Council to further hone multi-million dollar bond ballot language
By Walker County News Today Staff
Tax dollars top the agenda of The Huntsville City Council tonight as council considers a tax rate for the coming 2016-17 fiscal year and ballot language for an $84 million to $128 million bond election on the November ballot.
According to council’s agenda, council members will consider a maximum tax rate of $.3809 per $100 of property valuation, down slightly from this year’s tax rate of $.3838 per $100 valuation, which is a reduction to the effective rate based on the latest data the city has from the Walker County Appraisal District on expected appraised values for the coming year.
The effective tax rate is the rate that would collect the same amount of property tax revenue during the coming fiscal year as the city collected this year. The effective tax rate can go down if property values have gone up.
Property values are a significant part of the equation when determining whether the taxes a homeowner pays on his home are actually going up, even if the city’s property tax rate stays the same. Last year, council attempted to get a 7 percent property tax increase past the public under the guise of holding the tax rate the same. Council, particularly then financial committee chairman Keith Olson, argued that the proposed rate obviously wasn’t a tax increase since the tax rate wouldn’t change. However, this ignored the fact that the WCAD had upped the appraised value of city property by 7 percent.
When citizens balked at the first public hearing on the proposed rate, council, at the last minute, opted for the 7 percent lower “effective rate.” Current Mayor Andy Brauninger, then an at-large council member, and Ward 3 council member Ronnie Allen had opposed the tax increase from the get-go.
This year, by not reducing the tax rate below the effective rate, council members can argue that they do not intend to raise taxes to cover payments on several proposed bond issues on the November ballot.
Bond Ballot Language
Council will meet today at a 4:30 p.m. workshop for another discussion on ballot language for the November bond issue. Council must act this month to get the measure on the November ballot.
Voters got a lesson last year in the ways in which ballot language can obfuscate an issue that will affect their wallets. Last November, voters turned down a proposition that would have set aside $625,000 a year to set up a city-funded economic development corporation made up of council appointees. Opponents charged that council used vague and inaccurate language to mislead voters about the realities of the proposition, known as 4B.
Council first discussed this bond issue of up to $100 million to fund four specific capital improvement projects to address repairs the city says need to be made to water and sewer infrastructure, plus a new public safety complex that would consolidate police and fire departments, and a new or upgraded city hall and city service center.
Last week council discussed an even bigger bond, from $84 million to $128 million, and removing specifics about how the bond money would be used from the ballot language.
At two previous meetings, council members have discussed ways to present the bond issue to the public to maximize the chance voters will view the issues favorably.
The discussion at last week’s meeting centered around the idea of having three separate propositions on the ballot each of which, if approved by the voters, would allow the city to take on significant debt in that area.
Proposition 1 would request up to $31 million for new debt for “public safety facilities,” such as a new combined police and fire department building and a new or upgraded fire station.
Proposition 2 would request $27.5 million for “city service facilities” such as a new City Hall and a new or upgraded City Service Center.
Proposition 3 would request up to $69.6 million for new water and wastewater facilities, including the Palm Street Plant and the A. J. Brown and N.B. Davidson sewage treatment plants.
This adds up to a possible total of roughly $128 million for all three propositions.
This level of new debt amounts to somewhere in the $16,000 to $18,000 range for the typical tax-paying family in Huntsville. That amounts to $20,000 to $23,000 in pre-federal-tax earnings per family. When interest on the debt is considered, that amount is probably more than $30,000.
Council has said in workshop sessions, however, that it plans to pay debt with an increase in water rates and the retirement of existing debt, which would free up 11 cents of the current tax rate now devoted to debt service payments. Council members also anticipate increased revenues through increased property values and sales tax collection. But, as at-large council member Don Johnson said, council can’t “swear on a stack of Bibles” to citizens that taxes wouldn’t go up to make higher than expected debt payments due to project cost overruns in the future.
7th Street Rehabilitation
At council’s meeting last week, council considered on the second reading the proposal to proceed with the construction contract for improvements to 7th Street between Old Madisonville Road and Avenue N. During the first reading two weeks ago, the 50 percent discrepancy between the engineering firm’s cost estimates and Ward 4 council member Joe Rodriquez questioned the low bidder’s estimate. City Manager Matt Benoit looked further into that discrepancy and reported back.
Benoit obtained further cost information from Binkly and Barfield, but that data showed several significant differences between the engineer’s estimates and the current construction bids.
“I’m even more amazed, after looking at this, that the estimates from Binkley and Barfield in some of the line items were as much as 800 percent off from two of the low bidders. I just cannot imagine that an engineering firm could be that far off,” Rodriquez said.
There was no real explanation offered for these differences. Mayor Brauninger asked if there had been any discussions between the city staff and Binkly and Barfield after these estimates came in. Engineers said they were basing their estimates on their experience with bids that they had received in the past 13 to 18 months.
After this discussion, council voted unanimously to authorize the low bidding construction contractor, Doughtie Construction, to proceed with this project.
Solid Waste Transfer Station
At council’s last meeting, council waived first reading to authorize the City Manager to sign an addendum to the Construction Manager at Risk Agreement contract between the City and Anchor Construction, LLC for the Solid Waste Transfer Station Project.
After a fair amount of discussion and questions to staff by council members, particularly Allen and Ward 1 council member Joe Emmett, council voted 8-1 to approve this request and to once again waive the two-reading rule in the process.
The discussion and backup material established that there has been an increase in cost on this project above what staff was expecting. Benoit referred to those as “cost overruns” in two of his Friday memos. However, Don Johnson, as Chairman of the Finance Committee, emphasized that the project budget has not overrun, only the staff expectation of cost.
Still, staff considered the cost expectation overrun to be sufficient to cause some key elements of cost in the project to be “renegotiated.” The cost estimate for concrete was reduced by $253,000 after a rebid action and the cost estimate for steel was reduced by $50,000. What is not totally clear is how those costs can be reduced without affecting the end product. Yet Benoit answered “No” to that question, when pointedly asked by Allen.