Garden City staff briefed city commissioners on Tuesday about how the city intends to finance projects funded by the .3-cent sales tax increase voteres approved in November.
Melinda Hitz, the city’s finance director, provided city commissioners with information on the financing during their pre-meeting.
The interlocal sales tax agreement between the city and Finney County will pay for urbanized improvements to Jennie Barker Road; ongoing improvements to Lee Richardson Zoo, construction and operation of an 11,068-square-foot indoor shooting range intended for use by local law enforcement and the public; and construction, operation and maintenance of a 15,061-square-foot fire station on the city’s east side.
The increase will go into effect April 1, City Manager Matt Allen said, and will sunset in 2033. Receipts on the sales tax will start filtering into local coffers in June.
The 15-year sales tax hike is expected to yield about $2.15 million annually to fund the balance of each project, which has been estimated at about $19 million total.
“We have this period in between where we have to figure out how this thing is going to work. Our goal has been ‘How can we get these five projects that aren’t the fire station started as quickly as possible?’” Allen said. “Each one of those are in different stages of design… But maybe the bigger issue is figuring out the financial puzzle…”
The city is proposing the use of temporary note issuances to fund all the projects in the first near six years, excluding the fire station, according to Hitz.
“…The city has always used temporary notes to fund projects before we go to a final debt issuance, that way you’re not issuing debt for more than what your projects cost,” she said. “In this case, you can issue temporary notes, and the sales tax will pay it off.”
The first temporary note issuance — scheduled for April 1, 2018 — would yield an estimated $7.525 million after four years. A second temporary note issuance would yield an additional $5.29 million.
“You can issue $7.525 million right off the bat. You can have that money right away in a project fund,” Hitz said. “Four years later, when the funds are still coming in, you can issue another temporary note for the amount of $5.29 million. This will get all of your projects done except for the fire station with these temporary note issuances.”
During that roughly six-year time frame, more than $13 million in sales tax would be coming in, which would be the revenue to fund the projects, Hitz said, noting that the temporary notes would be paid off and then the fund would close.
“So at the end of September 2024, all of those projects will be constructed and paid for,” she said.
Hitz said the use of temporary notes allows the city to move forward with the bidding process on each project, and that the issuances are sold to the the entities involved in the sales tax agreement and not to outside sources.
“You have to be able to say you have the sources to pay for projects before you sign the bid documents. That’s the tool that makes these things happen,” Hitz said. “If you take a look at that $7 million Jennie Barker Road project, you would have to bank four years of sales tax before you could even sign a contract for the construction. We didn’t think the citizens would want to wait that long to see something get started.”
The Jennie Barker Road project is estimates to cost $7.7 million, and the indoor shooting range is estimated at $2.5 million. For the zoo projects, the primate exhibit is estimated to cost about $1 million, the flamingo exhibit about $535,000 and the animal health facility at about $1 million.
The fire station project, along with its equipment, is expected to cost about $7 million.
“So we have total project costs of about $19 million. That’s in today’s dollars,” Hitz said.
Allen said the project that is the closest to “shovel ready” is the indoor shooting range, which has a “full set” of architectural plans.
The gun range is planned to be located on Old Highway 83 South near the old city landfill and will be designed for gradual upgrades and facility add-ons. The facility would include two classrooms, men’s and women’s restrooms with lockers, an office, a place to store ammunition, a lounge area, and a 25-yard firing range with eight stations encompassing 900 square feet. The building also would be designed for periodic external and internal improvements.
The gun range would replace the current one, which was built in 1967 near the Finney County Fairgrounds and has deteriorated considerably.
The three projects for the zoo, which would be substantial improvements to the three facilites, have yet to be designed, Allen said, and are just concepts at this time.
“The architectural work still needs to begin on that,” he said. “The commission will be looking at a contract for architectural work on those in an upcoming meeting.”
The Jennie Barker Road project has 30 percent complete design plans, Allen said, adding that there likely would be land acquisition required in order to move forward with the project.
“Based on where those projects were at when the two commissions agreed to go to the voters, we feel that this plan allows on April 1, that these projects are able to pick up and start with where they were suspended without funding,” Allen said.
Over the 15-year sales tax increase, an additional roughly $32,250,000 in sales tax revenue is expected to come in. While it will only cost $19 million to fund the projects, the remaining funds will be used for the fire station, to include operating expenses.
Hitz said the city and county will jointly create an oversight board that consists of six members — the mayor, county commission chairman and four other members of which two members each are appointed by the city and county. Two members would serve five-year terms while the other two would serve three-year terms.
“The responsibilities of the board will be to periodically review sales tax receipts and to ensure distributions and expenses have been used and paid in accordance with the sales tax issue approved by the electorate on Nov. 7, 2017,” Hitz said. “The board will annually represent their findings to the governing bodies of the city and county.”
Hitz noted that the board members appointed by both the city and county should be named by April 1.
Contact Josh Harbour at email@example.com.