Evanston City Council may revise its self-imposed limit on city debt tonight in order to pay for civic improvements and keep the city sufficiently insured.
City Council must consider this change because of another item on its agenda: $12 million in bonds that city staff said are needed to pay for city projects. The city can issue the bonds at no cost to taxpayers because of recent refinancing. But issuing the bonds would also push the city’s debt past its limit of $75 million. The new ordinance would raise that limit to $100 million.
Evanston gets good deals on bonds because of its sterling credit rating. But increasing the debt limit might call that rating into question.
“If you’re somebody who’s going to lend money to the city, you want somebody who’s going to pay you back in a timely fashion,” said Northwestern economics Lecturer Mark Witte. A debt limit shows creditors that Evanston is fiscally responsible and capable of repaying funds.
Witte also said given the city’s development, financing improvements is good long-term economic policy.
“With all these apartment buildings and condos going up, it’s going to take roads to keep people going in and out,” he said. “Sometimes you have to spend money to make money.”
The council doesn’t normally like to alter the debt limit, but Ald. Arthur Newman (1st) said the opportunity to refinance the bonds is worth it.
Newman said although raising the debt limit could hurt Evanston’s credit rating, neglecting the city’s infrastructure would be worse.
“You’re sort of damned if you do, damned if you don’t,” he said. “The worst thing you can do is neglect city needs.”
The increased debt limit and bonds proposals are part of a larger plan conceived by the finance department. The plan calls for the city to issue $60 million more in bonds by 2008. The plan could result in a 4 percent annual increase in the city’s debt-service portion property taxes. This would result in a small jump in residents’ total bill, but it would not be effective until next year.
Debt service usually represents about a third of the city’s portion of property taxes, said William Stafford, director of finance.
Stafford will give a full presentation on the plan at tonight’s meeting.
The council also will consider another item that could raise city revenue: an increase in fees on false police and fire alarms.
The proposed increase, which will be introduced during the Administration and Public Works Committee meeting tonight, is designed to deter false alarms, but could also generate more than $200,000 in new revenue.
Buildings in the city currently get four free false alarms before getting slapped with a $100 fine. The revised ordinance would reduce that number to two. It would also increase the cost of an alarm permit from $10 to $30.
But higher fines may not prevent false alarms at NU, said Brian Kittle, project manager for university Facilities Management. He said since the university pays the bill, students who live in dormitories are insulated from costs.
Kittle said the university pays about $1,600 to $2,100 per quarter in false alarm fines and estimated that amount would jump by about $2,000 under the new ordinance.
Both meetings will be held at the Evanston Civic Center, 2100 Ridge Ave., and are open to the public. The Administration and Public Works meeting begins at 7:00 p.m. and the council meeting begins at 8:30 p.m.
