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Questions About Excess Revenues in Roswell

The Wood administration has conveniently decided to postpone the inevitable property tax millage rate increase until after the November bond referendum.

Editor's Note: The following blog post was submitted as an "open letter to Roswell City Councilman Rich Dippolito."

The most surprising revelation to come out of Roswell’s budget process this year is not what you read about in the local print media, instead it is the fact that $6.6 million dollars has been “socked away” into a previously unknown escrow account to pay off a general obligation bond ahead of schedule.

I would simply like Councilman [Rich] Dippolito, who is the liaison with the Administration & Finance Department, to inform property owners where this astronomical amount of money came from and over what period of time it has grown to this number?

The following is an excerpt from the FY 2013 Budget (which can be found on page 253 under “Debt Service Fund”):

Following are the estimated principal and interest requirements on the City's outstanding general obligation bonds and the previously issued outstanding general obligation bonds of the City for the fiscal years ending June 30, 2012 and thereafter.

                            Principal              Interest                      Total

2013               $6,143,213             $436,425               $6,579,638

2014                      $0                      $140,175                  $140,175

As the reader can see there is absolutely NO principle payment due on any debt next fiscal year. None, Zero, Nada!

And when questioned about the “Zero” in the debt service principle payment in 2014, Mrs. Kay Love, the Roswell City Administrator explained that excess revenues had been placed in an escrow account. She has stated that the amount of the defeasance on the Series 2002 Bonds is $6,665,730. That means unbeknownst to property owners, the City actually has this money in the bank to pay off the 2002 bond next fiscal year.

Now bond payments are routinely scheduled based on a very rigid timetable and are financed by a general obligation property tax millage rate that will generate the required revenues for the specific life of the loan. For example, it is already well known that the proposed $24 million bond referendum, which will appear on November’s ballot, will require an annual payment of $2.4 million for 30 years.  

Councilman Dippolito, the next logical question has to be: was the additional $6.6 million generated with the existing debt service millage rate, as Mrs. Love has stated, actually been the result of an inflated tax rate?

Have property owners been over-taxed and for how long?

And if these excess monies were the result of a long-term gain, why wasn’t the rate adjusted to be revenue neutral, especially, during a period of declining real estate values?

Councilman Dippolito, you were present when I directly asked Mayor [Jere] Wood during the final reading of his budget if he was going to reduce or eliminate the debt service millage rate next year in light of the fact that there is no revenue requirements to pay down any principle due on any general obligation bond next fiscal year.

Mayor Wood refused to respond to my question. Do you agree that the Mayor’s lack of response is indicative that he has no intention of reducing property taxes? 

Isn’t it true that Mayor Wood’s long-term intentions are to eventually rollover this apparently inflated general obligation debt service millage rate into the General Operations & Maintenance Fund to subsidize the City's day to day operations?

Wasn’t this precisely what your Budget & Finance Director, Keith Lee ?

Or could it be that the Mayor & Council’s intention are to maintain the existing general obligation debt service rate for the next two years to generate excess revenues over and above the small amount due on the series 2008 bond in the fall of 2015?

Sir, don’t you believe that your constituents who are property owners have a right to know that either way the City will generate over $6.3 million annually in excess revenues?

So please explain why there is any need for the proposed $24 million bond referendum this November.

I am sorry, but with this FY2013 budget the Wood administration has conveniently decided to postpone the inevitable property tax millage rate increase until after the November bond referendum and will likely have to advertise a significant rate increase this time next year as is required by state law.

