The $12.7 Million Question

At the December 7 council meeting an ordinance was brought before the council to purchase $2.5 million dollars worth of bonds to pay off a legal settlement.  Last month the council voted to settle a lawsuit with the property owner of the River Trail and Addison Green apartments because methane gas from the city’s old landfill leaked onto their property.  In order to pay that settlement, staff recommended purchase of the bonds. 

Purchase of these bonds will result in an increase of your utility bill of $3.20. 

The council was deceived by the Finance Director.  When asked why the city could not pay for the settlement from the utility fund, Cliff Craig responded that it would deplete the fund, leaving the city with little money to cover infrastructure needs.

Now the word deplete means to leave little or nothing left. To us, it meant the city would have at the most a couple million dollars left and at the worst, less than a million.  But, through email with the City Manager last week it was confirmed that the city has $12.7 million in the Utility fund.

$12.7 million – $2.5 leaves you with $10.2 million.  Is that depleted?  No! 

Instead, the city will now have to pay $4.8 million for $2.5 million in bonds when you add in the interest charges over the 20 years.  The city will now raise our utility bills by $3.20 to pay for this lawsuit.  Instead of taking money from the funds we already paid for, they are going to charge us again for their mistake.  What a shame!

By the way, the next City Council meeting is January 4 at 6 PM, hope everyone is there to let them know what a mistake they have made.



Filed under Finances

3 responses to “The $12.7 Million Question

  1. John Hopkins

    I like this and Mr Garrett’s comments.
    I would add that Mr Dannenberg fiercely defended Mr Craig .
    The Manager might be right on paper but wasn’t there to see the tide turn.
    When Mr Craig spoke of Infrastrucure losses, it turned the whole Council.
    Cliffs statements were incomplete and misleading.The only person who questioned the bond approach was Mr Knutsen ,but the rest dismissed him as uninformed.Turns out that he was the only one to get it right.
    This is another case where the staff and some Council members are better at spin than honesty

  2. Jim Malone

    Mr. Craig’s testimony before the council was not truthful. Bottom line………………

  3. Chris Johnson

    “Fiscally prudent reserves for reasonably foreseeable contingencies of the utilities are substantial. One major line break alone could require millions of dollars in immediate needs. A two-month reserve for operating contingencies, three months for capital contingencies, plus the required reserves for debt service per bond covenants comes to about $9.1 million for Puyallup.” – Cliff Craig, City Finance Director, Tacoma News Trib letters to the editor

    Read more:

    $10.2m-$9.1m = $1.1m, or less than 9 percent of the total $12.7m. Looks a little more like depleted now, eh?

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