn’t be any problem making the payments, so long as city officials set aside the required funds each year.

Property taxes won’t be used to pay off the debt.

A novel position

On the larger issue of taking on debt, Kokomo is hardly in a novel position.

As of last year, with Kokomo Beach paid off, the city’s government had no debt. The city’s wastewater utility, which is funded solely through sewer rates, still has around $26 million in debt, but property taxes can’t be used to repay those bonds.

The fact the city was debt-free for a brief period, was, in fact, somewhat novel. No other city Kokomo’s size was without general obligation debt in that period.

But Goodnight has definitely been on a project spree, starting with the Foster Park pavilion early in his first term, and continuing with numerous trails improvements, the pedestrian bridge over the Wildcat Creek, the demolition of the frequently flooded homes on Carter and Murden streets.

“There is a cost to doing nothing,” Goodnight said.

On taking on debt, Goodnight notes that the city’s annual budget is $63 million, not counting the EDIT funds which will be used to repay the baseball/flood bonds.

“It’s always easier, politically, to do nothing. We can leave a hole down on Carter and Murden streets. We can let the [Highland Park CFD Investments] baseball stadium, which hasn’t been upgraded in 30 years, continue to deteriorate. Or, we can make a nice community for the people who live here,” he said.

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