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County Council Meeting July 13

To take over CARTA's debt burden?
Bond issue for Transportation to be raised by $6 million
Warwick Jones

It's not signed and sealed yet. But most likely on Tuesday night, County Council will take an important step to pull out CARTA from under its debt burden. And it will do this by tacking on $6 million to the transportation bond issue that voters will be asked to approve in a referendum at the end of this year.

Debt of $5.8 million
CARTA has a bank debt of approximately $5.8 million and it needs to be repaid over the next five years. The transport entity is committed to annual payments of approximately $1.1 million. It says that the debt arose because of the need for funds after the referendum results of 2002 were overturned. Denied sales tax proceeds, the funds were needed to keep the buses running.

CARTA has argued that the debt is a heavy burden and one that it should not be carrying. After all, it was not CARTA's fault that the referendum decision in 2002 was overturned. In the aftermath, it attempted to make the best out of bad circumstances. The Transportation Advisory Board (TAB) reacted sympathetically to this lament and recommended that Council move to repay the borrowings out of the sales-tax funds.

Purchase of Leeds Avenue facility by County not legally feasible
Council members had a mixed reaction when they considered the TAB request some weeks ago. Although sympathetic to CARTA's plight, some members were reluctant to use sales-tax funds to bail out the company. Staff was asked to investigate the possibility of Council buying the Leeds Avenue maintenance facility as a means of injecting cash into the company and to allow the debt repayment. Council was told last night that this was not a feasible alternative. The law restrained the use of General Fund money for spending on such a facility for an entity such as CARTA. So it was back to the drawing board.

Chairman Stavrinakis opened the Finance Committee discussion on the issue, described the problems and suggested upping the $205 million portion that related to Transportation in the forth coming referendum. This amount and the $100 million for Greenbelts which is also included in the referendum are to be repaid from half-cent sales tax proceeds.

Issues of interest rates and collateral
There seemed no opposition to this in principle though there was considerable discussion of the details. The interest rate on the CARTA debt was close to 4% a year. The interest that the County would have to pay on the bond issue was probably about 5%. So the question was asked as to why the bank debt should be repaid immediately. Why not simply make the payments according to the existing bank repayment schedule? There was also the suggestion that the County should have some collateral if it were to repay CARTA's debt. Staff was asked to work on this problem and report back by next Tuesday, in time for consideration at the Council meeting.

But what about the 18% ceiling?
Council member Scott was the only member to show concern about the reaction of the public. He reminded Council that the public was told that a maximum of 18% of sales-tax funds would be directed to CARTA. He wanted to ensure that this maximum ratio would continue and not exceeded. He didn't seem to get much support. Councilmember Darby asked whether this ratio was contained in any ordinance. No it wasn't, but he and others members of the Council at the time made this pledge to voters, Council member Scott replied. He said that if the percentage had been larger than 18%, he suspected that many voters would not have approved the sales tax.

What will be voters' reaction?
We are surprised how little to the support there was for Council member Scott and his concern. What he said was correct, in our view. He also noted that unlike Chairman Stavrinakis, he had to face the voters again and he feared their reaction.

If voters are aware of the $6 million added to the $105 million bond for transportation, will some vote against the issue? Will it be a substantial vote? We can only guess. But it is interesting that the Post and Courier made no mention of the CARTA issue in today's edition. It has long been an unquestioning champion of CARTA. It reported on other matters at yesterday's meeting but not on CARTA. We wonder why?

Greenbelt financing split to be incorporated in Comprehensive Plan
Council member Darby thought that the 70/30 split of sales-tax funds for greenbelts should also be noted in the referendum. This split - 70% of funds going to rural areas and 30% to urban areas - was recommended by the Greenbelts Advisory Board and contained in the Comprehensive Greenbelt Plan. No Council member had an issue with the split but there was concern as to whether the Council was going too far if the ratio were incorporated in the bond referendum language. Incorporating the ratio was essentially making it permanent. No change was presently contemplated but Council should be allowed some flexibility over time. As an alternative, Council agreed to incorporate the ratio into the Comprehensive Plan and a change to the ratio would require a 2/3 rds majority vote.

Some of the other matters before the Committees last night were:

• An ordinance tightening up sales of puppies. This related particularly to sales from Flea markets and was supported by the SCPA.

• Final amendments to new zoning regulation. These related to Goat Island, tree removal in Agricultural areas, and to existing storage facilities in Agricultural Residential areas.

• Reports from the Internal Auditor. Mr. Robert Stewart is the County's internal auditor. He appears before the County Audit Committee at least every quarter with his reports. He made a number last night and we will not attempt to summarize them. But we share the view of Council member Inabinett who complimented him on his work. No major discrepancies were reported in any of the audits but it is very clear that Mr. Stewart has done a thorough job. He has identified minor discrepancies and has commented on weaknesses in the County system. In all instances, he has discussed the identified weakness with the respective department heads. It seems all agreed with his conclusions and are taking action to tighten up controls. His audit was not confined to simple cash and fund management. It also involved reporting and systems. For example he made many comments on the weakness of the County Disaster Recovery Plan, particularly data retention and recovery.