East Cleveland Looks to State-Backed Bonds to Pay Old Bills
The biggest chunk of the plan is selling $6.9 million in bonds backed by the State of Ohio.
Those bonds would be paid back over eight years out of East Cleveland's share of the local government fund -- state money set aside for cities, towns and other smaller governments.
In a recent interview, Mayor Gary Norton said the city will soon be looking for investors.
"In our case, we don't know which market will accept them, we don't know which investors will buy them, but I am confident that there will be some takers for our bonds," Norton said.
Sharon Hanrahan with Ohio's office of budget management chairs a board that oversees the city's finances. She said she's not happy with this approach, but it's one of the last major tools a city in fiscal emergency has to pay off its creditors.
"It was a hard decision, and it wasn't anything that was made hastily," Hanrahan said.
Hanrahan said she worries there may not be investors interested in the bonds, but adds the city could ask the county to buy them. She said the plan is only a short-term fix, and the city will still face challenges ahead.
On the cuts side, East Cleveland plans to freeze salaries, lay off city workers and reconfigure healthcare. The city has also furloughed many employees to a four-day work week.
The city's trying to make money, too. It hiked a trash removal fee and is selling off land it owns.
City leaders also hope to land a grant to hire an economic development director.
East Cleveland Councilman Nathaniel Martin said new housing and retail would bring much-needed tax revenue.
"Because of our location, which is one of our greatest assets, right next to University Circle, right on Euclid Avenue, we're in a great location for economic development," Martin said.
The plan also calls for East Cleveland to look to the city of Cleveland to possibly take over trash and fire services. A Cleveland spokesman said there's no official deal in the works yet.