Why Not? Abilene Not Participate In Joint Justice Center

Abilene City Management Perspectives

Public Facilities

There has been a lot of discussion in the community about the City Commission's decision to not participate in Dickinson County's proposed joint justice center. For all intents and purposes, the issue has been "tabled" for the foreseeable future. What does this mean, and what is the impact to the City of Abilene?

The City Commission did not articulate when they would want to continue a conversation about public facilities when they last discussed the matter. However, it may be prudent to allow the issue to rest for several years until such time as the City has options available to finance such facilities without requiring a significant increase in taxes.

Presently, I do not know what the cost is of participating in a joint justice center with Dickinson County. What I do know is that taxes will need to increase whether the City participates in the justice center or pursues its own facilities. The reason for this is twofold:

·      If Dickinson County elects to build the facility and finance it without requiring the City to "pay rent," Abilene residents will see an increase in taxes because they are also residents of Dickinson County.

·      If Abilene participates in the facility and is required to pay for its portion of it (the most likely scenario), taxes will also have to increase for Abilene residents because the City will have to generate enough revenue to pay for the financing of its portion of the facility.

In either scenario, the laws of economics apply and taxes will increase because the facility will have to be paid by someone (i.e., Dickinson County residents and Abilene residents). 

Property taxes are presently needed to pay for much needed School District improvements and planned County projects and service expansions. By waiting, the City can defer a potential tax increase until it has available debt and revenue capacity. Deferring action also allows the City to minimize any potential tax increase by allowing the City Commission to decide to use existing revenues that are being presently used to pay for other capital projects.

The 0.35% sales tax allocated to pay debt service for improvements to the Library and Pool will sunset in 2018. This sales tax generates about $470,000 per year. Additionally, the five mills dedicated to pay debt service on bonds issued for the E. First Street Project will not be required for this purpose after 2022. The five mills currently generates about $260,000 used for debt service. Combined, these two revenue sources represent about $730,000 that could be used for future debt service payments. This amount of revenue would service approximately $14.1 million dollars of principle over twenty years. 

Another consideration is that the City's outstanding G.O. debt will be $6.87 million less than it is today. The City has about $2.3 million of G.O. debt against its statutory debt limit of $7.8 million. The statutory debt limit is calculated by taking 15% of the City's assessed valuation. By state law, the City cannot issue G.O. debt in excess of its statutory debt limit unless certain exceptions are used. For example, G.O. debt backed by special assessments does not count against the statutory debt limit. The City could issue $5.5 million of G.O. debt today, although maxing out the G.O. debt limit is probably not a prudent course of action to take. Waiting allows the City to retire some of its outstanding debt so as to allow for a fiscally prudent financing of future capital projects.

Finally, participating in the joint justice center with Dickinson County does not address all of the City's facility needs. By moving the Police Department to a new facility, the existing City Hall building will become that much more vacant and would no doubt continue to further deteriorate. Would it be affordable to maintain the areas that would become vacant in this scenario for the foreseeable future? The prudent path forward would be to develop a comprehensive plan that addresses all the public services needs currently housed in City Hall. Without such a plan, taxpayers will merely continue to fund the slow deterioration of an old building that has become obsolete with time.