Friday, July 28, 2006

Court ruling could hurt valley cities

Ketchum might go to bonds for major purchases

Express Staff Writer

In an effort to update Ketchum's fleet of aging street sweepers—dating from 1987, 1985 and 1957—the city ordered a new model.

The $175,000 price tag was to be paid in increments as part of a lease-purchase agreement.

Ketchum, like many cities, counties and highway districts, enters into lease-purchase agreements to buy big equipment like street sweepers and snow blowers.

A recent Idaho Supreme Court decision, City of Boise v. David Frazier, cast doubt over such arrangements.

Citing the constitution, the court ruled that the city of Boise was in error to go into debt for one phase of its airport parking expansion project.

Cities can only go into debt with voter approval unless the undertaking is "ordinary and necessary."

What expenses are both ordinary and necessary is up to city attorneys to interpret.

"Cities are struggling with those decisions right now in the budget process," said Ken Harward, executive director of Association of Idaho Cities. "(Requests) have to be evaluated by each city attorney on a case-by-case basis. A snow blower in Ketchum may be an emergency, and it may not be in another city."

"It also depends on how a lender/creditor views it," he added. "Some lenders may be frightened of the Frazier case."

During Ketchum's budget workshop on July 21, the city decided the expense wasn't acceptable in light of the court's ruling.

"There's a street sweeper in Mountain Home," said City Administrator Ron LeBlanc. "The decision came out after we placed the order."

Unlike many cities, Ketchum was able to borrow money from its savings to make good on its order.

"We are very well off financially," LeBlanc said. "I don't know how we would have handled it if we were a different city."

Harward said it's unlikely the Legislature could help by amending laws because the ruling was on a constitutional issue, meaning the state constitution, not laws, would have to be changed.

Even if the Legislature were to address the topic, it would be too late for a street sweeper the city of Ketchum ordered—and for the $455,000 snow blower the city had planned for.

"At one point (last winter) we had two down, and we were using the old one," said Brian Christiansen, street superintendent.

To many mountain town residents, that's an emergency situation.

"You're running the largest snow-removal business in the valley and you're operating it with a 50-year-old blower and two 20-year-old ones," said Councilman Baird Gourlay. "I would never run a business like that."

In City Attorney Ben Worst's interpretation of the ruling, an emergency, and therefore a necessity, does not exist.

"Because of the fact that it's foreseeable, you can't borrow without voter approval," he said. "(The decision) reflects the conservative nature of the constitution."

LeBlanc said the ruling punishes cities that practice good management and don't get themselves into emergency situations.

City officials now must decide what to do.

"If we're going to go to a (general obligation) bond for equipment, we should do a five-year plan and look at all our equipment," LeBlanc said.

The city has to announce a special election 45 days in advance. There are four months of the year elections can take place in Idaho: February, May, August and November.

Gourlay, who co-owns a ski shop in Warm Springs Village, said the city should prepare for winter by any means necessary, including paying the $455,000 in full.

"If (break-downs) happened at Christmas, that would be brutal," he said. "We are looking at 25 percent of our income (that week)."

"If the voters say no," he added, "if they don't understand that this is a management issue, this is life safety, I'm going to overrule them."

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