City tax increase of 10% proposed
Wednesday, January 29, 2014 7:59 AM
For the first time in five years, Decorah city officials are proposing a property tax increase.
The 10 percent raise will cover debt payments for two major projects - the extension of water and sewer service along Highway 9 to the Decorah Business Park on the east edge of the city and the purchase of a new firetruck.
While the debt levy to cover bond payments will be $1.30 per $1,000 of taxable value, the total property tax rate is only increasing by $1.25 per $1,000. The current property tax rate is $12.54 per $1,000 of taxable value, and the proposed rate is $13.79 per $1,000. The annual public hearing on the city budget is tentatively 7:45 p.m. Monday, March 3. The Decorah City Council crunched numbers for nearly five hours during a budget workshop last Monday.
The city will bond for $4,015,000 to pay for the water and sewer improvements, a project that's been planned for nearly 10 years, according to City Manager Chad Bird.
"While it is a large debt and project for our community, it is a very important one. It positions the whole east area for future growth and development. I view these utility extensions as a 50-to 75-year project that will really have an impact on that area for that amount of time, and that's a big deal," he said.
There are currently eight buildings in the business park served by a small well and individual septic systems. Once the extensions are built, water lines will connect to a water tower built in 2008 but not yet operational, and sewer lines will connect to the municipal sanitary sewer service.
Bird said he believes there are businesses that could be interested in locating in the park, which is a catalyst for providing city utilities there.
"Can that area be better marketed and served by having utilities out there? The answer is it probably could," Bird said.
A bid letting is planned for March 13, and Bird said "ideally" work would begin in early May, with the utility extension completed by the end of the construction season in 2015. The water and sewer lines will be "trunk lines," that will give the city the opportunity to provide lateral service lines to the undeveloped property in the area.
"This is more than a business park project, it's about the future growth of our city to the east. It's a community development project," Bird said.
Bird said it's been a "long time" since a new firetruck has been purchased. The city and the Decorah Rural Fire Protective Association are splitting the cost of the truck, which will replace two trucks.
"They are good stewards of the public's funds," Bird said of the Decorah Fire Department and the Association, which includes trustees from townships surrounding the city. The city is bonding for its half of the truck, $335,000.
Bird said the utility project has a 15-year debt payment schedule and the fire truck loan will be paid off over five years. However, the city manager is hopeful the utility bonds can be paid off sooner.
"We fully intend to utilize TIF (tax increment financing) for the Highway 9 utility project as soon as we can," he said.
There are two years remaining on a current TIF debt that paid for key infrastructure in the park, including roads and the water tower, Bird said.
A TIF district was created in the park in 2001 when a baseline property valuation was established. The property taxes on the increase in valuations in the park since then have been set aside to pay for city services within the TIF district.