Consultant: Town sound despite revenue slip
06/06/2014 2:44 PM
02/15/2015 11:26 AM
At Monday’s town council meeting, consultants with Davenport & Company provided the town with an updated analysis of its fiscal situation, reassuring leaders that its financial plans would remain sound without having to increase the tax rate past projections in 2015 and beyond.
The town wanted an idea how lower-than-projected revenue growth in the coming year, combined with other variables, would affect its ability to pay off debt from its $35.7 million bond program.
With increased operational costs from emergency services, council members wanted to know whether it could keep this year’s one-cent tax increase temporary and stick to a total of 2.75 cents next year to pay down bond debt. (by jumping just 1.75 cents in 2015).
“Yes, your plan is sound. You’ve got enough flexibility here that you should be able to meet it with 2.75 cents,” said Bob High.
This year’s flat revenues – many new developments won’t get onto the property tax books until 2015 or later – and fire service costs presented strains. But Davenport partner Ted Cole noted that town sold the first round of bonds for about $10 million at a 3.379 interest, lower than conservatively-designed models projected. That leaves the town some wiggle room.
With the new growth and interest rate variables inserted, Cole said the town could comfortably keep to its tax increase proposals long-term. It could even get by on a lower one if it spread projects out, he said, though it would increase uncertainties by pushing unknown future variables further out.
The consultants also noted a “natural hedge” as Cole called it. If the economy doesn’t facilitate revenue growth, it hurts the town’s revenues. But that would also likely keep interest rates below projected levels of 4-4.5 percent. Conversely, if rates rise to make borrowing more expensive, it would most likely be because of an improving economy that would generate revenue beyond projections.
As with the work session the week before, no changes were made by council as the budget with that one-cent tax increase marched past a quiet public hearing toward a June 17 vote.
One person – who had previously appealed to council against the tax increase – spoke at the hearing. He thanked council for its decision to classify the penny as temporary and stick to a voter-approved total 2.75-cent increase in 2015 to fund bond repayments (meaning next year would see a 1.75-cent increase).
“My issue was not with the one year, one time (increase),” Dan Bruffey said. “The staff proposal said that in 2015-16 the one cent would stay (in addition to the 2.75-cent bond increase. I didn’t think that was a good move.”
The penny will raise $297,000 largely to help fund a growing fire budget. It will cost the owner of an average ($170,000) home in Garner $17 in the coming year’s property tax. Bruffey noted that his house valuation fell almost exactly at the town average.
Rec center design
The town tabbed an architecture firm to design the new $7.8 million recreation center to be built downtown at Main and Montague streets.
After 20 firms applied and five interviewed, the committee of staff and elected officials selected Clark Patterson & Lee Design Professionals. Monday council approved the selection and authorized staff to negotiate details of the contract with the firm.
Town engineer Tony Chalk said the firm had designed a comparable project in the Brunswick County Community Center among a variety of other public projects. He said references came back favorably.
Councilman Gra Singleton, who was on the committee, liked the firm’s enthusiasm about some of the site challenges and its ideas to address them.
“They seem to specialize in Parks and Rec facilities,” Singleton said.
The council expects the new facility to have at least two and preferably three basketball courts, a walking track, several multipurpose spaces and some office space for employees.
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