City Manager Says Early River Renewal Design Costs Were Debt-Financed, Paid Back Through Sales Tax Capital Fund

City Manager Jacob Wood said some of the early design costs for Salina’s River Renewal Project were paid through debt financing in 2017, 2020 and 2022, with the city now using money from the sales tax capital fund to pay those bonds off.

The explanation came in a July 7 email from Wood to Commissioner Doug Rempp following questions about the River Renewal Project’s funding sources.

Bond Proceeds Tied to Early Design Costs

In a previous funding breakdown, the city listed $5,368,647.10 in bond proceeds as part of the money identified for the River Renewal Project. The city also listed $67,834.51 in debt interest among the project’s expenses.

Wood’s follow-up email clarified where those bond proceeds came from.

“We debt financed some of the early design costs in 2017, 2020, and 2022,” Wood wrote. “We are using funds from the sales tax capital fund to pay those bonds off.”

That means the city borrowed money for some early design work and is now using sales tax capital dollars to repay that debt.

What the Sales Tax Capital Fund Is

The sales tax capital fund is a city fund used for capital-related expenses. In general terms, capital expenses are long-term public projects or improvements, such as infrastructure, facilities, major equipment, or debt payments tied to those types of projects.

It is separate from the city’s General Fund, which is commonly used for regular city operations, staffing, public services and day-to-day government expenses.

In this case, Wood said the sales tax capital fund is being used to pay off bonds connected to earlier River Renewal design costs. That means local sales tax revenue is part of how the city is covering debt tied to the project.

Design Remains the Largest Expense

The clarification matters because design has been the largest expense listed so far for the River Renewal Project.

According to the city’s earlier funding summary, Salina has identified $17,540,929.30 for the project. Of that amount, $8,160,838.78 has already been spent, leaving $9,380,090.52 listed as cash on hand.

The largest portion of spending is $7,193,029.52 for design. That accounts for roughly 88% of the total spending listed so far.

Other listed expenses include $687,280.92 for feasibility studies, $109,762.10 for property acquisition, $99,272.10 for cost of issuance, $67,834.51 in debt interest and $3,659.63 in miscellaneous expenses.

ARPA Funds Also Set Aside

Wood also explained the ARPA money listed in the city’s River Renewal funding breakdown.

ARPA refers to the American Rescue Plan Act, federal COVID-era funding sent to cities and counties. Wood said the City of Salina received about $11 million in ARPA funds and set some of that money aside for River Renewal.

The city’s funding summary lists $1,107,097.24 in ARPA funds for the project.

Funding Sources Identified by the City

The city’s previous breakdown listed four sources making up the $17.54 million currently identified for River Renewal.

The largest source is $6,065,184.96 in sales tax money directed from Kenwood Cove debt. The city also lists $5,368,647.10 in bond proceeds, a $5 million transfer from the General Fund, and $1,107,097.24 in ARPA funds.

Together, those sources show the project is being funded through a mix of local sales tax revenue, borrowed money, General Fund dollars and federal pandemic relief funds.

City Says More Information Is Coming

Wood said the city plans to provide an update to the City Commission “at some point in the next couple of months.” He also said he could pull previous study session and public meeting materials if needed.

“This project has been discussed a presented more than just about any other public project that I have ever been a part of,” Wood wrote.

The latest email adds more detail to the city’s River Renewal funding picture. It shows that some early design costs were debt-financed, that sales tax capital funds are being used to repay those bonds, and that more than $1.1 million in federal ARPA money was set aside for the project.