This post is contributed by a community member. The views expressed in this blog are those of the author and do not necessarily reflect those of Patch Media Corporation. Everyone is welcome to submit a post to Patch. If you'd like to post a blog, go here to get started.

lee Turner June 09, 2012 at 01:16 AM
Lee, I love the fact that you ask direct questions and hold the politicians' feet to the fire! No doubt the council members sweat bullets when you walk into those meetings! I seriously doubt that Dippolito or any of the council members have a firm grasp on the points you raised. An informed, articulate, outspoken voter is a politician's worst nightmare. You're performing a great service by grilling these clowns and holding them accountable. You should consider running again for city council. Roswell needs somebody who's in it for more than ribbon-cuttings, social events and condoning the harassment of private citizens like Andrew Wordes. In the meantime, keep those politicians on their toes with your quick mind and hard questions until they get voted out of office.
Lee Fleck June 09, 2012 at 02:52 AM
In light of the newest protocols for Council meetings whereby members of the public are only allowed to speak for five minutes, it has become frustrating to obtain any meaningful exchange with those we elected as our public servants. I am forced to such “open questions” to obtain the facts on topics of public concern. During previous budget hearings there had always been a fairly easy back-and-forth exchange between the public & Council. And while one rarely gets a totally clear answer initially, follow-up questions assist in resolving misunderstandings. To allowing for a rebuttal period, as I have suggested to obtain clarification to any official response seems a reasonable request. When the decision was made by the Mayor & Council to limit the time a citizen could speak at any Council meeting, it was agreed that if a citizen needed more time they could make a request of Mayor Wood, which I did before the second reading of the budget. I had other financial questions to discuss but when I came to the podium my request for additional time was denied by Mayor Wood. Therefore I was forced to limit my inquiries to what I perceived to be the most glaring issue - the Debt Service. Especially with the forthcoming bond referendum this coming November. Of course I feel likewise with regard to any council meetings. I am sorry to say but City Council meetings having evolved into this ridiculous "get everything out and we'll answer what and how we want".
Courtney Rozear June 09, 2012 at 05:40 PM
Hi Lee: Honestly, some of the above is over my head. Did I summarize some of the concerns/questions below accurately? 1)Why is there an unknown escrow account with $6.6 million in it? 2)Where did the $6.6 million dollars come from? 3)If the citizens of Roswell have an extra $6.6 million sitting in an escrow account, why isn’t the Roswell City Council proposing lowering property taxes in the 2013 fiscal year budget? 4)If the citizens of Roswell have $6, 665,730 in an escrow account and we can pay off our loan next year with $6,579, 638, why isn’t that being proposed in the 2013 fiscal year budget? 5)Wouldn’t we save $140, 175 in interest payments if we go ahead and pay off the loan in 2013 instead of 2014? 6)Why do we need a $24 million dollar bond referendum? ($24 million – Yikes!) As you know, my research about the Houze/Hembree roundabout has me concerned about how the Roswell DOT, Georgia DOT and Federal Highway Administration sets priorities in spending our money. Roswell voters need to ask tough questions of the City Council and those in the city goverment asking for $24 million. Otherwise, we are just adding to government waste by turning a blind eye and agreeing to get squeezed for more taxes. I appreciate that you posted your concerns. Thanks, Courtney
Lee Fleck June 09, 2012 at 06:24 PM
Courtney, that pretty well sums it up, accept for #3. My question relative to the fact that where will be no principle payment on any general obligation bond is for the next fiscal year, 2014. Yes, the money is already in the bank and so point about saving the interest payment is logical. I believe that is a fair question on your part. However, my question is can we expect the elimination of the debt service millage rate that generates some $6.5 million annually. Think of it similar to the GA 400 toll. When the highway was paid off the toll was supposed to have been eliminated. Can we expect the Wood Administration to act similar to the GA Toll Authority and just keep on taxing us and continue to add these excess revenues to their coffers each and every year into the future. If that is what their intensions truly are then Mr. Dippolito needs to explain to the public why do we need an additional $24 million bond that is scheduled to be paid down at a rate of only $2.4 million each year for the next 30 years? What is the city going to do with the difference between the $6.5 they will take in annually by extending the debt service millage rate and the proposed $2.4 million the city will have to pay annually for the proposed bond that will be on the November ballot? What are their plans for $4 million difference!!
Jake Lilley June 12, 2012 at 04:59 PM
Agreed!

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