As the Federal Reserve increases interest rates in its effort to curb inflation, the City of Bloomington will have to pay more for the $20 million in bonds the city council approved Monday night.
The money will fund the library and O'Neil Pool projects. City Manager Tim Gleason said Tuesday the council has authorized a maximum of a 5% interest rate on the bonds.
"The increased cost is not insignificant when you are talking about $20 million in borrowing over 20 years. But we weren't ready then and I'm glad we have not waited any longer," Gleason said on WGLT's Sound Ideas.
Gleason said it's likely the city will be able to get a 3% interest rate on the bonds. Six months ago it might have been 2.5% or 2.25%, he said.
He said the city is also well positioned because old debts will be rolling off the books over the next five to seven years. Gleason said he is not suggesting the city should rush to replace that debt as it is paid off.
"But if there was ever a time in Bloomington's history to invest, to catch up on infrastructure from the past and also make those investments where you see a prudent return on investment, it truly is now," said Gleason.
He also said Bloomington has low debt compared to comparable communities.
Council vacancy
The city might have to wait nearly a full two months for a new council member appointment to replace Jamie Mathy. Mathy has stepped down because of a business conflict.
The last vacancy to replace Jenn Carrillo took nearly the maximum 60 days legally allowed to confirm an appointee. Gleason said that could happen again.
"Mayor Mwilambwe had a thought process in place for that vacancy. He was trying to get the opinions of council members behind the scenes," said Gleason.
Gleason said it's not necessarily a bad thing to involve council members in the process even if agreement is difficult.
"He likes to have things play out in an organized fashion when we are talking publicly, but there was a fair amount going on behind the scenes — nothing bad, just the process. I see something very similar and it could take the full 60 days," said Gleason.
He said the last appointment turned out well even if it took a while to finalize.
"Look at De Urban and how she is serving this board. I very much appreciate her thoughtful approach to anything that comes before council. And I think she has been a great replacement," said Gleason.
Mathy was one of the two remaining members of the council who hired Gleason four years ago. He stepped down to avoid a business conflict. The other is then council member, now Mayor Mboka Mwilambwe.
