The Village of Caledonia borrowed $1.74 million to pay for its portion of the water system upgrades as part of the Racine Water Utility agreement.
Initially, the village was set to borrow $2.1 million to pay for its portion of Racine’s regional water facility, but the village board decided use $400,000 of a $605,000 budget surplus from 2013 to pay down the debt.
In total, the village carries $31.4 million in debt, but 68 percent of that debt will be paid off in 10 years.
Dave Wagner, a financial consultant from Ehler’s, told the board earlier this month that the village maintained a strong credit rating of Aa2 from Moody’s, a credit rating agency. The interest rate on the bond came in at 2.44 percent. The village anticipates to have the bond paid off by 2032.
According to Moody’s, the village has a “sound financial management as evidenced by stable financial operations” and has “employment opportunities within the village as well as throughout Milwaukee metropolitan area.” Still, challenges include having a declining tax base for the past five years and limited revenue raising flexibility because of the state imposed levy limits.
The village’s tax base has declined every year beginning in 2009 by 3.6 percent because of a depreciation in home values.
“Notably, the declines appear to be moderating with a 3.7 percent decline in 2013 compared to 7.2 percent in the previous year,” according to Moody’s report on the village. “Also reflecting limited recent development, the village’s first two tax increment finance districts (TIDs), targeted for mixed used development, remain undeveloped. Notably, officials report that a new business is relocating into a newly developed TID No. 3 and some commercial growth, such as retail in the villages downtown area, continues.”