Town council members will decide Tuesday how much the town wants to borrow in March to pay for its next set of town projects.
In March 2013, Garner voters approved the biggest bond referendum in town history worth $35.7 million. The last bond referendum that was passed was in 2001.
Whatever the town borrows will impact the tax rate.
At most, taxes would increase two and three quarters cent on the tax rate in 2016, said Emily Lucas, the town’s finance director. That is the equivalent of a $48.13 increase on the average $181,982 single-family home in Garner.
The city raised the property tax by a penny this year to pay for the fire department’s needs and additional fire equipment.
The town borrowed $9.8 million for its first set of projects in January. Half of it was to pay for a new police station. The second set of projects will cost a little more than $14.67 million. That includes park enhancements, storm water facilities, an indoor recreation center, sidewalks, a dog park and a new town hall.
Lucas proposed four options for borrowing money to pay for the projects to town council members at last Tuesday’s council meeting.
If the council were to choose option 1, the town would borrow the full amount of $14.67 million and taxes would increase two and three quarters cent on the tax rate. Interest rates would also be higher. Option 2 includes borrowing $10.76 million. Option 3 includes borrowing $9.314 million and option 4 borrows $9.47 million.
However, the town would have to pay the rest of what it doesn’t borrow, from it’s $6.9 million capital fund.
“What we don’t want is for the reserve money to drop below zero because then we have to use the general reserve money,” town council member Buck Kennedy said.
When the capital funds runs out, the town has to dip into its fund balance.
“That money helps us operate during the year,” Lucas said. “You don’t want to use it all up and it not be able to help you in the future.”
The town plans to borrow money three more times through July 2018. It will borrow money in March 2015, January 2017 and July 2018.
Garner has a AA bond rating, which will keep interest rates fairly low. How much they borrow in March 2015 impacts how much they borrow in 2017 and 2018. Each bond sale will take 20 years to pay back.
Lucas said all of the projects are expected to be built by 2020.