Ballot question on Eagle’s river park headed to voters
EAGLE — The town of Eagle’s ballot request for a sales tax to fund a river park plan is now bigger and longer.
But in terms of average annual cost to residents, additional review revealed the proposal is actually cheaper than originally thought.
Tuesday night, the Eagle Town Board approved ballot language for the April 5 election that will present the river park funding plan to voters. The ballot question is long, something that Colorado voters have become accustomed after more than a decade of Taxpayer Bill of Rights regulations. But the key points of the ballot question are:
• A 0.5 percent rate sales tax increase (or five cents on each $10 purchase).
• A debt increase of $5.2 million — in the form of revenue bonds — which will be repaid by the sales tax increase.
• A maximum 30-year term for the revenue bonds.
• A maximum repayment amount of $9.9 million.
What does it mean?
The ballot question features big numbers and conservative estimates. For instance, the question notes that the maximum net effective interest rate for the new debt will not exceed 5.1 percent. However, in reality based on current conditions, that interest rate is more likely to be in the 3.6 percent range.
“There are a lot of moving parts in all these equations,” said Ken Marchetti, a financial consultant for the town.
Marchetti noted that the average voter is more likely to hone in on a much more straightforward question: How much is this going to cost me? Original estimates indicated the cost would be about $97 per household annually. Revised figures show that the cost will be closer to $30 to $50 per year.
When they first considered the sales tax bond issue, members of the town board indicated a preference for a 20-year term. However, after more study they decided 30-year bonds, with provisions allowing early pay-off, would be a better option.
Members noted that the longer term of the bonds ensure that future residents, who will receive the benefit of the planned improvements, will also have a stake in paying for them.
Town board member Kevin Brubeck agreed with that reasoning, but noted the early pay-back option is a critical part of the deal.
“I don’t think our neighbors down the road in Gypsum got enough credit for paying off their recreation center debt early,” he said.
Not to exceed
As they crafted the ballot language, the Eagle Town Board members took special care not to repeat a previous mistake. TABOR rules require that the ballot question begin by stating “Shall the town of Eagle taxes be increased by …” followed by an actual dollar amount and then concluded with the phrase “in the first full fiscal year.” Every ballot question in the state has to follow the same format and that means every time a governing body goes to the voters for a tax increase, an estimate is made. The last time the town made an estimate in a ballot question, they estimated too low.
When the town’s voters approved an up to $5 per transaction occupation tax on retail marijuana, the ballot question estimated $50,000 for revenues collected during the first full fiscal year. But when collections actually commenced, that estimate proved to be too low and on Nov. 3, 2014, the town had to cut off collections of the tax for the remainder of the year to resolve the issue.
The town board decided to take a chance on losing some political points in favor of losing actual dollars and set the estimated collection at $549,000 rather than a figure of $470,000 as originally proposed.
“My two cents is that we have been too conservative,” said town board member Sarah Baker. She argued that voters will be making a decision based on the sales tax percentage increase, not the estimate contained in the first sentence of the ballot question.
“It’s a balance, politically, because you don’t want to scare people away,” said town attorney Ed Sands.
“You are faced with a board that has seen this happen, so we are kind of sensitive on the topic,” said Mayor Yuri Kostick.
Town board members agreed the increase estimate isn’t the biggest issue regarding the measure’s changes at the polls. They noted a robust education campaign will be needed to make sure people understand the larger issue, not just the ballot wording.
“The best thing that can happen is for people to make an informed decision,” said Kostick. “All right folks, now it’s in the voters’ hands.”
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