Thursday, May 23, 2024

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City council moves forward with 2 potential bond packages for Nov. ballot; could hike taxes by 13%


A consultant for the city of Burlington has laid out a step-by-step plan for a proposed bond referendum that, if successful in this fall’s election, could raise tens of millions of dollars for various projects – at a cost in annual debt payments that could equal as much as 6.5 cents, or 13.5 percent, on the property tax rate.

Ted Cole of Davenport Public Finance appeared before Burlington’s city council on Monday to present this veritable road map for the city’s proposed bond referendum, which would ultimately raise some $63.5 million for six, high-dollar recreation and road-related endeavors.

Rather than lump all of these projects together, Cole encouraged the council to split them into two distinct groups that could be presented separately to the city’s voters this fall.

The first of the consultant’s two parcels contained $11 million for a proposed expansion of the Paramount Theater, $6 million for the construction of a new edifice for the Maynard Aquatic Center, and $25 million to build a new indoor rec center, or Sportsplex in the western part of the city. The second, meanwhile, bundled together $15 million in street resurfacing with $1.5 million in sidewalk repairs and $5 million for streetscaping in Burlington’s downtown area.

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Totaling $42 million and $21.5 million respectively, these two packages could be put before the city’s voters when they go to the polls on November 5.

“They will be separate questions on the ballot,” Cole went on to explain when he addressed the council during a work session on Monday. “One or the other or both can be approved. They are not contingent on each other.”

Cole said that, if Burlington’s voters approve both of these packages, the city would be in a position to obtain $63.5 million in funds from the bond market. The consultant added, however, that this influx of revenue could cost the city as much as $99.1 million over the 20-year life of the bonds – a sort of “worst case” scenario that he said is based on an annual interest rate of 5.344 percent.

Cole told the council that the N.C. Local Government Commission has instructed the city to use this particular figure in its calculations since it was the highest rate which the bond market had realized over the past 20 years. He added that the city may very well get a much better deal when it goes to the bond market given that the current interest rate is about 3.75 percent.

Cole said that, in order to pay off this debt, the city would need to come up with the equivalent of 4.7 cents on the tax rate by the fiscal year that ends in June of 2026. He added that additional bursts of revenue would be needed in each of the following three fiscal years – for a cumulative increase of 6.48 cents, or roughly 13.5 percent, on the tax rate. Alternatively, Cole said the council could implement a single, frontloaded infusion of new revenue in 2026, whose tax impact would amount to 5.68 cents, or about 10 percent.

In either case, Cole reminded the council that these calculations don’t necessarily mean the city will need to raise taxes to the levels he indicated.

“I don’t want to leave you that this would require a tax rate increase,” he stressed. “We just equate it to pennies on the tax rate because it’s a meaningful benchmark.”

Cole said that, in order to proceed with the proposed bond referendum, the council would first have to issue a “findings resolution” that spells out the details of the two bond packages. He added that this resolution can be brought to a vote as soon as May 21.

This relatively fast turnaround nevertheless raised some concerns for Burlington’s mayor Jim Butler, who observed that some of the projects under consideration are likely to increase in cost as the city’s administrators continue to flesh out their plans.

Butler noted, for instance, that the $25 million earmarked for the Sportsplex is based on an estimate which may be a few years out of date.  In the meantime, he said that the local YMCA has recently expressed interest in partnering up on this project, which could pull its price down in the long run.


Paramount Theater

The council also received two object lessons at Monday’s work session in how rapidly the costs of its capital projects can change.

During that evening’s proceedings, Mon Peng Yeuh with the design firm ClearScapes presented the council with the latest plans for the proposed renovation and expansion of Burlington’s Paramount Theater’s proposed expansion.

In its broad strokes, Yeuh’s latest vision resembled one she had unfurled in August – with a + Add New Category two-story annex crowned by a rooftop patio augmenting the existing theater’s footprint. Yeuh told the council that the biggest changes in the latest iteration of this plan include a longer canopy along the new structure’s façade and a “stage right” addition behind the existing playhouse. She also described some of the high-quality                                                                                                               materials that she’s recommending for features like flooring, windows, acoustic wall panels, and stairs.

According to assistant city manager Nolan Kirkman, Yeuh’s latest designs for this project would set the city back some $13,201,383. This figure is more than 15 percent higher than the $11.3 million pitched to the council in August – which was itself a 60 percent jump from the project’s initial price tag of $7 million.

Kirkman nevertheless assured the council that “we are hitting our target somewhat” when he presented the most recent cost estimate to the council.


Downtown Streetscaping

The council received an even higher mark-up from city engineer Todd Lambert, who gave Burlington’s elected leaders an update on the streetscaping plan for the city’s downtown business district.

Lambert reminded the council that city staff members drew up the initial, inchoate version of this plan to accompany a grant-funded venture to replace the underground utilities in this part of the city. He added that the city has since enlisted a professional consultant to flesh out the staff’s efforts. Lambert noted that, in the course of this overhaul, the consultant reduced the project’s proposed toll on parking spaces from 65 to 61 that would have to be sacrificed. At the same time, he said that the consultant’s efforts have considerably driven up the cost from the staff’s original estimate of $7.5 million to a new figure in the neighborhood of $25 million.

Lambert told the council that he and his colleagues rejiggered the consultant’s plans in order to bring this proposed price tag to a level within the city’s means. Along the way, he said that the staff decided to ditch a proposal to revert South Main Street’s current one-way orientation to a two-way trajectory. The city engineer also pointed to two traffic signals that were nixed from the plan as well as the elimination of wider sidewalks, which are meant to encourage outdoor dining and special events, in areas next to city-owned buildings.

In the end, Lambert said that city staff managed to further reduce the number of lost parking spaces to 14. Meanwhile, he and his colleagues tamped down the project’s anticipated cost to $16,425,000. Although a fair bit higher than $7.5 million, Lambert insisted that, between grants and other anticipated revenue sources, the city will only need an additional $5 million from the proposed bond referendum.

“Staff felt we could proceed with construction documents for these reduced items,” he added, “and that would fall within our anticipated budget for this project.”

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