News Flash

Home

Posted on: June 12, 2019

Options For Financing Street Improvements in the City of Snyder

The City Council has requested that the staff come up with some methods of financing $20,000,000 to use to maintain the streets. The City does not have the funding to cover this type of project, a tax increase or a new fee would be necessary to cover the cost.   Listed below are different options that are available to the City of Snyder to finance the maintenance and repair of our existing streets. Residents of the City have voiced their concern about the condition of the streets in Snyder, additional funding will be necessary in order to do this.  The fee amounts and the projected revenue are just numbers used to demonstrate possible scenarios.   Please take a moment to read over the available options and at the end of the information is a small survey.  The City would appreciate your response to this.  If you have any questions, please feel free to call the City Manager at 325 573-4957 or the Finance Director at 325 573-9361.  The City Council meets the first Monday of every month at 5:30 at the City Hall located at 1925 24th St., the public is encouraged to attend.  


1.    Street Maintenance Fee – This is a fee that is added to your city utility bill which will be money used exclusively to maintain and repair city streets This fee would be charged to anyone that has a water meter that lives within the City limits.  It would be added to your monthly utility bill listed as a street maintenance fee.  This fee may be canceled after a four-year period upon Council action.  This decision is one made by the elected City Council.  There will not be an election for this.  Public hearings will be held to receive public opinion.  The council would also determine the terms and the monthly fee.  Below is an example of what the fee could be and the amount of money that would be generated from this on a yearly basis.  


Residential
$10.00
Commercial
$10.00 to $75.00 (based on the traffic volume their business attracts and  generates)
Fee reductions available for those over 65

       


The City currently has 3,783 residential water meters.  For a $10.00 monthly fee that would annually generate $453,960.  Commercial meters at a total of 699 at $25.00 would generate an amount of $209,700.  Total revenue from this fee for a year would be approximately $663,660.   (These are all examples based on the fee amounts that are listed above, the fee could be more or less.)


2.     Street Maintenance Sales Tax - Sales tax for street maintenance is an optional, dedicated city sales tax, the money received may be spent to repair and maintain existing city streets.  Under the current sales tax allocation, the local sales tax is maxed out at 2%.  In 1992 the City held a special election to adopt a sales tax for economic development at the rate of 3/8’s of 1% and the adoption of an additional sales and use tax of 1/8 of 1% to reduce the property tax rate. (total of these two equals to ½ or .50) The remaining 1% is the local sales tax for the city, along with the .50 for the county.  Breakdown of local sales tax: 

 

1.0000%
General Use Tax
.5000
County Sales Tax
 .3750
DCOS
 .1250
To Reduce The Property Tax
2.0000%
Total Local Sales Tax


An election would be necessary to reallocate the percentage of the tax to DCOS.  The current 3/8’s (.3750) could be changed to any increments of 1/8th reducing the current rate and creating a new tax for street maintenance.  


Based on the amount of sales tax received last year, this is the amount that would go into a street maintenance sales tax fund if it had been in place at the rate of 1/8th (.1250). 


$255,276
Street
 $510,552
DCOS

                                                         

Total amount of sales received was $3,063,314.  DCOS received $765,828.  


There are several things to consider for this to happen, DCOS has debt of $3,000,000.  There must be enough tax revenues available to pay the debt prior to the rate being reduced.  


3.    Certificate of Obligation is available for local governments to fund public works without voter approval unless a petition signed by 5% of the registered voters is submitted prior to the issuance.  In 2018 Specialized Public Finance presented the City Council these six options. These numbers would change based on the current interest rates.  

   

PROJECT FUND DEPOSIT
AMORTIZATION TERM
ANNUAL PAYMENT
 REQUIRED TAX RATE

TOTAL DEBT/SERVICE

$9,000,000
20 YEAR
$641,196
.1200
$12,829,035
$15,000,000
20 YEAR
$1,066,823
.2000
$21,300,173
$20,000,000
20 YEAR
$1,416,560
.2660
$28,342,265


               

PROJECT FUND DEPOSIT
AMORTIZATION TERM
ANNUAL PAYMENT
REQUIRED TAX RATE
TOTAL DEBT/SERVICE
$9,000,000
25 YEAR
$566,708
.1060
$14,099,493
$15,000,000
25 YEAR
$937,659
.1760
$23,407,534
$20,000,000
25 YEAR
$1,245,579
.2340
$31,147,752

              

To see what impact this would have on your property tax assume the value of your home is $100,000.  Take the value of your home divided by 100 multiplied by the required tax rate. ($100,000/100 x .1200).   Based on the six options listed above your taxes could increase $106.00 to $266.00.  This increase would be for 20 or 25 years, keep in mind that during this period there will be other projects for the city that will require financing that would also increase the tax rate.  The tax rate currently of .4700 is defined as M&O (maintenance and operations) of the City, any debt would be classified as I&S.  The City has a maximum of $2.50/$100.00 for I&S.  (interest & sinking) 


4.    General Obligation Bond requires an election.  A bond is secured by a pledge of the City’s taxing power; ad valorem taxes (property tax).  If a bond fails, Certificates may not be issued for that purpose within 3 years of the election.  The impact would be the same as the six scenarios listed above for a Certificate of Obligation.  The City of Snyder would be acquiring long term debt for the City to maintain the existing streets, for 20 years or more.  


In options 1 & 2 the amount needed to begin to repair the streets would accumulate over a period of years  which would still allow the city to perform maintenance on a yearly basis along with the money that is budgeted for street maintenance; with  option 3 or 4, the City would receive all the money up front.  

All four of the options would provide funding to the City of Snyder to maintain the streets.  The street maintenance fee would be a charge to everyone that has a utility account; including some business or organizations that would be tax exempt through property taxes; schools, churches.  The street maintenance tax would not increase the existing sales tax, it would only reallocate the percentages that currently go to DCOS.   The Certificate of Obligation and the General Obligation would increase property taxes for a period of 20 years of more.  


Regardless of which option is selected if any, the City will still need to look at current tax rates and fees for possible increases just to cover the daily operations of the City and possible Capital Projects in the future. 


To Print a Copy of these options please click the following link Printable Copy Options for Financing Street Improvements in the City of Snyder.


We would like your feedback on which option you believe is the best one for the City of Snyder. Please take time to enter your choice on the Poll below.



Poll For Financing Street Improvements
Facebook Twitter Email

Other News in Home

Fire Hydrant Replacement

Posted on: July 16, 2019

Properties For Sale

Posted on: June 17, 2019

City of Snyder Water schedule

Posted on: August 10, 2015