CR1 park funding options suggested
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.