Urban County Council on Thursday approved $68 million in bonds for projects, including $2.2 million for infrastructure in the Distillery District and $12.5 million for sidewalks and rain gardens downtown.
Most of the bonds, $48 million, will pay for projects that have already started, such as renovations to the Lyric Theatre, overhaul of South Limestone and storm sewer repairs.
Before the meeting, 6th District Councilman Kevin Stinnett, chairman of the city's bond workshop, said council members faced tough choices on which projects to include. But how tough were the choices when council members added $20 million in new bonded projects?
"It looks like we approved a lot, but we haven't paid the bill for it," Stinnett said. In other words, he said, "We have approved the mortgage, but we haven't made the first payment."
The increased debt service on these bonds makes balancing the 2011 city budget "a difficult task, because we have to find additional money to make the additional payments," Stinnett said.
Distillery District developer Barry McNees attended the bond workshop three weeks ago with a last-minute request for $3.2 million for sidewalks, sewers, streetlights and parking along the Manchester Street corridor where his arts-and-entertainment project is located.
On Thursday, workshop members approved bonding $2.2 million of his request. That includes designing and building streetscapes and sidewalks. A request for $1 million for public art and Art in Motion bus shelters was deferred.
Councilman Jay McChord said he supported the Distillery District but questioned adding it to the bond package the city will take to market to sell on Jan. 14.
McChord asked whether the Distillery District request could wait until later in 2010.
Councilwoman-at-large Linda Gorton jumped to the Distillery District's defense: "This is the purest form of economic development. This is the kind of project we are looking for, one that creates jobs."
Also on the list of approved projects was the Downtown Streetscape Plan, which includes renovating Cheapside Park and building a pavilion for Farmers Market and installing new sidewalks, curbs, street trees and rain gardens along Main Street and parts of Vine Street.
Workshop members approved several of Mayor Jim Newberry's high priorities. These included $2 million for the Purchase of Development Rights program, $1 million for a security system for the jail, $1 million for design of a new government center and $1 million for a new city computer system.
Projects kept on hold included maintenance of several fire stations, resurfacing of some roads and some new traffic signals.
As council members decided which projects to bond, Commissioner of Finance and Administration Linda Rumpke warned: "It's not how much debt the bank will let us take on; it's how much your debt payment is."
Debt service in the 2010 budget is $28.7 million.
The projects approved on Thursday increase the annual debt service by $8.9 million, to $37.6 million, when city revenues are uncertain.
This does not include a $35 million bond the city must sell before June 31 to make the next payment toward fully funding the Policemen's and Firefighters' Retirement Fund. This year, Newberry decided to pay off a $246 million unfunded liability in the police and fire pension fund, which had not been fully funded since it was established almost 34 years ago.
That commitment is soaking up about half the city's bonding capacity.
"If we don't increase revenues for the next year," Stinnett said, "We will have to make cuts in the 2011 budget."
In addition, Newberry last month projected a $12 million revenue shortfall in the current budget. He has asked division directors to make an addition 5 percent reduction in expenses.
Reach Beverly Fortune at (859) 231-3251 or 1-800-950-6397, Ext. 3251