On Monday night, the Indianola Board of Aldermen voted yes to a resolution regarding a lease-purchase agreement for the purpose of financing the city's new fire truck at a cost of around $400,000.
Mayor Steve Rosenthal said, "I'm hoping this is one of the last steps on getting this financing done."
He said the process has been held up because of the virus and certain hiccups with the dissimilar accounting processes.
Rosenthal explained that the city is anticipating a 15-year amortized loan that they hope to pay out in five years. He explained that they plan to pay half down and finance the rest.
"If we can go ahead and do this agreement at this point, even if they approve it… approve us, we can refuse, but then we're going to have to figure out how we're going to pay for it in a year and a half."
Even though the aldermen have expressed their approval, one question still lingers, and that is can this board burden a future board with long-term debt? Attorney Kim Merchant raised the question because of a previous query by Alderman Gary Fratesi.
"Mr. Fratesi had brought up an issue around long-term leases and whether a board can bind," Merchant said.
Fratesi acknowledged that his original concern did center on whether or not a seated board could extend a contract beyond their term. Referencing previous purchases for police units and such, Fratesi said, "Whether it's right or not we've done it, not saying that everything that we've done was right."
Merchant informed the group that there is an attorney general's opinion that says a current group of lawmakers cannot bind a successive board with a long-term lease or purchase agreement.
However, there are exceptions to the statute and a clear exception has to be carved out in the law, as is done with bonds.
Rosenthal asked Merchant to do some research to see if there may be an exception for fire trucks also.
In other business,
A measure to institute an incentive-pay policy passed 4-1 with Fratesi casting the no vote. Rosenthal emphasized that they were only adopting a policy to have in place if they decide to use it. Alderman Marvin Elder said, “I'd like to make a motion that we move forward with that before something occurs and we don't have this in place."
Fratesi asserted that he wasn't going to vote yes unless someone could explain to him where the money would come from in the event the policy was enacted.
As she explained the fundamentals of the policy, which was originally called a hazardous pay policy, Merchant said, "Let me be clear, there's no such thing legally as hazard pay. That's why we're calling it incentive pay." She explained that it was simply an inducement to be given to employees for working during such times as the pandemic.
She shared that because a state of emergency still exists, the policy could be initiated during this time. Associated with the policy is a contract that each of the employees would be required to sign that points out that they know the remuneration is a temporary payment or a one-time payment and that it does not include any Public Employees' Retirement System contributions or additional benefits.
Fratesi then asked if the money expended under the policy would be reimbursed by any governmental entity and the answer was no. "Then the next question is how are we going to pay for it?” Fratesi asked, “Tell me how are you going to pay for it. You can't ask me to go along with it if you don't tell me how you're going to pay for it. We're already going to have a three-fourth of a million dollars deficit,” he said.
Fratesi added that in the coming months and years, the city could be in worse shape than they are now. “We're in shape to have to go borrow money to finish the year out right now,” Fratesi asserted.
An attempt to sway Fratesi into agreeing because of the employees' loyalty also failed. “Half of them walked off, they need to be patriotic. We have paid them, we have supplied them with health insurance, we're doing what we can,” he said, “My answer is no, I will not vote for it.”
When questioned about additional moneys, Rosenthal said there is a few million dollars in the rainy day fund; however, some of those funds are specifically earmarked and cannot be used for general purposes. Fratesi added that when you consider past spending and past budget deficits that the city is in a dire position. “We are close to being broke,” he said.
