Marc on Debt
When Chris Koos became mayor 18 years ago, the Town was debt-free. Today, our outstanding loan balance is around $82 million. On top of that, we are scheduled to pay almost $35 million in interest. Despite all the increased taxes and everything we have paid to this point, we still have another $117 million to go. Each year we pay $2 million towards principal, but an additional $3 million just for interest.
If we continue down the path Chris Koos has laid out for the Town, we will be paying off this debt for the next 22 years. The interest burden will fall on the shoulders of not only our children, but our grandchildren, as well. Uptown will still be here after the next election—we must simply find better ways to pay for it. It is a question of how we decide to spend our money.
To save millions and shorten the amount of time it will take us to pay off this debt, I plan to put more money toward principal so we can spend less in interest over the life of the loans. Every extra dollar we pay right now will leverage an additional $0.43 in savings. That’s a huge amount.
- For six of our bonds, we are paying interest only—we are not making any headway at all on the principal. For example, just one bond that was worth $1.8 million will wind up costing the taxpayers $4.2 million.*
- The current mayor has not prioritized reducing the Town’s debt, choosing instead to push forward on even more multi-million-dollar projects that were devised more than 20 years ago—rather than addressing the “needs” of the Town, Koos has persisted in pursuing the “wants.” We must carefully evaluate these high-dollar projects and better balance them with the real needs the Town has. The current list of projects is long.
- This past year we had a $6 million surplus. We can leverage that right now to reduce the principal on our bonds. Then, the money that we are currently paying on interest could instead be paid back into the reserve fund. Paying cash every month to ourselves instead of giving it up in interest to our lenders not only would save us millions, but would generate interest income for the Town. That’s the same cost per year, and it would free up a lot of funds.
It is important to address this issue now because Uptown will get harder to pay for in the next few years. The revenue from the Tax Increment Financing (TIF) districts that helps fund our payments will no longer be available after 2026.
If you are ready to see change in how our debt is managed, please vote by April 6th for me, and vote for like-minded council members who will work with me to see this change happen.
*Town of Normal Comprehensive Annual Financial Report for the Fiscal Year Ended March 31, 2020, PDF page 179 (Page 159 in the document page numbers.)
In this video, I talk about the AAA rating we keep hearing about. Here's why this does not excuse where we are at.