Saturday, Jul. 21, 2012

Morrisville: $20 million debt to trigger tax increase

Property owners could see 3- to 6-cent increase

One thing is for sure: If voters approve $20 million in spending for parks and road projects, property owners will see a tax increase.

Over a 20-year period, it could take between $275,000 to $2 million a year to pay back the bonds, depending on which financing method the Morrisville Town Council chooses.

The amount of the tax increase would depend on a variety of factors, including timing of bond sales, interest rates, reducing existing debt, and financing method, said Town Manager John Whitson.

The tax increase could add between 3 to 6 cents to town’s current tax rate of 36.65 cents per $100 property valuation, said Councilman Michael Schlink.

Schlink has been pushing for months to get numbers out to the public so residents could make informed choices when they head to the polls in November to vote the bond referendum up or down.

“I want to make sure that we tell voters that will raise taxes,” Schlink said. “Not what happened in 2004 when we told voters we wouldn’t raise taxes and haven’t been able to sell those bonds without triggering a tax increase and we’ve dragged our feet on those projects.”

Morrisville has been unable to sell about $4 million in bonds to complete RTP Park, which will have tennis courts, a playground and regulation-size cricket field.

The council is hosting a public hearing at 6:30 p.m. Tuesday at town hall to hear feedback on the bond projects.

The projects include up to $14.3 million for 1.7 miles of a new roadway from McCrimmon Parkway at N.C. 54 to Aviation Parkway and $5.7 million for renovations at the Aquatics and Fitness Center and phase III of Morrisville Community Park.

In the end, the council will need to choose whether to make equal payments on the debt, which would have an effect on the tax rate over time.

If the council opts for equal payments of $1 million a year plus interest, it could take a tax hike of 3.1 cents to 5.8 cents to pay it off, according to consultants with Davenport & Company. The consultants did a debt analysis for the town.

Another option would be to use a structured payment model in which the town would make varying debt payments each year. In this scenario, the town would need to raise taxes 3.2 cents to cover the debt. That’s because the payment model would take into account existing debt.