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Debt payments for Manteca drop in upcoming municipal budget
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It isn’t cheap to build state-of-the-art wastewater treatment and surface water treatment plants to meet stringent state and federal clean water standards.

Manteca had to borrow $106 million during the past 10 years to build both facilities. Overall, the city’s general fund and enterprise account debt for sewer, water, refuse collection and the golf course exceeds $96 million. The debt for the two facilities plus a couple of smaller items such as a phone system, 100-foot aerial platform fire truck, and a 75-foot aerial truck for the parks department will have a combined payment of over $1 million less on the debt in the fiscal year starting July 1 as compared to the  2007-08 fiscal year. And virtually all of that debt is being paid for by users fees or fees collected on growth.

That is separate from the Manteca Redevelopment Agency debt that is more than $123 million. RDA debt is somewhat different than general municipal debt. It is secured by RDA tax increments and is separate from the general fund. Also, state law requires RDAs to go into debt by borrowing money in order to function. That was designed so an RDA would be able to leverage the most money upfront to fight blight and stimulate economic development.

The city’s debt status is all part of the primary spending plan for the fiscal year that starts July 1. The Manteca City Council will review the budget during a special meeting that starts Tuesday at 3 p.m. at the Civic Center, 1001 W. Center St.

Big ticket debt items such as sewer and water treatment plants would be impossible to build if cities had to pay for them in cash and without borrowing. The debt service is paid off from monthly users’ fees for sewer and water services. Both funds are not projected to have a rate increase in the coming year. That was avoided in part when the city slashed expenses in those accounts which weren’t in deficit mode 18 months ago at the same time they attacked the general fund’s $11.8 million deficit. It successfully prevented utility payment delinquencies that have risen significantly due to foreclosures and the Great Recession from creating a burden on users who pay their bills.

The general fund is not impacted by water and sewer debt or that at the golf course.

A rundown of general fund and enterprise account debt that excludes the water and sewer systems are as follows:
•The city still owes $225,000 on the $880,000 facility bond refinanced at a lower rate in 2001 that paid to double the golf course to 18 holes, construct the tennis courts, and build the parking lot. The payment next fiscal year is $225,000. The last payment is in September 2013.
•A 2001 State Energy Commission loan of $1,916,717 to retrofit well pumps, city building lighting, heating and air conditioning and traffic signals with more efficient energy saving motors and lights has an outstanding balance of $283,140 as of July 1, 2010. It will be paid off June 2011. Since all savings are connected with the wastewater treatment plant the sewer account covers the payments for the state loan. The city has already rolled up significant power savings to help offset the debt payment.
•The other part of the energy saving debt was a $1,575,000 loan from Bank of America for the remaining energy saving retrofits citywide including some work at the sewer plant. There is $565,220 in principal left with the final payment being made in September 2013. It is paid for with money from the general fund, local transportation account as well as sewer and water funds.
•The city borrowed $1,055,000 from Bank of America to buy the 100-foot aerial platform truck for the fire department. The principal balance as of July 1, 2010 is $716,112. It is being paid off from government facilities fees collected on growth. The final payment is in August 2004.
•Manteca used an equipment lease to purchase the Shortel PBX Voice over Internet Protocol telephone system for $460,951. The ongoing principal as of July 1 is $367,069. It is being paid for out of the equipment replacement fund. It is another case of the replacement system ending up reducing the city’s yearly operating costs. The final payment is on April 2014.
•An equipment lease was used to purchase the 75-foot aerial truck that the parks department uses for $171,900. There is $160,465 remaining in ongoing principal as of July 1. The final payment is in January 2015. It is being paid for from the major equipment fund.

The amount of debt payment being made by the city is down by over $1 million in the next fiscal year starting July 1 compared to the 2007-08 fiscal year.

The RDA debt for the fiscal year starting July 1 is $7,534,570 for general projects and $448,860 for RDA housing funds. Even with the state taking $6.6 million of the RDA’s tax increment to help cover its $19 billion budget shortfall the agency still has a cushion that essentially would enable it to make double payments for a year which is why its bonds have such strong ratings.