New Rules In Federal Stimulus Package Could Eliminate Need For Tax Increase In 2010
While many are skeptical about the recently passed Federal Stimulus package, at least one part of the package has resulted in a $300,000 saving for the City of West U. and possibly eliminated the need for a tax increase in 2010 due to the $13.8 million parks bonds.
The stimulus package increased the limit on bank qualified debt issuances from $10 million to $30 million per year. The increase prompted the city to refinance $3,000,000 in 1998 bonds for a savings of $300,000 in interest.
The $0.173 tax rate could remain the same through 2010, and is then estimated to rise to $0.18030 from 2011 through 2014 before falling to $0.17181 in 2015. The original projections showed an increase of $4.96 monthly for a $700,000 home in 2010. New projections estimate an increase in 2011 of $4.26 for a $700,000 home, which should remain the same though 2014 before decreasing by $4.96 monthly in 2015.
Along with the refinancing, the city also issued $8,800,000 in Permanent Improvement Bonds and $1,295,000 in Certificates of Obligation, which are not voter approved.
The PIB bonds are part of the parks bond package, and will be used for the first phases of the West U. Rec. Center reconstruction. The Certificates of Obligation will go towards the water and sewer line improvements along Bellaire Blvd. as well as the purchase of emergency generators for the city.
The true interest rate on the bonds is 4.236 percent – a lower number than originally estimated.
“It’s a range we haven’t been in really since October of 2008,” said Ryan O’Hara withg RBC Capital Markets. “I think the planets lined up for us a bit there.”
About $1 million of the bonds issued were purchased by residents of West U., who were given priority.