April 1, 2014 10:37:11 AM
City leaders will hold a public hearing in May to get taxpayer feedback on a possible millage increase to fund infrastructure upgrades throughout Columbus.
Councilmen have gone more than two years without raising property taxes, but that could change if they go forward with an intent to issue $5 million in general obligation bonds for capital improvements.
A hearing date has not yet been set.
If 10 percent or 1,500 registered voters object to a millage increase, a referendum would be necessary. Approval from 60 percent of ballots cast would be needed to move forward.
The value of a Columbus mill is $173,000. The millage rate is currently 40.13.
Attorney Steve Edds of the Baker Donelson law firm in Jackson and city financial consultant Lynn Norris told councilmen they would work to set up a payment plan that would necessitate a maximum two-mill increase and hopefully less. A two-mill increase would add $20 in property taxes per $100,000 in home value.
Edds said the city could issue the debt directly by selling it in the open market or to the Mississippi Development Bank, but the latter option provides more flexibility to structure the debt in a way that would minimize the amount of a millage increase needed to pay the loan off over 20 years for approximately $350,000 a year.
One thing the city has in its favor in terms of borrowing power is its recently upgraded bond rating, Edds said. This, plus the fact that Columbus has "significantly less debt" than peer cities, gives the city the ability to borrow at a lower interest rate. Edds said the city can issue a maximum of $18 million in debt. Interest rates are on an upward trend, however, and waiting a few more years to issue the bonds might cost the city in the long term, he said.
"A factor to take into account as you think about this process is interest rates are and have been rising," he said. "We began late summer last year to see interest rates begin to spike. We have every belief that interest rates will continue to rise. If you're going to do a capital improvement project, the sooner you get started on that, the better."
If the council were to adopt a resolution in May, Edds said it could have the money in the bank by June or July, which would allow the city to begin advertising for contractors and starting the process of improving roads and ditches late this summer.
From 2010-12, the city spent about $3.5 million of an $8.9 million bond issue for capital improvements.
Columbus Mayor Robert Smith said he would support an increase if he had to break a tie vote between councilmen.
"I would like to do a public forum to get citizens involved and see whether or not they really want to see infrastructure improvements," Smith said. "I hear complaints all the time concerning potholes or streets that need paving. By having a public forum, that will give citizens an opportunity to say whatever they want to say."
Councilman Charlie Box said he agreed that infrastructure improvements are in dire need. He said he'd like to see the millage be added for the duration of the project and then restored to its current rate upon completion, but that would require too much of a hike during the project timeframe.
"I think it's something we're going to have to do. We've talked about it for five years about how we're going to have to increase millage one of these days and I think we've gotten to that point," Box said. "Our infrastructure is crumbling so badly that it's really getting to be a problem in a lot of areas. I would love to do it where we put the millage on until we complete a project and then take the millage off, but if you're going to run it out for 20 years it's going to be hard to do that and if you don't run it out for 20 years... it gets so high you can't afford it."
Councilman Bill Gavin also said he wanted taxpayer feedback before proceeding.
"I'd really like to hear from the public about this. It's their money," Gavin said. "I'm sure you're going to have some for it and some against it."
Nathan Gregory covers city and county government for The Dispatch.
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