Fri., 6:24am: Salem must decide how to spend $1.3 million from gas well lease

SALEM – The city’s $1.3 million gas lease windfall remains in one piece for now, with a few more suggestions made on how to divide the shale funds and another meeting set for further discussion.

“I’d say split the baby,” Councilman Dave Nestic said, explaining he would pay down some debt, do some of the projects requested and revisit taking interest income from the Utilities Department every year. “If I had to make a decision tonight, that’s what I would do.”

Nestic is a member of the Finance Committee of city council, which met Thursday to talk about what to do with the lease funds. The committee had already discussed the issue at a previous meeting where city Auditor Betty Brothers made a plug for paying off debt and Mayor John Berlin asked to put the whole amount in capital improvements.

They both reiterated their arguments, although Brothers said she would be okay if they just paid off the one debt, the $683,500 note for the Pershing Street Phase I and Cunningham Bentley Connector, Phase IV projects as a means to increase cash flow.

Berlin outlined four projects that could be accomplished by putting all the money in capital improvements, with $850,706 to cover replacing the city hall roof, paving the gravel city hall parking lot, paving East Pershing from Ellsworth to Broadway and taking part in the Small Cities paving grant which could leverage money from the state to go with the city’s share.

Utilities Commission Chair Geoff Goll said he was grateful for the fact that they were allowed to discuss what to do with the money. On a personal basis, he said he’d like to see the city be able to hire more police officers, but as chairman of the Utilities Commission and spokesman for the commission’s water customers, he said they wouldn’t be there talking about this money if it wasn’t for the 9,000 water taps from their customers.

Every foot of land leased was purchased with those 9,000 taps, he said, pointing out that 6,500 of those taps are within the city, but at least 25 percent of the revenue coming into the water department comes from people who don’t live here.

If the $1.3 million went in the water reserve fund, he said the city general fund would receive $10,000 to $15,000 each year from the interest off of that money. He also said that barring a natural disaster, there would be no water rate increase for at least the next five years.

Committee Chairman Councilman K. Bret Apple, Nestic and committee member Councilman Brian Whitehill all had questions for Goll about the department’s reserve fund, which has $3,553,000 in it, an amount he said is about $500,000 short of what they like it to be. They also asked about the water rates, learning the last time water rates were increased for city customers was 1995.

During discussion by the committee members, Nestic said whatever they decide, he wants the money’s use to have a lasting impact. He said they could also consider funding the Community Improvement Corporation to take over some troubled buildings in town and do something with them. He could also see paying off debt to increase cash flow.

Apple said that first and foremost, there has to be some debt reduction. He also mentioned looking at infrastructure and stressed that the decision should stay with the Finance Committee to make a recommendation to council. Apparently it had been suggested the issue be moved to Committee of the Whole, which includes all seven council members, but Apple disagreed.

Whitehill also said it should remain with Finance Committee.

The committee will meet again at 6:30 p.m. May 9. Apple said they’ll discuss the options and make a recommendation then for council to consider.