Comments On Kemah's Bonded Indebtedness
by Kemah Mayor Bill King - email message to Kemah Residents
May 2, 2005 
 
Dear Fellow Kemah Residents:
 

In the current campaign for mayor, some extremely disingenuous and factually inaccurate statements have been made about the City's outstanding indebtedness.  Let me share the facts with you.  

The City has two outstanding indebtednesses.  The first is the money that was borrowed to build the current city hall.  This debt was originally $690,000.  It was taken out in 1995 when Rick Diehl was mayor and was unanimously approved by the members of City Council at that time, including John Conrad .  The outstanding balance on that debt at this time is $350,000.

In December, 2002, the City formed Kemah Public Facilities Corporation ("KPFC") to own the old city hall block on 6^th Street .  The City Council member at that time, including John Conrad , unanimously approved KPFC borrowing $1,360,000.  These were used as follows:  

 ·  Approximately $500,000 was used to refinance funds that had been borrowed to complete the Community Center.  The loan to build the Community Center was unanimously approved in 2000 by the City Council members at that time, including John Conrad .

 ·  Approximately $330,000 was used to pay off debt that KCDC had incurred in purchasing some of the lots in the old city hall block that the city did not own.

 ·  Approximately $150,000 was used to purchase the land behind the houses on Fay Street .  As you may recall a developer want to build a RV park there and we were able to purchase the property instead to preserve it as green space and for drainage.

 ·  Approximate $80,000 was used to purchase a repetitive flood loss house immediately behind City Hall.  The property will allow the City to expand the parking lot in the future.  

 ·  $200,000 was placed in a reserve to make improvements on the old city hall block.  Approximately $70,000 of those funds have been spent on leveling and weather proofing the surface.  These improvements allowed the City to begin charging for parking in 2002.  Since that time, the City has earned over $125,000 from parking fees after expenses.  

The current outstanding balance owed on this note is approximately $1,130,000.  Therefore, the total current indebtedness of the City is approximately $1,480,000.  There are several points I would like to make in regard to this indebtedness.  First, this is one of the lowest per capita indebtedness for a city in the State.  Second, after deducting the loan proceeds still held in reserve, during the last four years, the City's total debt has actually decreased, notwithstanding that we have purchased the Fay Street property, the lot behind City Hall and converted the old city hall lot into a paid parking lot.  Third, with regard to the refinancing that took place in 2001, 100% of the payments on that note have come from parking revenue and KCDC sales tax.  None of your property tax money has been used to pay a dime of that debt service.  

Finally, and this is the most important point, there is no way to pay off the City's debt except by selling the old city hall lot.  So when someone suggests to you that they are going to pay off that debt, you need to understand that their real agenda is selling that property.  That may something that the City wants to do someday, but the consensus has always been that we were not ready to do that.  

I recognize that a lot of hyperbole is thrown around in campaigns.  However, when I saw a candidate misrepresenting the facts and omitting that he had approved the very debt that he had approved, I felt that it was necessary to set the record straight.