The following is a long read and incorporates information from other Columbia Spy articles but is an attempt to understand some of the borough's finances over the past few years.
As things stand now, Columbia Borough is potentially in debt $20 million due to the actions of current and previous councils. Here are the basic figures:
Currently, the borough owes over $9 million for the McGinness Innovation Park and $11 million for payment of a series of general obligation bonds (municipal bond) taken out in 2016 for capital projects and payment of debt.
To be fair, the borough has not received the remainder of the RACP grant approved by the state for the Market House renovation and for parking solutions. The amount is in the neighborhood of $1 million.
At the October 24, 2023 borough council meeting, Borough Manager Mark Stivers said the municipal tax rate will stay at 8 mills for 2024, but Council President Heather Zink stated that council can't say that definitively, because the budget hasn't been finalized. (The plan is for council to vote to adopt the budget at the first voting meeting in December, according to Zink.)
That's the short version. Here's the long version:
The McGinness Property
Columbia Borough closed on the purchase of the 58-acre McGinness property on 8/20/21.
The estimate to develop the tract as of summer 2022 was $12 million, according to BizNewsPA (7/20/22). Columbia initially paid $1.5 million to purchase the property. The total of those two figures is $13.5 million.
The borough received a $1 million DCED grant from the state. Deduct that from the $13.5 million above to get $12.5 million.
Columbia Borough was also approved for a "Business In Our Sights" (BIOS) $3,350,000 grant (rounded off) in 2022. So deduct that from the $12.5 million to get $9,150,000. That's the total amount the borough will owe. That amount includes the $5.4 million loan that was approved, since we have to pay that back, most likely with interest (see below).
These figures could vary somewhat, but unless the borough somehow secures yet another grant, $9 million is a good "ballpark " figure. Officials hope that leasing or selling parcels (or possibly the whole property) will generate revenue. If that can be done, the $9 million figure would certainly be mitigated - or, ideally, eliminated. The latest estimate for completion of the project is six years.
[On a side note, according to LNP: "Columbia Borough Council publicly received the results of its 2021 audit with a warning. The independent accountant who presented the report noted the municipality consistently is reducing its cash position by spending down its capital fund. However, Columbia officials mentioned unique circumstances they say mitigates the decline.
More info: The borough’s cash assets were $2.9 million at the end of 2021, down $1.8 million since 2020. This result continues a four-year trend of declining cash balances, said Michael L. Reiner, CPA with Sager, Swisher & Co. “That is concerning,” Reiner told council members. The borough’s capital fund pays for projects that could include buildings and roads. A separate general fund pays for running the municipality."]
Another item to note is that a grant for DR1 Group, a drone company looking to develop an aerial-technology business at the property, was denied. The grant application was recently resubmitted, but a decision is not expected until next year.
In sum, this project could be costly for a long time.
The Municipal Bond
Stivers asked council to consider a "16-year plan" to pay off the debt. As an option, Zink suggested a special tax levy, which could entail raising taxes 1.5 mills to make annual payments of $691,000 for 16 years. ($691,000 multiplied by 16 equals $11,056,000.) Currently, no plan has been enacted. Bizarrely, Stivers said council has been "blessed" with the opportunity to solve this problem. The relevant part of the discussion can be heard HERE at 1:14:30.
A budget meeting scheduled for November 16 has been canceled. The budget will now be discussed at the November 9 work session.
Moving the Highway Department
There are other issues: a hoped-for sale of the sewer plant and borough sheds, as well as the former firehouse on Front Street. The plant and the firehouse properties are currently being leased out, and the sheds are still being used by the borough. The borough hopes the sale of these properties will help pay for the move of the highway department to the former Columbia Reduction Company at Ridge Avenue and 11th Street. The borough wants to move the highway department there at a cost of $1.35 million for the building plus an additional $2 million for cleanup and renovation of the property. The sewer plant and firehouse were expected to be sold by September of this year but so far haven't sold.
The estimate to develop the tract as of summer 2022 was $12 million, according to BizNewsPA (7/20/22). Columbia initially paid $1.5 million to purchase the property. The total of those two figures is $13.5 million.
The borough received a $1 million DCED grant from the state. Deduct that from the $13.5 million above to get $12.5 million.
Columbia Borough was also approved for a "Business In Our Sights" (BIOS) $3,350,000 grant (rounded off) in 2022. So deduct that from the $12.5 million to get $9,150,000. That's the total amount the borough will owe. That amount includes the $5.4 million loan that was approved, since we have to pay that back, most likely with interest (see below).
These figures could vary somewhat, but unless the borough somehow secures yet another grant, $9 million is a good "ballpark " figure. Officials hope that leasing or selling parcels (or possibly the whole property) will generate revenue. If that can be done, the $9 million figure would certainly be mitigated - or, ideally, eliminated. The latest estimate for completion of the project is six years.
