TERRE HAUTE —
Mayor Duke Bennett asked the Terre Haute City Council Thursday night to approve a “tax anticipation” loan of up to $5 million that must be repaid in up to three years.
This is the third year in a row the mayor has asked the council to OK a $5 million loan to help the city meet its general fund cash flow needs between its biannual property tax payments from the state.
In each of the past two years, the loan has been approved for a term of a year or less.
“I know we’re going to need to do this over the next three years,” Bennett told the council at its December “sunshine” meeting in City Hall. The revenue shortfalls are the fault of the state’s property tax caps, he said.
The loan approved by the council for 2013 had a 1-percent interest rate and is due and payable at the end of this month, Bennett said.
Approving a three-year loan would mean the payoff deadline would be after the next mayoral and city council election in 2015, something that seemed to bother at least one city councilman, Todd Nation, D-4th.
Nation said he believed the council should approve only loans that are payable within the same calendar year.
Bennett argued for a three-year loan, noting that it would eliminate the expenses associated with originating a loan each year.
That costs the city approximately $12,000 each time a loan is taken out, the mayor said. Also, interest rates should be around 2 percent now, but may be higher in a year, Bennett added.
“My feeling is the three-year [term] is the way to go,” said Councilman George Azar, D-at large, based on the low interest rates and the elimination of loan origination fees.
• The council also heard about 45 minutes of discussion concerning a proposed ordinance designed to make it harder for minors to purchase drug and tobacco paraphernalia, such as pipes.
The ordinance, introduced by Sgt. Steve Lockard of the Vigo County Drug Task Force and the city police department, would affect about 42 convenience stores, gasoline stations, smoke shops and “head shops” in the city, Lockard said.
It would require those shops to pay $60 for annual city permits to sell paraphernalia, giving city police an opportunity to revoke those permits if violations of the ordinance were discovered.
Three owners or employees of stores that sell tobacco products spoke to the council and said they supported the intent of the ordinance. However, their comments raised questions that may lead the council to table the ordinance or, at the very least, amend it next week at its voting meeting.
One question involved whether the ordinance would require large retailers, such as Walmart, to purchase city permits.
That was not envisioned in the ordinance, Lockard said, adding he is willing to make changes necessary to reach consensus and have the measure passed.
The council is expected to act on these and other measures at its regular December meeting at 6 p.m. next Thursday in City Hall.
Reporter Arthur Foulkes can be reached at 812-231-4232 or email@example.com