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November 4, 2019

November 4, 2019

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Why is Washington Township selling a $15 Million Bond?

 

In response to a recent blog post by Bill Smythe, I offer you the following opinion for consideration... At a time when the Washington Township Trustee, Danielle Carey Tolan, is making an appeal to the Department of Local Government Finance for an additional $20,000 in funds for Township assistance, she is also asking taxpayers to be in favor of a bond.  A bond request of this size is unprecedented in Washington Township as the last (2011) bond was for $88,000. According to Township documents, the Washington Township Trustee is asking taxpayers to agree that a $15 Million Dollar Bond be issued to fulfill a portion of the vision outlined in the 2016 Washington Township Strategic Plan.  While Declaratory Resolution No. 2018-01 specifically says,

 

“WHEREAS, the Bond has caused to be prepared preliminary plans, specifications and estimates for the Project, including plats showing the general scope of the Project and the location and bounds of all real property considered necessary to be acquired or removed, or that would be injuriously affected in connection with the Project.”


No specifics and no plats are found in the supporting documents.  What we can see is an estimate to use $5.5 Million for land acquisition and $200,000 in real estate and bond issuance fees.  Are you willing to open your checkbook for $15 Million when the only detail received has acknowledged a $5.5 Million dollar bond?


The Trustee remarks in the Strategic Plan that she wants to be a good steward of your money, but never mentions a budget for land acquisition.  Should there be an expectation that land will be purchased by the Township?  Most of the Township properties have been acquired through donation.  Page 7 of the Strategic Plan in the Executive Summary, tells us that the Township will “practice frugality” as one of the Township goals, yet they need to approve this bond which is ten times (yes, 10X) more than the Township’s current annual budget.


How does this affect you?  I’m going to guess that you’ll hear it’s only going to cost you a (another) drink at Starbuck’s.  How many cappuccinos or iced coffees are you living without these days? Let me remind you, this is a twenty-year bond.  Despite the budget-slashing the Trustee has performed in order to make this look like a manageable solution for the purchase of greenspace, what will the needs of Washington Township be in just two years, five years or ten years?  Where will the additional monies come from?  The plan seems to be that extra money will always come from you…the taxpayer.  While we’re on the subject of budget-slashing, have you looked at the funds that, seemingly, have been crippled by the Trustee?


Let’s agree that the annual tax increase to individual taxpayers for the bond is negligible and instead ask, for what purpose will this bond money be used.  While I’m prepared to hazard a guess, I will leave it to you to ask the tough questions of the Trustee.


The Washington Township Board, who has a membership of three elected officials, will need only two votes to pass the Trustee’s bond resolution.  Is the Trustee seeking a blank-check for $15 million from her lame-duck Board prior to the November election?  For the sake of argument, let’s make some accounting assumptions to explain not only to the Board, but to taxpayers, why Washington Township can’t afford this bond. 
 

Based on the “Schedule of Estimated Sources and Uses of Funds” published by the Trustee’s office, the cash outlay from the 2019 budget will be $410,051.31 annual payments + $47, 000 in realtor fees + $163,000 in issuance cost which will total = $620,051.31, which accounts for approximately one-third of the Trustee’s entire annual budget. Keep in mind that $5.5 Million is just 38% of the total the Trustee is willing to take out in bonds. Now imagine what 100% usage of the total of the bond will look like for the Trustee’s budget. At the assumed interest rate of 3.60%, we will pay $7,996,000 for the $5.5 Million in debt service. If the Board bonds the entire $15 Million at the same rate, it will cost us $21, 807,000 dollars. We will be making annual bond/debt service payments of $1, 079,000.

 

In conclusion,

  • Consider that the Township Board should not approve a $15 Million-dollar bond;

    •  they could approve significantly less and issue another bond as needs arise;

    •  they could abandon this large outlay for over 20 years into the future;

    •  they could seek land acquisitions without cost to the Township.

  • The Trustee will attempt to sell you on the notion that interest rates are low now, though she is willing to accept any rate as high as 6%, according to the documents received.

    • You should keep in mind that interest rates are not locked-in as of the date of approval, but rather calculated at the time of the sale of the bond.

    • If the Trustee can prove she has brokered a deal for land acquisition in the amount of $5.5, shouldn’t the exercised declaratory resolution only have been approved for $5.5 Million?

 

You’re invited to join the Trustee and the Township Board on October 16th for a public hearing regarding Confirmatory Resolution 2018-02. The meeting will be held at the Township offices at 8 AM. Without your input, it is likely to pass and you’ll be on the hook.

 


About Marla Ailor - Marla is a 20 year resident of Westfield and has served as the PTO President for Monon Trail Elementary School in the Westfield-Washington School District, is an active and lifetime Auxiliary member of the Veterans of Foreign War Post, member of the American Legion Auxiliary and committee member of the Westfield Intermediate School PTO. Ailor recently ran for Washington Township Trustee in the May GOP primary and was endorsed by this group. Since then Ailor was added to this PAC to represent Westfield. 

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