Mayor Issues WHP Update: City Will Repay $3.4 Million WHP Loan While Preserving the City’s Bond Rating and Fund Balance
Mayor’s repayment plan is supported by the City’s external financial advisor, director of finance, budget director
Wilmington Mayor Mike Purzycki today unveiled a plan to repay what he said is an unanticipated and ill-advised $3.4 million loan that was agreed to by previous City administrations on behalf of the financially-troubled Wilmington Housing Partnership (WHP). The WHP is a publicly and privately funded non-profit agency that has provided affordable housing and helped to preserve City neighborhoods over the past 25 years.
Mayor Purzycki said his proposal to repay the loan owed to JP Morgan Chase will preserve the City’s current financial and debt position and protect the City’s bond rating, which is crucial to the City’s ability to borrow funds at reasonable and affordable rates for future capital projects.
The Mayor said he is proposing that the City obtain a $3.4 million short-term bridge loan from a local lender to repay JP Morgan Chase in full. Mayor Purzycki said the short-term bridge loan will be converted to a bond as part of Wilmington’s next bond issuance, scheduled for the fall of 2020. He said the $3.4 million borrowing is included in his proposed FY 2020 Capital Budget, which will be presented to City Council later this month.
The Mayor’s repayment plan is supported by the City’s external financial advisor, Director of Finance and Budget Director. The Mayor said he has concluded that the plan he is presenting today is in the best interests of the City and its citizens.
Mayor Purzycki also said today that he is opposed to a loan repayment proposal suggested by City Treasurer Velda Jones-Potter because it ignores the importance of preserving the City’s fund balance and protecting the City’s bond rating. Purzycki said the Treasurer is suggesting that $3.4 million in City cash reserves be used to repay the loan, which he said will inevitably cause a tax increase. He estimated that the Treasurer’s proposal could result in a tax increase as large as 8.5%.
Purzycki said any reasonable person who has reviewed this loan situation and the WHP’s current finances and assets, will conclude that the $3.4 million is uncollectable by the City. He said the Treasurer fails to recognize that the WHP has other creditors that will demand to be satisfied prior to the City receiving any proceeds.
“I will not support, nor will I ask City Council to support, any amount of tax increase related to the repayment of this loan,” said Mayor Purzycki. “I look forward to working with City Council to resolve this matter as quickly as possible.”