Over in less than a minute and with no discussion, the Truth or Consequences City Commission approved a $2.3-million loan, partly to refund and refinance a 2009 debt, but also adding over $1.12 million in new debt for unnamed projects.
The refinancing-refunding-new-money loan was approved unanimously at the Aug. 12 meeting after holding a public hearing in which no one spoke.
A month prior, the City Commission approved advertising the loan, which consisted of a legal ad in the Sentinel stating a public hearing would be held on the loan at the Aug. 12 meeting.
At that prior meeting Mayor Pro-tem Brendan Tolley asked why the information on the loan was incomplete in the City packet. The packet is available to the public on the City’s website. City Manager Morris Madrid said all documents would be included for the Aug. 12 meeting, but they were not.
Once again the debt schedules for the two loans totaling more than $2.3-million principal were missing, making it unclear how much principal and interest will be paid per month, per year and over the life of the loan.
Madrid claimed the debt was made clear in exhibit A and exhibit A-1 documents, but only exhibit A was in the packet, and it is not a debt schedule.
Exhibit A lays out the amount of Local Option Gross Receipts Tax revenue that will be “intercepted” by the New Mexico Finance Authority instead of coming to the City. In addition, the amount to be intercepted in exhibit A only refers to one of the two loans—the new-money loan for $1.12 million principal.
Exhibit A states over $12,000 a month of the GRT revenue will be intercepted by the New Mexico Finance Authority from November 2020 to April 2021. After that, the amount drops to just over $10,000 a month to be intercepted for the remaining life of the loan. The last payment is April 2030. The total GRT to be intercepted for the new-money loan comes to $1,125,123.72.
Both loans will be paid back from Local Option Gross Receipts Tax revenue, if the COVID-19 crisis doesn’t diminish that revenue stream too much. The loan documents vaguely state other revenue sources can be used to pay back the loans.
Therefore the City Commission has added a debt during the crisis that can tap any revenue source without naming the projects or qualifying why such debt should be added to the public-purse burden.
Madrid assured the City Commission the interest rate for both loans is less than 0.7 percent, “which is very low.”
Madrid was successful in getting the same sort of refunding-new-money loan approved by the City Commission last year at a July 2019 meeting. He added $1.2 million in new-money debt and refinanced a 2009 loan with over $1 million debt remaining at a lower interest rate. What the new money was used for was never discussed or revealed during the year.