Wednesday, March 13, 2013
MONMOUTH/INDEPENDENCE -- The Monmouth-Independence Network (MINET) has been something its namesakes have touted as an example of neighborly cooperation.
MINET's $26 million debt, along with Independence's current financial state, however, have figured into a rare rift between the two communities during the last few months.
Independence wants MINET to reimburse it for $305,000 contributed almost a decade ago when the cities were developing the utility's fiber backbone.
Monmouth is concerned because of the short-term hardship it might create for MINET -- and the potential for Monmouth to have to cover debt payment shortfalls out of its own pocket.
"This is a rough one," said Monmouth City Manager Scott McClure. "I would say this is the first real disagreement."
MINET's six-person board of directors -- comprised of the city managers, a city councilor and a citizen representative from each town -- has not voted on the matter, said MINET interim general manager Ross Schultz.
The issue? MINET has reserves available to cover a reimbursement, but doing so this year would make it unlikely the utility could afford a May payment for capital debt, Schultz said.
Monmouth and Independence completed a major debt refinancing of MINET in 2010, with the towns pledging "full faith and credit" on payments the system can't cover. The cities loaned MINET $642,000 to help cover a payment in December.
"We don't think we want to do a lot of repayment when MINET isn't able to cover all of its debt right now," McClure said.
Monmouth and Independence each contributed funds during the early 2000s to build the local fiber infrastructure.
Monmouth was fully repaid its $1.3 million capital investment during the debt restructure. Independence passed on the opportunity for repayment to prevent a hardship to MINET, Independence City Manager David Clyne said.
Independence is facing a nearly $700,000 budget deficit and potential staffing cuts by June. As such, the revenue is needed.
"Our financial condition ... is not as healthy and we've been scanning the books for any opportunity to improve our financial health," Clyne said. "But we're cognizant MINET is under stress and are trying to make any payment plan reasonable."
A repaid $305,000 would amount to a one-time funding source, Clyne said. By itself and because it would be paid over time, it would not restore 2013-14 budget cuts -- if they happen -- or negate the need for the city's forthcoming bond measure, he added.
Another quirk? The MINET board's Monmouth contingent wants direction from Monmouth City Council about how it should vote before incurring more debt.
Last week, Independence proposed a payment plan of $50,000 this year, and $50,000 annually afterward at 3 percent interest.