By Heather Bell
RADFORD – The City of Radford will look into procuring a short-term bond of four million dollars to take care of a “short term cash flow stagnation,” Radford City manager David Ridpath said during the Monday, Sept. 11 city council meeting.
“We have a very conservative budget and we pay as we go,” said Ridpath. “We have very little debt for a community our size. This is a momentarily cash flow stagnation and is not long-term. This is a cash flow assistance measure.”
Ridpath explained the city has to expend about 20 percent of its annual budget in the first two months of the fiscal year. This year, the delay in getting a state budget finalized, among other factors, led to the city having to spend a lot of money while waiting longer for monies to come into the city coffers than in previous years.
The bond, a Revenue Anticipation Note, will be issued for no longer than a year at somewhere between 4.5 and 7 percent interest. The city has not made a decision about which credit offer to accept yet.
“This allows us to free up some cash flow,” said Mayor David Ridpath. “Having no state budget until September has had an impact.”
The city gets reimbursed by the state for a myriad expenses that it has to pay for up front.
“I believe this is the right decision to get us through this rough patch, and our economy is still strong,” said Ridpath. “We’re very attractive to the debt market.”
The city can legally carry about $80 million in debt and currently has less than $30 million in total debt.
Vice Mayor Seth Gillespie said he agrees with the measure but also thinks the city needs to keep an eye on factors that could impact revenues in the future.
“I know how tough it is to pay for things on the front end and have to wait to get [the money] back, and that this is strictly a cash flow issue,” he said. “Moving forward though, I do think we need to keep in mind that I don’t think there’s any more COVID money coming, and we need to be aware that there is less off campus student consumption of energy, for example, and that will affect the budget.”
Ridpath said he thinks the revenues budgeted for the current fiscal year will come to fruition as budgeted, and the city should also be able to reach its goal of increasing reserves.
“We want to get those reserves back up,” said Ridpath. “Our goal is by the end of the fiscal year to get those back up to $5.5 to 6 million and I don’t have any reason to believe we won’t be there.”
Ridpath also said if revenues come in stronger than expected, the city will pay off the note early.
Also during Monday’s council meeting, council voted to name the 80-acre industrial land the city recently purchased, which is the former site of the Radford Foundry as the West Radford Commerce Park. The city purchased the site for $250,000.
“This gives us a way to market,” said Mayor David Horton. “We’re working with the state on this process to better visualize what can be there and to work with our businesses and our possibilities.”