[On a side note, according to LNP: "Columbia Borough Council publicly received the results of its 2021 audit with a warning. The independent accountant who presented the report noted the municipality consistently is reducing its cash position by spending down its capital fund. However, Columbia officials mentioned unique circumstances they say mitigates the decline.
More info: The borough’s cash assets were $2.9 million at the end of 2021, down $1.8 million since 2020. This result continues a four-year trend of declining cash balances, said Michael L. Reiner, CPA with Sager, Swisher & Co. “That is concerning,” Reiner told council members. The borough’s capital fund pays for projects that could include buildings and roads. A separate general fund pays for running the municipality."]
This information is included here only to note a trend. In essence, the borough currently has little or nothing in its capital fund to contribute towards the cost of the project, so a property tax hike seems inevitable, if not this year, then the next. (As stated above, Stivers says it won't happen for 2024; Zink says it is not definitive.) Last October, Council President Heather Zink said at a council meeting (10/20/22) that property taxes are going to go up. So, it's inevitable, but who knows when it will happen?
In addition, since the borough bought the airfield, it no longer receives tax revenue from that property and will eventually owe taxes to the school district once the property is "developed." If the property isn't sold then, it will become a tax burden for the borough.
Over the past two years, the borough has already spent well over a quarter of a million on testing and maintenance of the property, as well as asbestos abatement and demolition of the forner McGinness home - just to get the project started.
Regarding the $5.4 million loan the borough received from the state, it has 5 years to pay it back. Specifically, Columbia will need to reimburse the state about $158,000 for every acre sold (LNP 3/5/22). After five years, the state will amortize the loan over 15 years and charge 3% interest. The most recent timeline for project completion, according to borough officials (as of a few months ago) is about 6 years.
Note: The borough did receive ARPA funds, some of which were used for project costs, instead of towards infrastructure, housing, etc.
In addition, since the borough bought the airfield, it no longer receives tax revenue from that property and will eventually owe taxes to the school district once the property is "developed." If the property isn't sold then, it will become a tax burden for the borough.
Over the past two years, the borough has already spent well over a quarter of a million on testing and maintenance of the property, as well as asbestos abatement and demolition of the forner McGinness home - just to get the project started.
Regarding the $5.4 million loan the borough received from the state, it has 5 years to pay it back. Specifically, Columbia will need to reimburse the state about $158,000 for every acre sold (LNP 3/5/22). After five years, the state will amortize the loan over 15 years and charge 3% interest. The most recent timeline for project completion, according to borough officials (as of a few months ago) is about 6 years.
Note: The borough did receive ARPA funds, some of which were used for project costs, instead of towards infrastructure, housing, etc.
Another item to note is that a grant for DR1 Group, a drone company looking to develop an aerial-technology business at the property, was denied. The grant application was recently resubmitted, but a decision is not expected until next year.
In sum, this project could be costly for a long time.
The Municipal Bond
The current financial crunch dates back to 2016 when council, with Kelly Murphy as president, voted to approve a series of general obligation bonds totaling $9.8 million to pay off debt and for capital projects. Unfortunately, the debt has been draining borough coffers ever since, leading Stivers to admit at the 2022 meeting, "We've been borrowing money to pay the bond" and describing it as an "albatross."
Stivers asked council to consider a "16-year plan" to pay off the debt. As an option, Zink suggested a special tax levy, which could entail raising taxes 1.5 mills to make annual payments of $691,000 for 16 years. ($691,000 multiplied by 16 equals $11,056,000.) Currently, no plan has been enacted. Bizarrely, Stivers said council has been "blessed" with the opportunity to solve this problem. The relevant part of the discussion can be heard HERE at 1:14:30.
A budget meeting scheduled for November 16 has been canceled. The budget will now be discussed at the November 9 work session.
Moving the Highway Department
There are other issues: a hoped-for sale of the sewer plant and borough sheds, as well as the former firehouse on Front Street. The plant and the firehouse properties are currently being leased out, and the sheds are still being used by the borough. The borough hopes the sale of these properties will help pay for the move of the highway department to the former Columbia Reduction Company at Ridge Avenue and 11th Street. The borough wants to move the highway department there at a cost of $1.35 million for the building plus an additional $2 million for cleanup and renovation of the property. The sewer plant and firehouse were expected to be sold by September of this year but so far haven't sold.
The borough is also looking at selling off another asset: 26 acres of the borough farm to be put up for bid.
To sum up, there are many issues in play and a lot that taxpayers could be on the hook for. Unfortunately, borough officials have hung their hopes on a multitude of ifs and maybes that could keep taxpayers in debt for decades.
To sum up, there are many issues in play and a lot that taxpayers could be on the hook for. Unfortunately, borough officials have hung their hopes on a multitude of ifs and maybes that could keep taxpayers in debt for decades.
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