WARREN Windfall will help city pay off some debts

Paying off the short-term debt would free up about $600,000 a year, officials say.
By AMANDA C. DAVIS
VINDICATOR TRUMBULL STAFF
WARREN -- The city has plans to wipe out its short-term debt, thanks to a nearly $2.3 million unexpected windfall.
What's left over will go into a hospitalization fund that Mayor Hank Angelo said has increased 82 percent in the last three years.
The city announced Friday it will receive 39,613 shares of Anthem Inc. stock as a result of Anthem Insurance's decision to become a publicly traded company.
The city is entitled to the shares because it has been a client of the company for so long, Angelo said, noting that the number of shares is based on the amount the city has paid the company over the years.
Officials said the city will not pass along the money to employees because there is no co-pay for their health insurance.
In dollars: At the close of the business day Thursday, Anthem stock was $57.30 per share, making the city's shares worth about $2.3 million, the mayor said.
The money will pay off $1.5 million the city took out last year for capital improvements, $400,000 for the downtown parking deck and $345,000 the city agreed to pay off recently on behalf of Tony Joy Jr., who has operated the city's Avalon South Golf Course.
Joy, who has a lawsuit pending against the city for alleged breech of contract, has blamed financial problems at the course for his failure to pay the remainder of $425,000 he secured to make upgrades.
The mayor said he expects the $345,000 will eventually be paid back to the city, once the lawsuit is settled or heard in court.
Reaction: Officials, including Angelo, said this will be the best use of the money, once stocks are sold.
"It's good business sense to pay off your debt," said Tom Gaffney, the city's income tax administrator.
Councilman Bob Marchese, D-at large, agreed, saying, "It's the prudent thing to do."
He's agreed to sponsor legislation that will come before council Wednesday, authorizing Treasurer John Taylor to sell the shares and Auditor David Griffing to pay off the debt.
Angelo said he was happy to make the announcement because the city's financial troubles often take center stage.
"First and foremost, the city is operating in the black," he said.
The city finished 1997, 1998 and 1999 in the red, but because of budget cuts, finished in the black in 2000 and 2001.
The city is "on firmer ground" now, Angelo said, because of the 0.5 percent income tax increase that voters passed last year to boost the shortstaffed police and fire departments.
Money for projects: Griffing said paying off the short-term debt will free up about $600,000 annually for five years, money that can be used for city projects.
The mayor said he will make recommendations to council for how the money should be spent and noted the city can look at possible capital improvement projects and road repairs.
He declined to elaborate about possible uses but told reporters $600,000 a year is not enough to fix the city's worst roads.
The city has been tossing around the idea of assessing residents, based on the frontage of their property, to fix roads. A majority of residents would have to agree. The windfall does not change the city's need to do that, Angelo said, explaining that a recent state performance audit says the city should be repairing 17 to 19 miles of roads each year.
For just resurfacing, Angelo said, the cost per road is about $50,000.
By law, cities are not allowed to own stock so state Auditor Jim Petro's office issued guidelines in February, spelling out how cities should handle this matter, officials said.
davis@vindy.com