Contingency rules changed last year

SALEM — City council members last December voted to approve an ordinance outlining how council contingency funds can be used, but on Tuesday night, a few of those same council members debated the question all over again.

The issue at hand was the purchase of property proposed by the parks department, which all agreed fell under the guidelines as written in the ordinance, although Councilman Geoff Goll seemed to disagree in the end. Most of the focus then centered on whether the council contingency fund should be tapped for the $95,000 purchase price for the office on Oak Street.

The parks commission never sought out use of the council contingency fund and had planned to pay a $25,000 down payment and borrow $70,000 to cover the rest, with plans to pay the note back over 20 years. Councilwoman Cyndi Baronzzi Dickey was the one who suggested that council dip into the fund, since the $124,000 was just sitting there unused the past six years. She said the city could pay the cost outright rather than have the parks department carry a debt.

Dickey opened the Committee of the Whole meeting, which includes all seven council members, by reading into the record what the ordinance governing the contingency fund states. The contingency fund had been the brainchild of former Councilman Dave Nestic, who suggested they use some of the oil and gas lease proceeds for city-owned property to put together a fund that each council member could access, if all seven agreed, for a worthwhile project in their ward. Council members could join together for one big project or a few could go together. Projects had to have a lasting impact and benefit the constituents. Council members could promote their project to other council members to use their chunk of the total.

One project all of council agreed upon was contributing to the cost of the new entrance signs for the city. Another use that was passed by the majority but was not agreed upon by all was using the money to pay for Town Center Associates for one year. Last December during a Committee of the Whole meeting, council members talked about spelling out and simplifying the process for using the money, with former Councilman Brian Whitehill saying they needed to focus on the purpose not on the buckets and the previous understanding that each member had a chunk of the bucket.

At the time, Councilman Andrew Null had questioned how the money would be divided and how it would be tracked and Goll also questioned the division, asking why they couldn’t just simplify it by saying a member of council can bring an idea to the committee then it would be up to all of council on whether to spend the money.

Recently he brought up the original intent of each council member having a set amount and questioned using it for the building. On Tuesday, all seven voted in agreement that the purchase of the building met the definition of a “having an impact on the city, or any part thereof, lasting greater than one year and should be for the long term benefit of a particular city ward or wards or the city of Salem as a whole.” After the meeting, Goll said it should be for a project that’s going to create jobs or help with economic development. He didn’t agree with paying $95,000 for a building for two-and-a-half employees.

Nowhere in the ordinance passed last year did it mention dividing up the contingency fund between the council members, which Dickey said would be a nightmare for the auditor’s office to track. She noted that questions about the amounts had been raised before on whether a no vote meant that council member’s share couldn’t be used. In the end, council last year decided on the simpler version.

In starting the discussion, Dickey had explained how the city provides space for all the departments in the city and how the Memorial Building and city had an agreement for rent-free space in exchange for certain services. She noted that a lot of those services have changed and that the city was making a donation each year to the Memorial Building, In 20 years, she said those donations have totaled over $200,000, so “it’s not rent-free by any stretch of the imagination.”

She said using the contingency fund to pay for the building might help the city continue to make the donation and could help the parks continue working on improvement projects. She also said the city has benefitted from the low fees at the parks and she wants to keep those low. She said the borrowing of funds would cost taxpayers interest money for the loan.

Null asked why the idea of using contingency funds wasn’t brought up earlier. Mayor John Berlin said the parks commission didn’t know that money was available and the members weren’t predicating their decision on hopes that those funds would be used. He said they shouldn’t be “scolded” regarding the funds, pointing out that use of the continency fund is a council decision.

With the money just sitting there, Berlin said it’s used to offset the cost of banking fees and isn’t collecting individual interest. City Auditor Betty Brothers said the general fund as a whole gets interest which goes back into the general fund. It was also explained that if the building were sold, the money would go back into the council contingency fund, along with any excess over the purchase price, if the contingency fund paid the entire cost. If the cost is split and it’s sold, part will go to contingency and part will go to parks.

Null questioned what happens if they take the money out of there and then some other project comes along that would benefit from the contingency fund. Brothers said council has the power to appropriate money into the fund.

Null then suggested matching the parks dollar for dollar for the cost, meaning paying half the cost. The decision on that remains pending after just one reading.