The millage is a result of a 2006 $15 million brownfield redevelopment bond to invest in streets, water and sewer lines, parking, and environmental cleanup at the parcel of property at the corner of Beacon Boulevard and Jackson Street. McGinnis said this area was environmentally unsafe — and, regardless of the private development that came afterward, it was work that needed to be done.
The private development was a planned part of the payback of the brownfield bonds used to redevelop the land, with new taxes going toward annual debt-service payments.
With development at the site slowed down — blamed on the downturn in the economy — payments due on bonds will overtake available funds in 2015. City Council would need to come up with $1 million per year to make necessary payments if no millage is levied, city officials say.
McGinnis said other options to address this debt include making significant cuts in city services, and doing nothing and having to levy a larger millage down the road.
“They selected the least painful,” McGinnis said of the proposed 0.75-mill tax.
In addition to the millage, officials are setting aside funds from the general fund and making additional cuts each year in areas that could include collaboration and staff attrition.
“It’s not a one-year, one-time fix,” McGinnis said of the millage. “It’s something that needs to be in place.”
McGinnis said these millage dollars will eventually be recovered and paid back — either into the general fund for infrastructure improvements or possibly as millage relief.
Work is continuing on the north end, where McGinnis said there was some funding left from the brownfield bond. As a result, crews are currently putting a cap over the black water/bentonite containment area to keep harmful chemicals from spreading to the groundwater or Grand River.
According to McGinnis, a parking lot was originally intended to keep the water out; but, with a lack of any development on the site, the containment well could overflow.
Other highlights of the 2011-12 budget include narrowing a $750,000 budget shortfall that was the result of increasing costs in heath care, pension costs and decreasing revenues. To narrow this gap, officials eliminated nine staff positions through attrition, canceled capital improvements and delayed equipment purchases. This has reduced the projected shortfall to $150,000, and McGinnis said he expects this gap to close to zero.
The upcoming city budget also includes proposed increases in water and sewer rates. Over the next three years, water and sewer rates will increase 12 percent each year, with just the sewer rates increasing this year, to cover deficiencies in the city’s water and sewer funds.
According to a report issued by City Finance Director Jim Bonamy, the average water and sewer rate for area residents would become about $35.39 per month — a rate less than many other communities in the state.
The city’s fiscal year begins July 1.