Rather than take out a loan to buy the Destin Campground, the city of Destin, Fla., will use its cash reserves to cover $3.6 million of the $4.9 million purchase price.
“We’ve talked with banks, the money’s available,” City Manager Greg Kisela said at the Destin City Council meeting on Monday (Nov. 3), “But we’d be paying probably in the 5.5% range.”
Kisela told The (Destin) Log that when the city took out a loan at the end of 2006 to buy land for Royal Melvin Heritage Park on the Destin harbor, the rate had only been 4.4%.
The city, located in Florida’s Panhandle 40 miles east of Pensacola, plans to use the campground property, and some land to the west, to build a road.
The council voted 4-1 to buy the land with $1.3 million from an old bond issue and $3.6 million from the city’s “unappropriated fund balance,” consisting of money that had been included in the budget but not spent. That would leave the city with between $4 million and $4.5 million in the fund which could be spent in emergencies, such as hurricane recovery.
“With the economy being what it is and the possibility of more hurricanes, I think this is incredibly reckless,” Councilor Dewey Destin said. He cast the only nay vote.
Kisela said he understood Councilor Destin’s concerns, but buying the campground would still leave the city with as much in the fund as when Kisela arrived in 2003. He said the city runs a tight enough ship that it accumulates about a half million in the fund every year.
Councilor Destin said that with 300 to 400 homes in foreclosure in the community and property values probably dropping another 15% to 20%, the city might face an even tighter budget next year.
“Mr. Kisela has more confidence than I have,” the councilor said. “I hope he’s right and I’m wrong.”
Kisela said that if the $4 million wasn’t enough, the city could still take out a loan.