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City continues future infrastructure funding talks

Alex Doty • Jul 10, 2018 at 1:00 PM

With new water and sewer rates set to take effect Aug. 1, which are expected to fund improvements for those systems, the next step in the city’s funding discussion is the potential for a millage request before city voters that would be dedicated to paying for streets and sidewalks.

“It seems like there is a preference to move away from a debt solution to a pay-as-you-go solution,” City Manager Pat McGinnis said.

To accomplish this, the city is looking at the possibility of asking voters to approve a new, perpetual 3-mill levy. Officials say 2 of the 3 mills would be dedicated to existing bond debt — namely paying off the 2008 and 2015 infrastructure millages. More money would be made available for new projects as the existing bonds are paid off.

One mill produces approximately $550,000 in tax revenue in the city.

The proposal wouldn’t likely be brought to voters until 2019, at the earliest, city officials say.

“They’d be voting for 3 mills, but we’d make it explicit in the documentation in the ballot issue that 2 of them will be dedicated to those existing bonds until they’re retired,” McGinnis explained.

If timed correctly, there could be a millage reduction in the next couple of years, city officials said.

“We have two millages that will be running out,” City Finance Director Jim Bonamy said.

These bonds, he noted, include both the Grand Landing debt support millage and the Community Center millage.

RELATED: Our View: GH officials digging deeper for city’s future

“I’m seeing this as a way to continue to invest in things, work off debt, and use more and more money for projects,” Bonamy said. 

The latest estimates show that the city has about $38 million worth of projects on its “to-do” list, and it’s a list that continues to grow as years progress.

“All of that is going to continue,” Bonamy said. “That’s the reality of what we’re going to have to face.”

Bonamy noted that the current concept would be a way to address the issue of paying for additional work on aging streets and sidewalks without getting into debt by issuing bonds. This, he noted, would mean more money could go toward projects and less would be tied up in financing for bond issues.

“You’re really setting this up for someone else,” McGinnis said.

The city manager noted that the current model of having a big backlog of projects and going out for debt isn’t sustainable in the long run.

“We want to create a future where we got enough money coming each year that we can build infrastructure and not pay interest,” he said.

Mayor Geri McCaleb said it would be “an education process” to let voters know about the plan, but it would be worth exploring.

“We’ve learned over the last 10 years that there is no end to this,” she said.

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