Roach Pledges to Bulldoze O’Fallon’s Mountain of Debt

Roach Pledges to Bulldoze O’Fallon’s Mountain of Debt



Get Herb Roach talking about the debt the City of O’Fallon has amassed over the last 20 years, and it is hard to calm him down. Herb says, “The current administration has taxed and spent beyond belief. Debt was under $11 million 20 years ago and it will soon be around $67 million.”

“To put that in perspective, the debt that was once $520 per person and is increasing to $2,100 per person. We have seen what has happened at the State and Federal level. We may not have much control over that, but we certainly do at the local level. When I am mayor, that sort of mentality will stop.”

When asked what he thought about his opponent’s plan to commit $1 million of reserves to lowering property taxes over each of the next four years, he commented, “That is just more political gamesmanship.  Once his idea to use 20 percent of new sales tax revenue to abate property taxes was shown to provide less than $4 a year in property tax relief to the owner of a $150,000 home, he rolled out this idea.”

Roach continued, “While it provides some immediate relief to homeowners, it ignores the looming debt that we are passing on to our next generation of leaders and citizens. Currently our city’s debt service, the amount we pay for interest and principal on our loans, is about $5.5 million annually. That will grow to over $6 million annually once the city issues bonds for Destination O’Fallon. I offered alternative funding options of using some reserves and phasing in certain features of Destination O’Fallon as we collect more hotel/motel tax, but those suggestions fell on deaf ears.”

When asked to provide an example of his concern, he offered the following. “The city issued $9.3 million in Build America Bonds in 2009. The city is primarily making only interest payments on those bonds. Four large principal payments, what most people would refer to as balloon payments, totaling over $8 million, will be due from 2036 to 2039.”

“Also, another $18.5 million in bonds were issued in 2009 to fund additions to the parks. In 10 years, the payment on those bonds will increase by $500,000 per year over what is being paid now. That increase will last for 9 years; that’s an additional $4.5 million.”
Herb also went on to say, “The city spent over $6 million to build the Regency Convention Center and now we lease it for $1 per year while the residents are stuck paying the debt on those bonds.”
“So while we live rather nice and comfortable with the amenities we enjoy, our children and grandchildren are the ones who are going to have to pay for them,” said Mr. Roach. “I will not make promises that enrich current citizens in order to gain political favor knowing I would be passing that expense on to future generations.”

Herb went on to explain, “Homeowners need to understand these are general obligation bonds. That means they are secured by property taxes. If the city can’t come up with revenue from other sources to make those payments, your property taxes will be raised to cover that debt.”
When asked if Mr. Roach had any ideas as to how to work on this mountain of debt, he said, “First, as I have stated previously, I will use reserves to roll back the most recent property tax increase. Second, some reserves will be used to address the unfunded infrastructure needs identified in the city’s Strategic Plan, and third, we’ll use what reserves we can to retire some of that debt.”
He continued, “We’ve also got to look at ways to reduce expenditures by implementing solid business practices. Top on that list is to stop granting contracts over $10,000 without getting competitive bids. Any savings we realize will also be used to retire debt.”
When pressed about whether that will be enough, Herb said, “Probably not. This isn’t going to be easy, but it has to be done. As our city continues to grow, the revenue we receive from sales tax, phone and cable, utility, plus food and beverage taxes is also steadily increasing. So I will also advocate earmarking a significant portion of all new revenue received from those sources toward debt retirement. The city has just increased the hotel/motel tax by 80% to pay for the bonds being issued for the first phase of Destination O’Fallon. Revenue above and beyond that needed to make annual payments on those bonds may be used to retire other debt.”

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