City Discusses Refinancing Loans, Negative General Fund Balance

City Council took no action out of an executive session that took place during a special meeting held Friday, but the body did briefly discuss a plan of action that could improve the city’s financial state and spare it from another drastic credit downgrade.

 City Manager Jim Zumwalt told council Friday that he attended two meetings in Richmond this week and met with members of the Virginia Municipal League/Virginia Association of Counties (VML/VaCo) Finance to discuss possibly refinancing a portion of the city’s loans through the agency.

 City officials are considering this because the annual principal and interest on city and school bonds will increase by , Zumwalt said.

By refinancing a portion of the city’s debt, the municipality gets more time to pay its obligations. City officials also hope the overall economical situation will improve in that time frame.

 The city’s chances of securing a VML/VaCo loan would be better if they waited and applied after issues a rating for the city and after the revised FY 2010 budget is publicized, Zumwalt said VML/VaCo Finance officials told him this week.

The officials he met with in Richmond also expressed some concern over , the soon-to-come rating from Moody’s and the city’s negative general fund balance, Zumwalt added.

 During the meetings, he and city finance director Gary Fields explained that only the general fund is in the red, but when you pair it with the $3 million in the school’s debt service fund, then the city is actually in the black, or in the positive, Zumwalt said.

 Still, VML officials were having trouble accepting that explanation, he added.

City officials are now considering moving the $3 million in Manassas Park City Schools funds directly into general fund so that it will reflect a positive balance for the audit, which is expected to be completed in two weeks.

 Zumwalt said he discussed moving the money with Superintendent Dr. Bruce McDade and explained to him that even though the money is in the city's general fund, it would be earmarked for the schools and won’t be spent on anything else.

 McDade told him moving the money is a touchy subject for some, but he understood the importance of it and would discuss the matter with the school board at its Monday meeting, Zumwalt said.

 As for the city borrowing money and refinancing its loans, that’s a decision that will be made in the early part of 2012, the city manager said.

 Counciman Suhas Naddoni said he wouldn’t be in favor of refinancing the city’s loans.

“ … It’s not worthwhile to go that route,” Naddoni said during Friday’s meeting.

 In other news, several governing body members are expected to particpate in the on Saturday. Mayor Frank Jones wants to put a few of the Police Department’s new vehicles in the parade, while Councilman Preston Banks wants to be in the parade with his 5-year-old niece.

The parade is from 5:45 to 7 p.m. It will start at General Ridge’s Golf Course, proceed down Manassas Drive and end at the Manassas Park Police Department.