Champaign pores over developments

By Patrick Wade

The Champaign City Council held a special study session on Tuesday to discuss a proposal to add nearly $50 million to the city’s debt over the next four years to fund “priority” projects.

The city currently has $45 million in outstanding debt, Finance Director Richard Schnuer said. The proposed plan to finance capital projects will double the city’s outstanding debt.

“That amount of debt, what we have and doubling it, is an amount of debt which is not at all unusual for a city our size and financial capacity,” Schnuer said.

He added that the city will not have to raise property taxes to fund the proposal, but plans to repay the bonds with revenue generated by the projects they fund.

The four-year bond issuance process will begin Dec. 4, when the city plans to issue the first round of bonds. These include: a $13.4 million bond to fund a 600-space downtown parking garage; a $4 million bond to extend Olympian Drive into the Clearview subdivision; and a $3.3 million bond to refinance bonds issued in 2004 to redevelop the former Burnham Hospital site.

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Additionally, the city will issue a $15.3 million bond in March 2009 to fund the Boneyard Creek improvement project and a $15.1 million bond in April 2011 for a new public works facility.

“Every one of these projects is a priority of this council,” Dist. 3 Council member Vic McIntosh said. He added that by completing these projects, the Council is fulfilling obligations it has already made.

“We do not have the cash (to fund the projects),” McIntosh said. “We’re going to have to create a debt to do this.”

City staff has not yet identified a source of revenue to repay the bond issued for the new public works facility.

“That’s something we’ll need to work on and resolve before issuing the debt,” Schnuer said.

City staff consulted with independent credit rating agencies, all of which declared the city qualified for these bonds, Schnuer said.

The city also worked with consultant Phil McKenna to develop the plan.

“The timing is right, the resources are in place to make these, effectively, self-supporting bonds,” McKenna said.