City finance staff outline $151M debt, $51M short-term borrowing and recommend austerity, reserves and a five-year capital plan

Wendy (city finance staff) told the Ithaca Common Council on Sept. 16 that the city’s total outstanding debt stands at about $151 million and that the city retains statutory capacity to borrow roughly $72 million more under the state constitutional limit. She said the city’s long-term bonded debt is declining as principal is paid down, and that short-term borrowing (bond anticipation notes, or BANs) accounted for about $51 million of the total as of the presentation.

Why it matters: City staff said a high level of short-term borrowing can raise volatility and stress the budget when BANs must be rolled forward. Finance staff urged a cautious approach in 2026 — focusing on critical projects, advancing a five‑year capital improvement plan and building reserves to smooth future costs.

Details from the presentation - Debt totals and capacity: Total debt was presented as approximately $151 million; staff said the city could borrow up to about $72 million more before hitting the statutory debt cap metric commonly reported by financial advisors. - Short-term vs. long-term debt: Finance staff explained that short-term BANs are used while multi-year projects are underway. The BAN total of about $51 million was split broadly among city facilities (roughly $24 million of the BANs), transportation/infrastructure projects, and equipment. Of the equipment portion, staff said about $2.7 million of the current short-term borrowing relates to fire apparatus or fire vehicles. - Project phasing and reimbursements: The finance director described the fire station project as an example: the city used short-term borrowing as design and construction costs came due, expects proceeds from the sale of an old station and grant reimbursements (including a roughly $1 million Empire Grant) that will allow the BANs to be paid down and the remaining cost to be converted to long-term bonds when appropriate. - Interest-rate context: Short-term borrowing has carried higher rates (presented as roughly 4.0–4.75% during the recent period) than some long-term instruments. Staff noted eligibility for long-term financing of water/wastewater projects through state programs (EFC) once projects are complete.

Staff recommendations and next steps: City staff recommended an “austerity year” for new borrowing in 2026, creation or expansion of reserve funds (bridge maintenance, emergency building repairs, technology infrastructure and pump-station reserves for water/sewer), continuing a move toward leasing non-police vehicles, and developing a five-year capital plan. The presentation also recommended continuing a centralized grant-tracking function to improve reimbursements.

Council response: Council members asked for detail on how much of the BAN total is covered by expected reimbursements or property sales and asked for a plan to convert short-term borrowing to longer-term serial bonds where appropriate. Several council members expressed a preference for limiting new short-term borrowing in 2026 and for using reserves and phasing projects to reduce exposure to interest-rate volatility.

Decision vs. discussion: The committee received the presentation; there were no ordinance votes or bond authorizations at the meeting. Staff said they will return with more detailed schedules showing which BANs are expected to be reimbursed or converted to long-term bonds.

Ending: Council directed staff to provide detailed BAN roll‑forward plans and to prioritize the five-year capital plan and reserves work as part of the 2026 budget process.