Amsterdam approves $20M bond resolution for capital projects, borrowing planned over multiple years

By Ashley Onyon/The Leader-Herald

AMSTERDAM — A $20.17 million bond resolution to finance upcoming capital projects in the city of Amsterdam was unanimously approved by the Common Council on Tuesday.

Officials cautioned that the entire sum will not be borrowed. Primarily short term bond anticipation notes (BANs) will be issued as needed within the next four years to provide the upfront cash to undertake projects that will largely be funded by reimbursable grants.

“This authorizes the city to seek BANs when the time is right, it doesn’t commit us to borrowing,” City Engineer Mike Clark said.

Kim Brumley, the city’s financial consultant, previously alerted the council to the need to map out and authorize borrowing to provide the cash flow for capital projects mostly funded by grants that are not paid out until invoices are submitted for contracted or completed work.

“What we’re doing is trying to get seed money to start the projects and as reimbursements come in, we will pay the contracts from the reimbursement,” Brumley said Wednesday.

According to Brumley, while the city’s general, water, sewer, sanitation and recreation funds are all stable, those balances cannot be used to supplement capital project funds.

Brumley enlisted Clark to aid in the development of a structured borrowing plan accounting for the funding needs for capital projects that are expected to get underway within the next four years.

The plan was prepared over the last several weeks in concert with city department heads and Amsterdam’s financial advisors, Municipal Solutions. Officials are still finalizing the level of cash flow that will actually be needed to start the various projects, which will determine the amount of interest the city will ultimately pay for financing the projects, Brumley said.

While the entire $20.17 million will not be borrowed, Brumley noted the figure is the total anticipated cost of the projects combined and the full sum was authorized in the bond resolution to properly account for the upcoming expenses.

“We’ve committed to these projects, so it is helpful for the council and the city’s financial position to know how much we’ve committed out,” Brumley said.

Authorizing the financing could lower overall capital project costs by guaranteeing speedy payment for contractors and removing the need for vendors to borrow money themselves to cover their expenses for performing the work in anticipation of being paid months later.

“It gives us an upper hand with the contractors to be able to guarantee them that they will receive payments timely,” Brumley said.

The structured approach will allow capital projects to be undertaken without any anticipated taxpayer impact, while finally creating a multi-year plan the city has previously been directed to develop by the state Comptroller’s Office, according to Mayor Michael Cinquanti.

“What we’re doing is what we should have been doing right along,” Cinquanti said. “It’s essential to ensure the city doesn’t overextend itself.”

The city’s improved financial standing and credit rating in recent years enabled officials to prepare the borrowing plan.

“There were situations in the past where the city couldn’t get bonds,” Cinquanti said. “We’re in a much better position.”

Only two expenses authorized for financing are not covered by grants: $1.8 million to replace the Amsterdam Fire Department’s failing ladder truck and $586,500 for roof replacement at the Public Safety building. The city is still seeking funding sources to support those needed projects.

Other projects will require additional funding before moving forward, such as upgrades to the wastewater treatment plant that were authorized for $4.3 million in financing.

The city was awarded a $4.3 million Water Infrastructure Improvement Act grant and approved for a $6.8 million no-interest loan through the state Environmental Facilities Corporation for the upgrades to bring the plant into compliance with state standards that are expected to cost about $17.2 million.

The $2.12 million authorized in the bond resolution to install residential water meters equals the funding awarded to the city by EFC through the Green Innovation Grant Program. The city is seeking additional funding for that project that was previously estimated at $4.5 million.

Deputy Mayor and 5th Ward Alderman James Martuscello previously asserted his opposition to installing water meters at homes across the city, reasoning that property owners already pay for water use and should benefit from the ability to use all the water they want. He suggested amending the bond resolution to remove the authorization to finance that project.

Officials pointed out that the single item could not so easily be removed from the lengthy resolution. Clark noted the city has not formally accepted the grant towards installing meters and that authorizing the borrowing would not guarantee the project will move forward.

Officials are still investigating the potential project to curtail excessive rates of water usage in Amsterdam where homes are not metered. Only industrial and commercial water customers in the city already have water meters installed and pay for water based on their actual usage.

Each year, homeowners pay a flat fee for water dividing the city’s cost of providing water to residents among all taxpayers regardless of their level of consumption. The existing system essentially leads to the subsidization of homeowners consuming the largest volumes of water.

Installing meters at homes would enable the city to more equitably charge residents based on their individual water usage, Cinquanti said. The city would send out mock bills outlining usage and the amount homeowners would pay based on their habits before launching meter-based charging.

“It’s a critical, sensitive issue we have to make sure the majority of citizens understand we’re not doing this to hurt anybody, we’re doing it to be fair to everybody,” Cinquanti said.

The shift would help the city better manage the water system and identify leaks more quickly to reduce waste of a vital natural resource, Cinquanti added.

Ultimately, Martuscello supported the bond resolution as presented, while making clear that he would oppose any future proposals to install residential water meters.

“When it gets down to anything to do with the water meters, I’m going to vote ‘no,’ but I’m not going to knock down this bond,” Martuscello said.

The $20.17 million resolution authorizes the city to issue bonds for the following capital project expenses:

  • $455,000 for improvements to the city owned playground neighboring Barkley Elementary School
  • $1.8 million for a new ladder truck for the Amsterdam Fire Department
  • $586,500 for roof replacement at the Public Safety Building
  • $288,728 to extend the Chuctanunda Creek Trail
  • $3.47 million for a Complete Streets Project reconstructing portions of Main Street and Bridge Street and making other streetscape improvements
  • $847,000 for the conversion of streetlights to LEDs
  • $2.12 million for the installation of residential water meters
  • $4.3 million to upgrade the wastewater treatment plant
  • $521,785 for the replacement of lead service lines
  • $452,210 for road improvements
  • $1.8 million for the annual road resurfacing program
  • $527,590 for HVAC upgrades at city facilities
  • $3 million to design and prepare full construction plans for a multi-modal transportation hub

Reach Ashley Onyon at [email protected] or @AshleyOnyon on Twitter.


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