Early payoff: City plans to pay off bowling center 14 years early, by 2015
Chillicothe News - Chillicothe, MO
Updated Jul. 31, 2012 @ 11:46 am
Updated Jul. 31, 2012 @ 11:46 am
» Social News
Chillicothe City Council members made significant strides toward their obligation to the city-owned bowling alley at their regular meeting, held Monday evening in council chambers at City Hall.
The council made a unanimous decision to pay off the debt on the Fast Lane Family Entertainment Center within the next three years instead of drawing the payments out, which would not be finished until 2029.
The loan on the bowling alley is currently paid for through the Capital Improvements Fund, which is solely designated for capital improvement projects. The existing capital improvements tax will carry the city through 2025, at which point, there will be a remaining four years left on the bowling alley loan, meaning that those four years the loan payment would come out of the city's general fund.
Councilman-at-Large and Finance Chairman David Moore brought the topic to the meeting, stating that it would save the city $280,765.26 by paying off the loan early.
The current balance on the loan is $868,915, with the amount of interest due on the current schedule from 2009 to 2029 totaling $450,446.03, according to figures presented by City Administrator Ike Holland. Of that total, $130,993.82 has already been paid in interest with an additional $38,686.95 in interest over the next three years. Therefore, instead of paying the $450,446.03 in interest through 2029, the city opted to save the $280,765.26 by paying off the loan in the next three years.
"I might not be happy paying for the bowling alley," said Moore, "but it is an obligation that is there."
Wayne Cunningham, 2nd Ward councilman, said that the city should never have been involved in buying the bowling alley, but that if there was enough money in the capital improvements fund to buy out early while still maintaining a good amount in the fund, that he was all for the early payoff.
Figures were anticipated for the fund over the next 13 years, covering through 2025 when the existing capital sales tax expires. The lowest the fund would get would be around $430,000, a number which includes projected funds needed for the water park project. After that point, which would be 2014-15, the fund would once again increase.
Cunningham asked Administrator Holland what the city should try and keep in the fund. Holland answered by stating that they should always try and maintain a balance for emergencies and that most state entities try to carry at least three months operating funds. Holland went on to say that anything less than $400,000 would be pushing it.
Tom Douglas, 3rd Ward Councilman, said that he felt the capital improvements funds should stay in the parks and the pool and that as soon as the loan was paid on the bowling alley, that the city sell it.
Nona Wilkison, who spoke from the crowd, asked that once paid off, expenditures for the building would still not show zero due to upkeep and improvements that would have to be made as the equipment is getting older and is in need of replacing.
At that, Holland stated that the bowling alley does work with a budget, just like all other city-owned facilities, that they use for operations.
Moore said that the operating funds should be taking care of the needs of the bowling alley and that if they needed additional funds beyond that, that a request would have to be brought to the council for approval.
Moore wanted to remind the council that it was smart to make these projections, especially if the money was there. He restated that as is, the loan payment would come out of the general fund after the capital improvements tax was up.
Alvin Thompson, from the crowd, addressed the council as well, stating that another council could come in next year and change everything the city was setting up. He stressed to the council that he believed the city should just sell the property and take a loss. "The bowling alley is a thorn," said Thompson.
Cunningham reminded Thompson that no matter what the city decides at this point, they are still obligated to pay the interest.
Moore also stated that even if the bowling alley were to sell, that the money received after splitting it three ways (between the three entities responsible for the property purchase - being the City of Chillicothe, CIDC and CDI) would not be enough to pay the note. "Then, we'd have to pay out of pocket," said Moore. "Our options will be a lot better when its paid for."
Currently, the loan for the bowling alley allows for early payoff without penalty, but the city has to give 30-days notice prior to making arrangements. That 30-day notice was slated to be given today, Tuesday, so that early payments could start Sept. 1, 2012.