Short Term Won't Work For Roads
Last updated Friday, April 28, 2006 10:25 PM CDT in News
By Lori Harrison-Stone
The Morning News
ROGERS -- Short-term financing isn't going to work when it comes to paying for two major road improvements in Rogers, so city voters may soon be asked to support a financing option that won't involve new tax money.
Mayor Steve Womack had planned to ask the Rogers City Council to approve some kind of short-term financing to fund an estimated $12.5 million for two major projects -- expansion of the Pleasant Grove Road overpass and a bridge on 45th Street to link New Hope Road and Walnut Street.
He learned this week from the city's bond counsel, Shep Russell of Little Rock, that short-term financing can't happen the way he'd hoped. Russell was unavailable Friday and did not return a message left at his office.
To make it work, the city would have to show it could pay off the $12.5 million needed in five years with simple short-term financing. Womack had hoped to finance the projects by possibly paying only interest until 2010 when voters would likely be asked to continue the 1-percent capital improvement sales tax for another bond issue.
Womack's proposal to reduce the millage rate for the city's general fund that pays for city operations has met with skepticism anyway, so he said Friday he plans to propose that part of the existing millage be used to back bonds to pay for the needed road work. Rogers voters would have to agree to the bond issue, but since it doesn't involve more taxes, Womack believes it will get voter support.
The new plan would accomplish two goals -- funding for the two projects and support for Womack's plan to reduce property tax millage rates to reflect the city's true operational needs.
"The consensus opinion is that I don't have the votes (from the City Council) to get a tax cut," he said. "I would rather dedicate it to projects than grow the size of our government."
Rogers voters won't get a property tax reduction like he had hoped, but property taxes supporting city operations would still be decreased by dedicating that revenue to pay off the new bonds, he explained.
Alderman Jack McHaney, chairman of the Finance Committee, said Friday he agrees the two projects are of major importance for the city and need to be done as soon as possible.
"If he can come up with a solution like that, I'd support it," McHaney said.
Alderman Greg Hines, who has made it clear he wouldn't support a property tax reduction, said Friday he likes the idea of dedicating that money to the road projects instead. Hines said he believes in reducing taxes when the city can afford it and it's "fair and equitable" to the residents.
With sales tax revenues hitting record highs and franchise fee collections rising, Womack believes the city will be able to absorb the cost of a new bond issue based on the existing property tax collections. The city's 1-percent sales tax generated $9 million in 2005 and was up 18 percent in the first quarter of this year.
City landowners now pay a property tax rate of 2.9 mills for the city general fund and special property taxes of one-half mill for the police pension fund, one-half mill for the fire pension fund, and .9 mills for the city library. The 2.9 mills generated $2.9 million in 2005 and a half mill generated approximately $335,000, said Jerry Hudlow, city treasurer. Womack said the city could likely dedicate 1.5 mills to the new bond issue, which would generate about $1 million per year.
McHaney said he would like an update on how funding from the 2003 bond issue now stands before he agrees to the new plan. He doesn't want the city pulling money away from projects that were prioritized for that bond issue. He also suggested the city try to get support for the overpass from local developers who will benefit.
"There just may be some kind of public-private partnership we can do," he said. "Even if it's just a small amount."
The city hasn't required developers to pay for off-site improvements in the past, but Rogers has had great support from developers anyway, Womack said. Developers have funded extensive improvements to Pleasant Grove Road already, he said.
"That would be great, but I haven't had any developers step up to the plate," Womack said. "It sounds good, but obviously the 45th Street bridge has not made any progress in a year and neither has the overpass. We could wait an indefinite amount of time for that to happen."
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