HomeMy WebLinkAbout12192016 City Council Work Session Notes - Road Bond FundingWORK SESSION NOTES ON A
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Purpose:
Present: E 1,
101 � v i—f YN1,11 Council Members Present:
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Called by: lou 0C I Time: Date:
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CITY OFSEVVARD
CITY COUNCIL VVC}RKSESS|ONRE: ROAD PROJECT FUNDING
Monday, December 19,2O1G
$3,000,000 Road Bond
Shall the City of Seward incur debt and issue general obligation bonds monamount not to exceed
three million dollars ($a000,000) to/npncethe planning, design and construction of road improvements
mthe City? The bonds shall be secured byopledge of the full faith and credit of the City. Ithexpected
that annual payments of principal and interest on the Bonds will be Two Hundred Thirty Thousand
dollars ($23400V),mro0.7zincrease /nthe mill rate (from 3.z3mills m3.B4mills, equal monincrease
of $72 per $100,000 in property value) or the approximate equivalent of a one-fifth of one percent (0.005)
sales tax (from 4.0%m42x).
Resolution 2016-045July 25,2016, providedfor submission mvoters, the question of whether to
authorize $3million inGeneral Obligation Bonds for the Rood Improvement Project.
Election Results ofzV/4/2Oz6:
Yes: 297
No: 108
Resolution 2016 -03S - May 9, 2016, authorized matching funds of$50,O00 toward State of Alaska
eappmmiaUonof$Bz,443for the Seward Area Paving Improvements Project.
Resolution 2uz*-0n7'January z3,onz4-defined the Scope nfWork for use nf$Z.7million
federal earmark monies as part of the Statement Transportation Improvement Program for
road improvement projects, anticipating local matching funds of $300,000 (not yet appropriated).
Funding Ideas:
[property Tax -
Requires 0.72 mill increase in property tax:
Represents I3.1%increase inonly the Seward share ofproperty tax rate (from 3.12mills to3.84mills)
Represents 8.6% increase in total property tax rate (including City, KPB and Flood Service Area); from 8.37 mills to
9.09 mills).
Pros: Easiest option toadminister
Property taxes are considered a standard way ofpaying for road improvements.
Seward's property tax valuations are fairly stable, so consistent revenue source.
Cons: Impacts anestimated fewer than 7OOunique property tax payers.
Does not affect numerous government-owned and non-profit owned property.
Sales Tax -
Requires o.2mincrease )nSales Tax Rate:
Represents increase in sales tax rate from 4.0% to 4.2%, (a 5% increase in Seward -only portion of sales tax)
Represents increase in total sales tax rate from 7.0% to 7.2% (a 2.86% increase in total Sales tax rate, including City
and Kenai Peninsula Borough)
Pros: Spreads cost over locals and visitors.
Easy to administer
Cons: Sewan]'ssales tax rate isalready among the highest.
Does not affect numerous govern ment-uwned and non-profit owned property.
Sales tax is largely dependent on visitor industry and subject to more variability.
Road improvement Fee per pa��
Requires anannual $14B/year($zZ.39/momh)ifassessed asper-parcel fee
Assumes 1'4ZZparcels inTAF (4V) and zZDparcels ioTAF (41)
Pros: May be a viable means to spread costs among all parcels in Seward, including non-taxable.
Assesses costs to properties which is a standard way of paving for road improvements.
May bepossible toinclude onutility bill toreduce administrative burden.
Cons: May be subject to challenge by government and non-profit entities.
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