Home News Local News

John Day to save $280,000 with loan payment plan

City warned about pension liabilities.

By Richard Hanners

Blue Mountain Eagle

Published on December 15, 2017 2:48PM

John Day City Manager Nick Green

Eagle file photo

John Day City Manager Nick Green

Buy this photo

The city of John Day intends to save $280,000 by paying off loans early.

On Dec. 12, the John Day City Council unanimously approved one of four options for consolidating two Public Works Fund loans through Business Oregon’s Infrastructure Finance Authority.

The city received an offer from Washington Federal, the same lending institution that originated the bond for the city’s new fire station, to consolidate the two loans at interest rates ranging from 2.34 percent to 2.49 percent.

The city’s Budget Committee had approved a recommendation during the fiscal year 2018 process to accelerate payments on a loan for the industrial park near the airport by $20,000 and on a loan for the West End Water System improvement project by $100,000.

The chosen option will save the city $283,060 but includes a six-year call, at which time the city must make a bullet payment of $720,000 to pay off the entire loan. The city can cover the cost of the payment by saving $120,000 a year, which fits into the Budget Committee’s plan for the loans, Green said.

In other council news:

• According to a 2017 financial audit by Guyer & Associates, the city’s total net position of assets over liabilities increased by $384,332 over the year, “a modest but positive increase,” Green said.

The increase largely was due to revenue from the solar eclipse event, receipts from the U.S. Forest Service and the value of the shop building acquired through the purchase of the Oregon Pine property.

CPA Kent Bailey issued a “clean audit” but warned the council about estimates for Public Employees Retirement System liabilities, which were “all over the board.” He noted that just a 1 percent change in market interest rates could dramatically increase PERS liabilities.

“Trust me, we’re in the good part of the cycle now,” he warned.

City expenditures totaled $2.5 million, with 23 percent to sewer, 19 percent to water, 17 percent to emergency services, 17 percent to police, 10 percent to streets, 7 percent to fire and 7 percent to administration.

The council also unanimously approved a resolution to address $3,950 in excess expenditures for the sewer fund’s capital outlay reported in the audit. Green said the city’s estimate of closing costs and title fees in May for the acquisition of the Oregon Pine property were off by about 1 percent of the $520,640.

The resolution discloses the budget violation to the Oregon Secretary of State and provides a plan of action to ensure future budget estimates do not exceed budgeted amounts.

“We’ll need more of a cushion if we do future property acquisitions, which I don’t expect,” Green said.

• The city received $4,945 in additional recreational marijuana tax revenue from the state.

• The council met in executive session to discuss a performance review of City Manager Nick Green and to discuss ongoing negotiations of proposed acquisition, exchange or liquidation of public investments. News media representatives were allowed to attend but cannot to report on any of the deliberations during the executive session.

• The council’s next meeting is Jan. 10. John Day will host the League of Oregon Cities Region 8 Small Cities Meeting on Jan. 18.


Share and Discuss


User Comments