The Cherokee City Council voted to commit $400,000 toward the Aquatic Center/Gillette Park project. The council voted 4 to 0 (Council member Doug Woods was absent) to match the $400,000 Vision Iowa state grant. The Vision Iowa required the match in order for the city to qualify for the grant.
The required $400,000 is in addition to the $100,000 already pledged by the city - $20,000 a year for five years to be paid out of the revenue from the Local Option Sales Tax.
The city will bond for the $400,000 over a 10-year-period. Although the action Tuesday commits the city to providing the amount specified, the bonding will not actually take place until such time as the project goes past the planning stages.
According to estimates presented by Ron Strickland, city administrator, based on current interest rates, the $400,000 loan will cost a total of $493,587 over the course of the 10 years. There will be some fees immediately deducted from the $400,000.
The debt service levy, based on current interest rates, will add 50 cents per $1,000 taxable valuation to the total city property tax.
Strickland stated that the city can bond for up to $700,000 as a reverse referendum bond, meaning the bond can be approved by council action, without a vote of the public.
Strickland noted that there are several infrastructure needs in the city that will likely require bonding in the future such as street repair, water line repair, sewer line replacement, bridge replacement and water tower painting.
Ron Johnson, council member, said that he would have preferred to have a vote of the public on the bond, but there are time requirements that need to be considered. He said people who have called him about the matter have pointed out that a pool is not a money making operation and also that there are a lot of elderly people in town.
"I countered by asking how we can keep young people in town if we don't have things for them to do," Johnson said.
Bill Troth, council member, said people who have talked to him said they did not envy the decision the council must make and that they trust the council to make the intelligent decision. "We sure have them fooled," Troth joked.
John Cook of the fundraising committee for the project was asked about how much more money needs to be raised to reach the $3.6 million estimated cost when the total donations pledged, the state grant and the city's contribution are factored in. He responded that about $950,000 more is needed.
He was also asked about what would happen if the fund raising effort fell short of its goal.
"I'd like to give you a real simple answer but lawyers don't do that," he joked.
He said that if the fund raising comes short $100,000 to $300,000, there may be options on how to proceed with the project for next year without scaling it back.
"I'm confident that the project will happen," Cook said.
He noted that he doesn't know how the Vision Iowa Committee would respond to a scale back of the project that was submitted for the grant. He said that wouldn't be known unless and until such a scale-back occurred.
Cook added that if there is a significant modification of plans, those who pledged money for the project would have to be contacted on how that affected their commitment. He said that some donors were particularly interested in one aspect of the project or the other and that this interest varied from donor to donor.
If the project is delayed past the planned 2006 construction, costs could increase, Cook added.
Before the vote was taken, Dennis Henrich, mayor, suggested that the council approve a bond for $500,000, the extra $100,000 to include funds for other infrastructure needs. Strickland's list of interest costs and levy increases included estimates for bonding of $500,000.
With a 10-year bond, the levy would be 61 cents per $1,000 taxable valuation to pay off $500,000, based on current interest rates.
Dwight Varce, council member, said that the city shouldn't include anything other than the $400,000 for the project in the bond.