ZACHARY — The mayor and City Council are taking steps to call a referendum on changing the city’s home-rule charter to allow bond issues, without an election, for utility improvements that are secured by utility revenue.
State law allows municipalities to borrow money against future utility revenue without voter approval, but Zachary’s home-rule charter trumps state law by requiring an election to be held for any bond issue.
The council wants to put the charter amendment on the Nov. 6 ballot.
“We won’t borrow anything that we can’t pay back with the (recent) utility fee increase,” Mayor David Amrhein said Tuesday. “It will still need to go through the (state) Bond Commission and this council, and we won’t let that happen.”
Zachary has borrowed $9.3 million from the state Department of Environmental Quality at 0.95 percent interest to fund upgrades to the city’s sewer system, but the bond issue had to be approved in a special Oct. 22 election. The city raised utility rates to repay the bonds.
The department has since offered to lend the city another $5 million for sewer improvements at the same low interest rate, Amrhein said.
He added that, like a line of credit, the city would not be obligated to borrow all of the $5 million.
Municipalities may use only utility funds or other revenue from city-owned infrastructure to pay off any bond debt obtained without voter approval. By state law, bonding sales or property taxes would still require an election.
The home-rule charter provision makes it difficult to take advantage of low interest rates, because it takes at least six months to go through the steps to hold an election, the mayor said.
“This is the way to make the infrastructure changes we need and to move Zachary forward,” he said.
Attorney John Hopewell explained that because the proposal would change Zachary’s charter, it must be approved by the bond commission, which will meet Aug. 16.
“We’ve already missed the July deadline, so this is our one shot until next year,” he said.
When the home-rule charter was written, Zachary was a much smaller municipality and no one foresaw the need for many infrastructure improvements, the mayor said.
“We had no bonded debt at that time. But now we are getting too big to pay as we go,” he said.
The council also agreed Tuesday to move toward allowing citizens to pay utility bills using credit or debit cards. A flat fee of $4.95 would be added to such transactions.
“The credit card companies charge the fee and as a government entity, we can’t waive it because we would be using taxpayer dollars,” Amrhein said.
The city would like to eventually allow people to pay for permits using credit cards as well, he said.