Twinsburg Increasing Debt Issuance to $7,250,0000

The Mayor and City Council have built a $7.25 Million dollar Golf Clubhouse, Restaurant, Bar, and Banquet facility at the Gleneagles Golf Course. The original debt was $6,138,000 but cost overruns totaling $1,112,000 (an 18% increase) were transferred from the General Fund and now City Council at the Mayor’s request is considering borrowing the $1.112 million plus paying an estimated $500,000 in interest on just the $1.112 million over 25 years. This make no financial sense when the City will probably just transfer the funds again this year or next year from the General Fund to the Golf Course Fund to cover continual operating losses: Does this make good financial sense to anyone?

It was surprising to discover that the legislation (Ordinance 122-2018 – Due for 3rd reading & adoption on Tuesday, January 22nd) authorizes the borrowing of $7,250,000 that contains a guarantee for repayment of the debt from un-voted property taxes; unless City Council appropriates the debt service payments from the Golf Course Fund or General Fund, the only funding sources available other than levying taxes on our property. The Mayor is hoping that the restaurant, bar, and banquet operations will generate a positive cash flow to breakeven, however, actual operations thru November 30, 2018 have resulted in a loss of ($150,000) from the Aaron & Moses restaurant and banquet facilities; that trend indicates an annual deficit of ($450,000) is more realistic. In my experiences ‘Hope is not a reliable financial plan’ no matter what positive spin we put on it and creating competition for local private businesses with their own tax dollars has never proven a wise use of local government funds.

Gleneagles operations and capital improvements from 2008 – 2017 have cost the General Fund $4.75 million or $475,000 annually for operating losses and $2.8 million from other funds for capital improvements; that totals $7.55 million in taxpayer subsidies. Recreational Golf Courses in all communities typically require subsidies (usually from 25% - 40% but not 60% - 70% or more) from the General Fund, however, I have never witnessed such uncontrolled expenditures anywhere in Ohio or Michigan that were not supported by a voted levy and by taxpayers who were informed of all the costs involved . In the last decade Gleneagles has not made a single nickel and hoping it will with $7.25 million more tax dollars is financially reckless and unreasonable! Many say that the facility is beautiful and they love it, however, other residents and business owners see things a little differently. They are concerned that the deficit spending trend of our new Mayor and City Council, that has reduced the cash reserves in the General Fund (built up by prior administration over 12-15 years) from a $25.2 million balance in 2015 to $9.9 million as of 11/30/2018 and is the result of uncontrolled deficit spending that will most likely end in a major financial boondoggle for the community.

The Mayor and City Council have been alerted to their lack of fiscal discipline for many years by Citizen Auditor, Loren Sengstock who has encouraged the City to prepare a five year budget forecast, obtain a performance audit by the State Auditor’s Office (City Council at the urging of the new Finance Director has finally agreed to this – just hope it is not too little too late), and real transparency and accountability in financial planning for the last 4-5 years. Mr. Sengstock and Mrs. Sally Gaydosh, founder of the ACT group are providing current financial analysis and other financial reports from Twinsburg at Active Citizens of Twinsburg’s website: www.activecitizensoftwinsburg.com . The cities deficit spending has been confirmed and noted by the debt rating agencies concern with the following statement ‘The negative outlook reflects a trend of declining reserves that is expected to continue’.

The question posed to Council at their last meeting was: How is the City planning to cover their continued deficit spending in the 2019 Budget and provide for the upcoming additional debt service and operating losses of Gleneagles; which could amount to $20 - $25 million or even more over the next 25 years? If this fiscal crisis brought about by fiscal deficit spending and risky financial ventures like the Gleneagles boondoggle continues, Mr. Sengstock believes Twinsburg could be facing fiscal watch or even fiscal emergency status from State Auditors in the next 2 - 3 years. The results of continued deficit spending and the debt issuance is creating a financial crisis that will leave the taxpayers no choice but increasing income taxes to 2.5% from the current 2% or Council levying un-voted property taxes guaranteed in the legislation for paying the debt service for the next quarter of a century. Is City Council confident there will not be a natural disaster or public safety emergency in the next 25 years? If a real emergency occurs, the Mayor and Council’s use of this Charter funding provision provided by voters will certainly be among the worst financial decisions and abuses of power ever witnessed in my lifetime! The thought of using the authority conceived for emergencies over 47 years ago by our founders for a ‘Country Club’ is tragic and requires the public be informed to assure a serious review by every voter in Twinsburg! It is never enjoyable to be the messenger of troubling news but someone has to keep the public informed and it appears that falls upon the folks at ACT again.

It is clear to me that when the electorate provided City Council, as taxing authority, with the means to address emergency issues by making provision in the City Charter, they showed immense trust in our elected representatives and expects them to exercise discretion and wisdom, if it ever became necessary because of an unforeseen emergency. The founders of Twinsburg used great insight and thoughtful planning to make sure their community was prepared for unforeseen emergency or issue(s) that might befall our community. It is also clear to me, that voters then and now, never intended for un-voted property taxes be used to guarantee debt payments for any public purpose(s) such as a ‘Country Club’ that would be competing with local businesses using their own tax dollars to subsidize operating losses. A more affordable option was available years ago; however, the Mayor and Council seemed determined to have what they wanted and not what the community needed. Had transparency, public involvement, and patience been a higher priority, this entire matter could have been addressed before it became the financial albatross we are witnessing today. Why were the voters never allowed to vote on issuing debt for 25 years and for a recreational facility that includes a restaurant, bar, and banquet facilities?

It is unwise for the Mayor and City Council to take the taxpayers for granted as if taxpayers will understand or be compassionate when fiscal mismanagement or abuse of their City Charter happens! The voters have always been generous in supporting our community for the public health, safety, and general welfare of our residents. To be placed in the position of supporting fiscal blunders or continuing deficit spending by creating un-voted recreational facilities like restaurants, bars, and banquet facilities it is truly unimaginable. Twinsburg voters will have a voice in the financial future of Twinsburg with the upcoming Mayoral election that starts with a February 21, 2019 deadline for filing nominating petitions for the Mayoral primary on May 7, 2019 and it only requires only 50-150 signatures.

Competition in elections for local public offices should always be encouraged and a change in leadership is likely the only option available to taxpayers rather than increased income taxes or property taxes for the next 25 years. If you believe a balanced budget, fiscal responsibility, and a new vision for Twinsburg; that does not involve competing with local businesses with their own tax dollars are important policies; then Twinsburg needs you to step up and provide leadership and sound financial decisions to bring us back into balance!

The Active Citizens of Twinsburg (ACT) have been keeping a keen eye on our local government and believe it is time to make sure the citizens are informed of just how our community could be negatively impacted with the questionable fiscal actions of the Mayor and City Council. Make sure you vote on May 7th and remind your friends and neighbors to do likewise. Our ACT group will keep you informed. We exist to provide transparency and accountability for all Twinsburg residents and taxpayers.

Loren Sengstock, Citizen Auditor and an Active Citizen of Twinsburg (ACT).