Bonds are not like other loans the Dunkirk Finance Committee recently discovered.

The city has been considering selling the Boardwalk Market building due to the cost to taxpayers each year. The arguments have been that the city should sell the waterfront building to staunch the bleeding of $42,000 a year due to debt repayments or that once the debt is paid in 2021, the city will lose less and the property may be worth more once spinoff development from Athenex comes to town.

However, the Finance Committee recently discovered it may not be not as easy as selling it and paying off its debt.

“Like if you wanted to sell your house and pay off the last $20,000 with one check, pay off your mortgage, you can’t do that,” Councilman-at-Large Andy Woloszyn said after Treasurer Mark Woods explained the city may be locked into the terms of the bond the city took out to build the structure.

Woods said if the term of the bond was 10 years, the city may have to pay for the full 10 years, even if the Boardwalk is sold.

“There’s a procedure in that situation, which may allow for it to be paid off ahead of time, but if not then the city must create a reserve,” he said, noting the latter is a common procedure. “… The reason being these increments are sold to the public by the company, so they have to guarantee the proceeds of this bond over that number of years. So if we paid this off tomorrow, they’re responsible for principal and interest payments to all those customers.”

Woloszyn pointed out, “That’s why so many people are investing in municipal bonds for their retirement — guaranteed interest payments.”

First Ward Councilman Don Williams Jr. said Chautauqua County is in this situation of having sold the former County Home and still paying on long-term debt.

Third Ward Councilman Adelino Gonzalez said he wished this had come out during the discussions about selling the Boardwalk in December and January.

Woloszyn agreed, saying he doubts the general public would look favorably on paying for a loan on a property the city no longer owns.

“I guarantee you if we do sell it and it comes up during budget time three years from now that we have a $75,000 payment due to pay off the Boardwalk and we sold it three years ago, somebody’s going to say, ‘What’re you talking about you sold it three years ago? Why are you still making a payment?'” he said. “I didn’t know that until today. I would have said the same thing.”

The Economic Development Committee will hear from the public on the matter at the May 16 meeting.