Joint Utilities Fund: New Bank for City

By Kathleen Sloan

HERALD Reporter

In the hour preceding the regular Tuesday, April 24 meeting, the Truth or Consequences City Commission held a work session, which included discussing using the Joint Utilities Fund as a bank.

City Manager Juan Fuentes said the municipal airport needs to replace two fuel tanks, costing about $250,000 total. A New Mexico Department of Transportation, Aviation Division loan would require a 50 percent cash match from the city, said Fuentes. The city could borrow from the New Mexico Finance Authority or from the New Mexico Environment Department, said Fuentes. Those monies would take until Jan. 2013 to obtain, if at all, he said.

“And the city already has a lot of debt, and I’d like to avoid that and think of doing it ourselves,” said Fuentes.

Fuentes said the biggest revenue-maker for the airport is fuel sales – another reason not to stall the tank replacement project. It takes in about $14,000 a year. The ending balance for the Joint Utilities Fund is $2.8 million, said Fuentes. The JUF could loan the airport $125,000 at two percent over 20 years and the airport will pay $7,644 a year, which will halve their fuel sale profit.

Fuentes said the two percent is “to build up that fund” for other inter-city loans; “nothing over a million.”

Fuentes said he had just met with department heads for budget talks and “they desperately need to replace equipment,” anticipating more use for this banking fund.

Commissioner Steve Green asked about a third fuel tank that might need replacement.

Ed Williams, temporary department head for the airport, said the “mo fuel” is not used much and recommends not replacing it. He said other airports are not supplying the rare fuel either.

Green also asked if this fund could replace the New York fund that currently is used to pay for credit card purchases.

Fuentes answered obliquely. “We used $30,000 for improvements at the airport, but we don’t want to draw down too much.”

Green asked if the $250,000 pricing includes removal of the tanks.

Fuentes said that detail would be supplied in a forthcoming ordinance, if commissioners approved this inter-city loan.

Mayor John Mulcahy asked, “Can we pay it off faster?”

Fuentes gave no definitive answer.

Commissioner Freddie Torres said, “We don’t have to charge interest do we?” adding that he is against the interest charge “but I’ll go along” with the other commissioners’ wishes.

During the regular meeting, commissioners passed a resolution unanimously to have the JUF loan the money at two-percent interest over 20 years.

Fuentes, in an e-mail, gave his reasoning for drafting an ordinance for the loan: “The resolution adopted gave staff the authorization to proceed with the Aviation Grant Application with a local match requirement. Since the resolution calls for a 20-year Fund to Fund loan, the ordinance will obligate the City Commission and City Manager to appropriate every year the debt payment to the Joint Utility Fund. If this was a 2-4 year loan, I would only recommend a resolution.”

That ordinance will have a two-week publication, that is, it will be available to the public at the city clerk’s office. The ordinance will be scheduled for a public hearing, and if passed, will go into effect after 30 days if no protest to the ordinance occurs.

In an interview Friday, April 27, New Mexico Municipal League Executive Director William Fulginiti said such inter-city loans “are not uncommon.”


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