The City Council’s decision to take out a loan for our City Hall is a gamble that could have negative financial consequences for decades into the future. While TLT revenue is indeed the single largest revenue source for the General Fund, after paying the General Fund’s two largest expenses of City Administration and Police Department services, there is little left to pay for other services or transfer of money for street, water and storm drain projects let alone take on new debt service costs.
Has this Council considered that taking out a $4 million dollar loan at this time may not be wise because:
TLT revenue for the first quarter of this year was down 23% from the same period last year.
TLT revenue will continue on an annual downward trend from the artificial COVID era highs.
City General Fund operation costs are expanding at an annual rate that exceeds the ability of revenue to keep pace.
Falling real estate prices from their historic highs are an indicator of a softening in the economy with a majority of economists forecasting a recession of some degree in 2024.
We are told that visitors substantially through short term rental (STR) revenue from the General Fund are going to pay for this loan. As STR General Fund revenue declines and citizens want to further reduce dependence on STRs to improve livability, how can STRs be counted on to pay this debt into the future?
How are we going to pay for needed water, street and storm drain construction projects?
The building boom is over. Fewer future building permits means reduced System Development Charge revenue from developers will be available for years to fund these needed projects. What little funding the General Fund currently provides for these projects will now no longer be available because it is now needed to pay this new loan debt.
Bonds have always been the preferred financing choice of Oregon cities for large, expensive and long lived capital projects and just makes more sense to fund our City Hall project because:
It is a stable revenue source that is not affected by external economic conditions.
Allows the City to successfully start the process to break our dependence on STR revenue.
Everyone, full time residents, part time residents, businesses and STR owners all pay their share.
More General Fund revenue is now available for water, street and storm projects instead of loan debt.
A vote does not slow down the project design process or demolition of the old school.
Mr. Mastenik is engaging in his First Amendment right to petition our local government and is collecting names of Manzanita voters at the Post Office with a petition to be submitted to the Council in July asking for the opportunity to vote on this critical community decision.
The long term financial risks are real. The best financing choice for this project is obvious.
Why doesn’t this Council trust its citizens to make this decision?
Randy Kugler