by David Taber

An alderman-at-large claims Somerville will be paying a record amount to service its outstanding debts by 2009, and some question where those funds will come from.   

‚ÄúProjected debt service for the city two years out is going to be 9.1 million dollars.  It is the highest I have ever seen, it could be the highest in the city‚Äôs history,‚Äù said Alderman-At-Large William A. White Jr.

The 9.1 million figure is about 2 million dollars more than the city is paying out now, he said.

To put it in perspective, that’s 20 police and 20 fire fighters you could hire, he said.

Mayor Joseph A. Curtatone said the city is operating within its means, and the increased level of debt is in line with increases in operating costs and an expanding revenue base.

“We have a diverse and sizable tax base that will continue to expand and diversify,” he said.

Curtatone said favorable bond ratings from Moody’s and Standard and Poor’s indexes show the city’s fiscally conservative approach to budgeting is paying off.

The city had a favorable outlook when the bond ratings were issued, White said. But with the real estate market leveling off, condominium conversions on the decline, and no major commercial development slated to go on-line for at least two years, when construction is due to be completed on the Ikea at Assembly Square, he said concerned the city may need to look elsewhere to meet its financial obligations,  he said.

He is concerned that the city may look toward the sale of municipal property in Union Square, where land value is due to appreciate substantially when the proposed green line expansion passes through, he said.

‚ÄúIs now a good time to sell city owned real estate, when the value of property  in seven years will be much more than it is now?‚Äù White asked.

Mayoral spokesperson Maeghan Silverberg said a municipal property review committee is currently compiling recommendations, which they will present to the board of aldermen in a few weeks.

‚ÄúCurrently there is no plan to sell a specific building,‚Äù Silverberg said.  Even if municipal property sales are considered, the proceeds will not be used to fund the general operating budget, said Curtatone. 

‚ÄúYou don‚Äôt want to sell physical assets to maintain your operating budget,‚Äù he said. 

White said, however, that Wendy Blum, the director of Somerville Community Access Television, told him that Curtatone wished to sell the Union Square building.

And he said that he would be surprised if a portion of the money from land sales does not end up financing the city‚Äôs debt.  A portion of the proceeds could end up in a reserve fund and the interest could go toward debt financing, he said.

White said he does not know if this is the Mayor‚Äôs plan, and he will be in the dark until the new budget is released in five months.  ‚ÄúFrom my perspective, looking at the facts, these are concerns that I have now,‚Äù he said. ‚ÄúIt‚Äôs possible he will not fund the budget this way, its possible he will raise taxes.‚Äù

The question of Somerville’s debt service payments came up briefly at the Jan. 25 board of aldermen meeting, during discussion on whether to approve the mayor’s request to issue a $2.3 million bond in order to finance the construction of the new field house at Trum Field, White said.

Apologizing for not allowing the board to look over the bond proposal, Curtatone said it was imperative to pass the bond measure that evening, to insure that the city would have time to take advantage of a $168,000 state bond issued by Urban Self Help before the end of the fiscal year.

During the board discussion, White said he would like to take two weeks to exercise due diligence, to review the city‚Äôs numbers, before approving the new bond, but in the end he voted, with the majority, to approve it.   

The question was, if there is a delay, would it cause further delays down the line,‚Äù White said.      

‚ÄúI didn‚Äôt want to vote no and shortchange the youth,‚Äù he said.  White asked the mayor to promise that, in the future, he would not present bond requests and expect aldermen to act on them the same evening, he said.

“We will do our best, I promise you that,” Curtatone said.

Speaking to the News, Curtatone said that he understood the alderman‚Äôs concerns.