Ocean Springs must decide whether to replenish reserves after large settlement payout

Ocean Springs must decide whether to replenish reserves after large settlement payout

OCEAN SPRINGS, MS (WLOX) - Ocean Springs has paid off a nearly $500,000 settlement the city owed after losing a discrimination lawsuit, but at least one alderman is not happy about how the payment was made. Now, city leaders must decide if or how to replenish a reserve fund that has taken a hard hit.

This week, the City of Ocean Springs pulled $287,000 out of the city's emergency fund to satisfy a settlement with Psycamore Psychiatric for refusing to allow the clinic to locate in an area where zoning permitted it.

Ocean Springs had already made an initial payment of $150,000 to Psycamore. Alderman Jerry Dalgo, who voted for allowing Psycamore to locate in Ocean Springs, told WLOX while the board agreed to pay the settlement, his understanding was how to go about paying the money was still under discussion.

"I thought there would be options given on how to pay it and each board member would vote on what they felt the best option would be," said Dalgo. "My personal preference would have been to take out a loan to meet that financial obligation and leave our reserve working capital intact."

However, City Clerk Shelly Ferguson said a board vote authorizing the payment this week was not needed because the aldermen had already authorized paying the settlement.

"When the Department of Justice negotiated a settlement with Psycamore, the board voted to abide by the decree. Part of that decree included making the payments, and there was a time frame it had to be paid in, which is the end of next week," said Ferguson.

Meanwhile, Alderman Chic Cody said he sees no problem with how the payment was made.

"We knew we had to pay it, so we pulled it from the resources that we had. The city clerk did a good job. The money will be replenished over time in the reserve," said Cody.

The city's reserve fund has taken a hard hit. Officials say the balance has dropped from about $776,000 to about $338,0000.

Ocean Springs leaders must now decide whether to take out a loan to replenish a reserve fund that has recently been cut by more than half by a discrimination lawsuit.

"I would support the city borrowing the money to completely replenish the reserve and then paying the money back within three to five years. Bonding underwriters are going to want the city with reserves equivalent to at least 10 percent of our general operations fund. Now it's down to four percent," said Mayor Connie Moran.

That decision will ultimately be up to the board of aldermen. Cody said he doesn't support borrowing money to replenish the fund. He said the city doesn't need to do that, because it has adequate funding.

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