Archive for Wednesday, September 28, 2011

CR1 park funding options suggested

September 28, 2011

With the price tag making the County Road 1 industrial park shovel ready pegged at just shy of $2 million, the Tonganoxie City Council began Monday to consider how the city can find the money to get the work done.

The improvements outlined at a council meeting earlier this month are meant to provide the utilities and infrastructure needed to open about 40 acres of the 237-acre park to development.

To that end, city financial adviser Tom Kaleko of Springsted Inc. provided the city with options, which included a hike in franchise fees paid to the city by utility companies, maxing out the city’s special use sales tax authority and a surcharge to customers’ water and sewer bills.

But he also dispensed what he called “tough love” in advising the council to set a relatively short deadline of 60 days to develop a business plan to pay for the extensions and upgrades of the 40 acres on the southwest corner of the park.

“If we can’t craft a plan, it’s a signal to me maybe the city shouldn’t be in the industrial park business,” the financial adviser said.

Kaleko did share good news with the tough love. The city’s sewer and water capital improvement accounts have more than enough cash to pay for the $235,000 6-inch water line and the $280,000 3-inch force main sewer line.

Should the council chose to do that, it would be left with $1.41 million in improvements to bond. Those would be:

• $700,000 to improve 2,100 feet of 222nd Street to a 32-foot wide road with a 6-inch asphalt cap.

• $260,000 to extend a gas line to the park.

• $400,000 in grading to prepare the ground for construction and infrastructure.

• A 25 percent contingency.

Kaleko proposed the city identify the revenue sources that could be dedicated to an economic development fund that would pay for the CR1 park’s improvements. He provided the council with possible short-, med- and long-term revenues sources for the fund.

“I’m giving you ideas and alternatives,” Kaleko said. “With these and others that may come up in discussion, you can start to craft a long-term plan.”

Kaleko suggested a $1 surcharge on city sewer and water bills could be one possible revenue source, which he estimated would raise $24,000 annually. The city had adopted such a surcharge in the past to benefit economic development.

The surcharge would be justified because in the long run the city’s utilities and its rate payers would benefit from the payments park tenants would make for utility use, Kaleko said.

For mid-term sources, Kaleko proposed a 1 percent increase in the city’s franchise fee on utility providers. That would provide $57,500 a year, but couldn’t be realized immediately because the city couldn’t increase some of the franchise fees until 2013, he said.

The city could also use the remaining quarter-cent of its special use sales tax authority for the economic development fund, Kaleko said. The additional sales tax would raise $96,000 a year.

It, however, would have to be approved by city voters, prompting Councilman Bill Peak to observe it would be the last revenue source he would count on.

Long-term revenue sources would be land sales of park acreage, development fees assessed tenants and additional property tax and franchise fee revenue earned from the park. But those post-development sources shouldn’t be used to offset upfront costs, Kaleko said.

Another available revenue source would be to dedicate mill levy support for the economic development fund, Kaleko said. He and Councilman Chris Donnelly said that mill levy could be arrived at by developing solid figures from the other revenue sources.

“My goal was to look at some of these options and look at what the net effect to taxpayers and rate payers is,” Donnelly said. “That’s going to determine how much stomach we have for it.

“That’s what I want to get out this.”

The city remains hopeful it can reduce its $1.41 million park development price tag further by finding a partner in the park’s development. Kaleko said a business plan coupled with last month’s positive feasibility study would provide the city a strong case to take to the Leavenworth County Commission and Leavenworth County Port Authority. That study found the park would provide the city and USD 464 with more than $9 million in benefit its first 15 years and more than $5 million in benefit to the county.

Assistant City Administrator Kathy Bard said she would have numbers to share with the council at its Oct. 10 meeting, regarding the revenue sources Kaleko proposed.

Although Kaleko was ready to talk about financing options for a new police station, that topic was deferred. The financial adviser did say, however, that unlike the industrial park in which a number of creative options were explored, that kind of basic city facility should be financed with 10- to 15-year bond paid off with property taxes.

At a Sept. 19 special meeting, the council agreed to end discussion of a joint police/fire station and search for an existing building to relocate the police station. The council met in executive session Monday on that topic and also received an invitation from John Shoemaker to consider his 4,000 square-foot building built in 1995.


Old_Vet 6 years, 6 months ago

“If we can’t craft a plan, it’s a signal to me maybe the city shouldn’t be in the industrial park business,” the financial adviser said.

AMEN!! We don't have the money for a much needed Elementary School but the city wants to raise funds to gamble on an industrial park. I thought this new crop of council members was supposed to be a little more conservative and less spend happy. Guess we didn't get what we were promised.

Waiting for the council to propose building a municipal airport on the site? What else can we buy? New police station (we actually have a need for that), expand the fire station, traffic lights on 24-40, more trails and sidwalks, tear down buildings, the list goes on and on. We need to live within our means. Come on guys!


straightup 6 years, 6 months ago

Old-Vet " I thought this new crop of council members was supposed to be a little more conservative and less spend happy" That's a JOKE Right? Did you really Believe that? HAHA We are talking about Tonganoxie hillbilly's that count with their fingers and toes to add anything up!!


William Peak 6 years, 6 months ago

i completely agree about living within our means. I wish more people would attend the meetings to hear everything that is said. Would like to clarify some items. Mr. Donnelly to his credit has asked that all financing options be put out for public diclosure to get feedback from the public. I agree with that philosophy of disclosure. The park is a gamble but a way to increase tax base for the future. The discussion continues on whether to continue or walk away. The dicussion of the traffic light centered on the city being able to afford the costs associated with that project. I argued that we can't afford. The fire station expansion would be funded by 200k allocated from previous budget with up to 50k from this budget. It takes care of their need and is considerably cheaper than the previous plan. With public safety issues(police station) I am determined to be prudent in holding costs down but am convinced we need a different station. I appreciate any input from citizens(I do receive many comments and calls from people) and would hope you weigh in after checking the facts and determing what you think about any issue. Come to the meetings. Thanks. Bill


straightup 6 years, 6 months ago

Can't afford SAFTY! Tell that to a family member when a loved one is killed on 24-40! But the City can afford $2,500 (on top of $5,000) to give to the Chamber of Commerce that has no benefits to the city and does nothing to promote the city? Live within our means? Peak, Is throwing away $7,500 to Chamber of Commerce your version of living within our means?


jjacj 6 years, 6 months ago

First of all, we already have 1 industrial park that has not been successful so we are going to "gamble" on another? Second, is it really a good idea to "gamble" on such an expensive thing with the taxpayers money in such tough economic times? I think this city had already proven that they don't exactly care about the taxpayers wants/needs but what would benefit them most. This city wastes money like we have a lot to throw away. I think it's time for a house cleaning at the local level and get people in there who look out for the benefit of the taxpayers and not for themselves. And it's no surprise the new city council is into spending. It's easy to spend money when it is not yours.


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