By MATT HOPF
Herald-Whig Staff Writer
AN EFFORT to pay back a $6.6 million bond the city of Quincy sold in 2009 for permitting and licensing costs to develop hydropower facilities at three lock and dams along the Mississippi River is clearly not going to be completed quickly.
There are too many questions remaining on how to pay back the bond and how much -- if any – could be recouped in the city's attempt to sell off design work, environmental studies and other materials completed for Lock and Dam 21 in Quincy.
It will be at least several weeks before options are sent to the Finance Committee, and up to 45 days is needed to sell a taxable bond to move forward on a sale of the materials.
The current repayment plan of the hydropower bond includes a $4.78 million payment in fiscal year 2013, which would have to be levied in December for property taxes payable in 2012. The city also would have a payment of $1.96 million for the 2016 budget year, which is currently the year it would be paid off.
The city has not spent $3 million of the bond, which would leave $1.78 million of the 2013 payment remaining, if that money is directed toward the payment. Including other bond payments the city is responsible for, that leaves a bond payment of at least $3 million, higher than $2.3 million the city has to spend on all of its bonds in fiscal year 2012.
The only proposal seen so far is from 3rd Ward Alderman Kyle Moore, who titled his proposal "Solving Our Hydro Debt Dilemma," which he distributed to the council on June 28.
Moore says his plan would pay off the debt by using the remaining $3 million, then refinancing the remaining $3.6 million over 10 years. Moore contends the debt would be paid off by using revenue the city receives from a franchise agreement with Ameren Illinois for the next nine years (a total of $3 million) and directing 1.4 percent of the general fund toward bond payments for five years -- requiring every city department to cut 1.4 percent from its budget, generating an estimated $400,000 annually, or $2 million overall.
That would cover the $4.9 million for the debt if it is refinanced at 3.2 percent.
The proposal does not take into account any revenue generated by the city selling any of the materials it has collected concerning Lock and Dam 21. And it does not address how the city could "give back" $2 million from its general fund without laying off employees, cutting city services or delaying any infrastructure improvements -- among the alternatives Moore says are "not acceptable."
The word "dilemma" isn't necessarily sitting well with some members of the Finance Committee. Chairman Steve Duesterhaus, D-2, said it shouldn't refer to the hydropower bond debt as a "dilemma" or a "time bomb," phrases Moore writes in his proposal.
"That's creating a scenario of desperation that we don't need," Duesterhaus told the committee last week, adding such talk could devalue the product.
"I don't see how talking about plans is devaluing (the product)," said Alderman Paul Havermale, R-3.
While these may not be the words they like to hear, anyone who makes a bid on the products already knows that the city was denied a license and could use any money reaped from selling materials to help pay off the bond debt. The federal denial is public knowledge.
The two principal payments on the hydropower debt make both the fiscal year 2013 and 2016 the highest bond payments the city is going to pay through fiscal year 2029, so it will be a source of concern, especially as the economy still struggles to stabilize.
Can the city recoup all the money it has spent on Lock and Dam 21 work so far? It's possible but unlikely. Any developer who would want the information will likely try to get it as cheaply as possible. After all, the city will likely put out a request for proposals from bidders and take the highest bidder. Much like buying a house or a car, there is likely to be some depreciation of the materials, and with a December deadline looming, the city is going to have to make some decisions.
Most see Moore's proposal as a starting point, but there certainly will be plenty to consider before a final decision is reached.