The City of Baraboo will not accept a loan from Sauk County government for its share of monies to construct a $4.6 million science building.
Baraboo Mayor Mike Palm wrote in a letter to Sauk County Board Chairman Marty Krueger last week that city council members were cautious about moving forward with the proposal because of comments and objections voiced by county supervisors.
“We don’t want this to be a political issue and we feel it would be more beneficial to put our efforts into completing this building project,” Palm wrote.
In August, county officials offered to loan the city $2.3 million for its half of the cost of a new science building that will be constructed on the University of Wisconsin-Baraboo/Sauk County campus.
The county and city jointly own the campus, and split facility costs evenly. The new science facility is part of the campus’ long-term plan and will replace labs from the 1960s and construction could begin as soon as next summer.
In an interview Monday, Palm said the city will issue bonds for its share of the science building costs. Because the city is in the midst of crafting and approving its 2014 budget, Palm said officials needed to be certain about where the project funding will come from.
He said the recent comments of county supervisors made city officials unsure of whether the county board eventually would have voted to approve the loan.
“The issue was that supervisors were wondering whether lending money to the city might be the best use of their dollars,” Palm said. “With that question mark hanging out there, we had to move on and make a decision.”
During last month’s county board meeting, several supervisors expressed skepticism about the loan proposal, including Supervisor Ruth Dawson of Baraboo, who questioned how she could explain to her constituents that the county was “going into the banking business” with the city.
“I have a real tough district,” Dawson said. “I mean, I have the issue of sidewalks that go to nowhere. And I’ve got 80-year-old women who had their services shut off at their house. And so the city is kind of — in my district — is real rough.”
Dawson was referring to recent controversies involving new sidewalks that some city residents opposed and a woman whose city water was turned off for a period after she refused to allow the installation of a new smart meter.
The county was able to offer the loan because it has a large rainy day fund of about $25.4 million. It’s money that property owners have been taxed for but has not been spent.
Best practice is for local governments to have enough reserves to pay 17 percent of annual expenses in case of a financial emergency. The county has enough in its general fund to cover 88 percent.
The loan proposal was billed as a financial benefit to both the city and county. Suggested terms of the deal included the city paying back the loan over 20 years at an interest rate of 3 percent or higher. The county currently earns only 0.3 percent to 0.7 percent interest on its rainy day funds because of restrictions on how local governments can invest.
The city may have benefited by saving money on administrative staff time and fees that typically are associated with issuing bonds. However, Palm said Monday he believed the savings would have been minimal.
The proposal also included a tentative 10-year review point at which the city and county could have renegotiated rates.
“I think it would have worked well for everybody, but I understand the city’s perspective,” said Sauk County Supervisor Jason Lane of Baraboo, who gave a presentation to his fellow supervisors about the loan during the board’s September meeting. “Safe is usually better.”
The Baraboo City Council’s Finance Committee meets tonight to discuss the city’s 2014 budget, including financing for the science building project.