The word “debt” sounds about as evil as Lex Luthor.
But even the Metropolis mogul would respect a super-savvy business move Huron officials just brokered, advancing quality of life without bouncing the city's checkbook backed by area taxpayers.
Huron city council recently agreed to borrow $1.35 million to pay for various community improvement projects either ongoing or about to start.
The city’s finance committee initially supported this decision.
There’s not enough money in Huron’s everyday operating budget, hovering around $4 million a year, to address a bevy of infrastructure improvements without sacrificing services such as police and fire.
Borrowing money at a low interest rate proved an alluring alternative, both to fund construction projects and protect Huron’s budget.
All told, low interest rates and Huron’s outstanding bond rating parlayed into city officials spending $6,000 to leverage the $1.35 million.
“This is one leg of our financial strategy that we’ve had in place for the past few years,” said Huron city manager Andy White, who spearheaded the deal. “This is an investment. If you don’t have some capacity of debt, you are not investing in your future.”
He added: “Certain things, your day-to-day operations, you want to pay for in cash. But there are long-term items that are completely appropriate for debt investment. With this deal, we can do great improvements in the community today at historically low interest rates so the public can begin to enjoy these investments today as opposed to incrementally over the next 30 years.”
White equated the debt scenario to a:
• Homeowner taking out a 30-year mortgage with fixed payments rather than paying 100 percent up front with cash.
• Licensed driver leasing a car at a good interest rate instead of outright purchasing a vehicle.
“It’s not responsible to pay cash in every situation,” White said. “If you sink all your liquidity in your home, what will you do if your roof goes bad? There is balance to everything.”
Huron’s total debt heading into 2014 totaled around $3 million, mostly from water and utility expenses. With expiring debt coming off the books this year and next, the total debt — when accounting for the new $1.35 million loan — should still total roughly $3 million in mid-2015.
Had the city avoided creating any new debt, area taxpayers could’ve paid off all existing obligations by 2023.
City council approved a similar deal for $525,000 in debt a year ago. These upgrades paid for improvements on Rye Beach Road, Jim Campbell Boulevard, ConAgra’s former site and the Lake Shore Electric Railway Trail.
Making sense of the dollars and cents
Huron officials have pinpointed $1.35 million in various projects they intend to fund with debt now through July 2015:
• $525,000: to improve various aspects in City Hall, enhance public access on former ConAgra site and upgrade other public features.
• $420,000: to install sidewalks on eastern side of Ohio 13 between U.S. 6 and Thunderbird Hills Golf Club.
• $405,000: for various road reconstruction and resurfacing projects, including several streets in and around the Old Plat neighborhood.