It is as clear as the mud at the bottom of Lake Mitchell, right! Hopefully this will clear up a great number of misconceptions related to Lake Mitchell improvements.
The big question, what exactly is the Resolution Council passed at the last meeting? The last meeting set a maximum amount the City will borrow via the State Revolving Fund (SRF) Loans from DANR. The project was estimated at $25 million dollars, and STILL IS. What has changed is the amount the City is proposing to borrow at 3.75% interest, for 30 years. After hearing from the public, and Council, the loan amount should be reduced, an extensive review was made on City funds. Since we have had a couple of good years relative to sales tax collections and interest paid on money in the bank, we determined the loan amount could be reduced substantially. The Resolution was proposing that reduction to be fully transparent with residents of Mitchell.
This DOES NOT reduce the cost of the project. It reduces the amount of money paid back for interest on the SRF loan. The project remains $25 million. It breaks out as follows: Project Mobilization – $1 million; Lake Mitchell Drawdown – $3.5 million; Dredge Material Disposal Site – $1.5 million; Additional Sediment Trap at Mouth-of-Lake – $1 million; Construction Phase Services – $1 million; Contingency for Unforeseen Issues $4 million; dredge (actual internal load control) – $13 million. TOTAL PROJECT $25 million. It is a $25 million project, NOT A $25 MILLION DREDGE.
This ultimately saves the City $5.6 million in interest payments over the life of the SRF loan.
How do we get to that figure? There is cash already set aside of $3.5 million for the drawdown (which has already been approved and is in the budget currently); we add cash from Capitol Project Reserves of $4.7 million to reduce the loan amount; and we borrow $16.8 million from DANR in the SRF loan. Total amount for project $25 million. Interest paid $11.4 million. GRAND TOTAL with interest $36,439,784.00.
In the discussion on the Resolution, it was proposed to reduce the loan amount even further, by up to $6 million. That additional $6 million would reduce the interest expense by an ADDITIONAL $2.1 million, saving the City EVEN MORE! But that met opposition from some Council members.
So how does this get paid for? This project will be paid for from our current revenue stream in the General Fund. NO TAXES WILL BE INCREASED!! In fact, we cannot raise property taxes without the City opting out of the current property tax scenario, which would require action by Council and could be referred to a vote by the citizens. We have two debts which will come off our books by 2030, which offers even more flexibility in payment of the Lake project.
A couple of things to keep in mind relating to this project. Several of the items in the $25 million dollar price tag will be necessary regardless of any method used to improve Lake Mitchell. Mobilization occurs no matter what, that is the cost a contractor includes to move onto a project and preparations to do the work, and perform the contract. The drawdown is required so there is a method to do maintenance on the upstream wetlands, and clear the sediment traps. The additional sediment trap is needed to help with water quality entering the lake from the watershed. Construction period services are required to ensure the contract for construction is being adhered to and the specifications followed. So, removing the dredge portion does not take the project cost as low as some people would have residents believe.
The question has come up as to why the City is not selling more land around the Lake. The City cannot sell any more lots for the purpose of funding this project, without taking that proposal to the residents of Mitchell for a vote to change the designation of more land around Lake Mitchell from being Park Land.