The Chelsea City Council unanimously approved a number of budget transfers Tuesday night, Oct. 22, which will pay for a previous court judgment, the bond payment for the new police building, the purchase of the former Bookcrafter’s building, and winter street maintenance.
In 2011, the city issued $2 million in general obligation bonds to fund an about $3 million judgment it must pay a developer after Chelsea lost a lawsuit brought against the city by the developer of the Heritage Pointe subdivision on Dexter-Chelsea Road.
Chelsea Investment Group, LLC sued the city when problems with the city’s sewer and water system put a halt to additional phases of the development.
Since then, to pay off the about $3 million court judgment, each year, varying amounts are cobbled together from the city’s electric, water, wastewater, general fund, stormwater and solid waste funds to pay for the bond.
The about $226,000 annual payment amounts to $77,596.50 from the electric fund, $38,186.54 from the water fund, $31,822.12 from the wastewater fund, $66,173.50 from the general fund, $9,546.63 from the solid waste fund and $3,182.21 from the stormwater fund. The bond payments are made each November and May for the 10-year note, which will be paid off in November, 2021.
“We make these budget transfers at this point in the year because the cash balances are at their highest point following the summer tax season,” said Kim Garland, administrative director, who noted that this transfer to the judgment bond debt service cash account is for the 2014-15 payments.
The City Council also unanimously approved a $26,000 transfer from the major street fund to the local street fund, which is expected to be used for snow plowing and winter street maintenance.
Also approved was a transfer $124,425 from the general fund to the capital projects fund for a bond payment for the new police building, also for 2014-15 . This 15-year bond will be paid off in 2026.
The police station payment is $99,425 and the additional amount is being used for the renovation of the city offices, which are underway.
In addition, the City Council approved a $29,610 transfer from the general fund, wastewater fund and water fund to pay for a portion of the bond the city took out to pay for the Buchanan Street Building. Since this building has been sold to Chelsea Milling for $175,000, that money will be combined with the $29,610 to make the 2014-15 bond payment.
“Debt covenants do not allow for the early or additional principal payments to reduce future interest,” Garland said, but the money from the sale have reduced the required annual transfers.
This bond will be paid off in November, 2022.
