By Edward Lynn, Editor
EAGLE GROVE, Iowa – The Eagle Grove City Council voted Monday night to move forward with a General Obligation Corporate Purpose Loan Agreement. The loan, originally proposed at $315,000 but increased to $350,000, will finance city equipment replacements, including a loader, cemetery mowers, a water department van, storm water pumps, and communication radios.
Resident Dick Callahan voiced concerns about the timing and justification for the loan, citing the city’s $4.8 million surplus and questioning whether the expenditure should be delayed until the next budget cycle.
“Why not delay this, any needed expenditures, and put it in next year’s budget,” Callahan suggested. “We have to find a lender now and negotiate a loan agreement and then pay interest on money that we really don’t at the moment, need.”
Callahan also questioned the city’s financial management, stating, “a recent audit showed that the city had $4.8 million surplus, and last year surplus was $2 million over the previous year’s surplus. So it seems like we had cash of on hand. But that’s clouded by the back step last year’s budget, according to the auditor, with several accounts that were over budget. I don’t understand how that happened. He also said that we couldn’t reconcile the bank statements. And that’s kind of basic, you know.”
City Administrator Bryce Davis explained that financing the purchase through a loan rather than using surplus funds allows the city to maintain cash reserves for larger infrastructure projects.
Davis further justified the loan by detailing specific needs. “The number one reason for the increase from $315,000 to $350,000 is the loader. Our current one is 12 years old, and we replace them every 10 years,” Davis said, noting we are two years overdue in replacing it, and that the price has jumped from $90,000 to $150,000 plus trade-in. The city is also replacing a 1996 pickup, an old Chevy Astro van that had a bungee cord holding the door shut, and two cemetery mowers that have exceeded their lifespan, and cost $18.000 each.
Davis emphasized the importance of keeping cash on hand for future critical infrastructure repairs. Noting that upcoming major expenses will ultimately include a quarter-million-dollar street sweeper, a $400,000 jet vac truck, and eventually, the replacement of our water plant.
Davis also explained the role that decreasing interest rates play in choosing a loan. “If we have 4 million into an interest bearing account, which generates about 200,000 a year right now, interest rates are ticking down, so we’re at about 3.8%,” he noted. “So if our borrowing, interest rate is close to that, it’s pretty much a wash, right? What we earn, but we still have the cash on hand. So if we have something catastrophic happen, and like he said, it might take a while to get a loan, but we have enough money to start a project with cash and then get a loan to, like, reimburse.”
City Attorney Lynn Seaba added some more context, explaining that this method avoids more taxation. “You don’t ever want to deplete your cash reserves. You know, you could add it, sure, you could add it to the budget, do budget amendments, and then increase your tax levy, right? But, you know, when you’re doing fiscal management, Bryce has a pretty good handle on this. You use debt service as part of, you know, he’s retiring $150,000 of the debt on another loan. And then this is a new one, and it’s part of the process.”
“We are putting this on capital improvements which does not increase property taxation,” Davis also noted.
Mayor Mike Boyd thanked Callahan for his diligence, saying, “I do appreciate Mr. Callahan being conscientious about our spending, and appreciate people asking questions and this complicated matters city financing with so many different funding streams and departments and just the way that the rules of funding can get very confusing, for sure.”
After discussion, the council voted unanimously to approve Resolution 2025-13, allowing the loan process to continue.
