City Council mulls seeking public tax for new downtown fire station
STEAMBOAT SPRINGS — Funding for the planned new Steamboat Springs fire station could come in the form of another new tax.
Steamboat Springs City Council members discussed at a work session last week various options to fund the purchase and construction of a new downtown station with a couple options necessitating a new public tax. The approximate cost for the new station would be $15 million, with the city’s portion being about $10 million and the remaining from the Steamboat Springs Area Fire Protection District. Groundbreaking on the station is tentatively expected in 2021.
With the recent budget impacts of COVID-19, it is likely the city will need to utilize all residual, unassigned balances in the general fund that was previously an option to utilize for the new station.
The 2-mill property tax that voters approved last year is specifically earmarked to fund the hiring of additional personnel and operational needs, but not for the construction of a new fire station.
City staff recommended to council that the city issue sales tax revenue bonds with a new sales tax tied to it.
A new tax would have to go to the voters, something that council unanimously believed was not recommended this year considering the impacts of COVID-19.
The new tax would end once the bonds procured by the city were paid off.
According to Kim Weber, city finance director, a new 0.1% sales tax would equate to $697,000 a year; adding a 0.2% tax would bring in $1,394,000 a year; and a 0.25% tax would bring in $1.7 million a year. A 0.1% sales tax would take about 20 years to pay off the debt, 10 years for a 0.2% tax and about eight years for a 0.25% tax.
Staff recommended this option, so funds from the 2-mill levy could be used for their intended purpose, and it wouldn’t impact the city’s general fund service, according to Weber.
The current fire station at 840 Yampa St. would be sold, with those funds going towards the future renovation of the Mountain Fire Station.
Other options discussed to garner funds for the new station were to issue a new property tax, instead of a new sales tax or use existing city sales tax funds. Using existing sales tax would result in an annual loss of $750,000 that goes to fund other services.
Another option was to issue certificates of participation, in which no election would be required. That entails the city putting up the new station as collateral and leasing it back from its lender. Funds would still need to be paid out of existing revenue streams by the city, resulting in an annual loss to other services.
Council also discussed the potential to reallocate funds from the 2-mill levy, diverting them to pay for the new station instead of their intended purpose. That, too, would require going to the voters and would result in not enough remaining funds to pay for additional fire staff.
“This is not a funding issue, this is a question of funding priorities,” said Steamboat resident Bill Jameson during public comment.
Jameson suggested the city reduce funding to the Steamboat Springs Chamber, which he said the city had told the chamber to expect for several years.
“It’s time to make good on that and use those funds that go to chamber funding for a critical infrastructure improvement, namely this fire station,” he said.
Those saved funds could then be combined with funds from some certificates of participation due to mature in 2021. That way, the public wouldn’t be responsible for the funding.
Council member Kathi Meyer said Jameson made a good point.
“I believe that we should look at kind of a hybrid,” Meyer said. “I’m very concerned about going to the voters, again.”
Council President Jason Lacy ultimately suggested that the city move forward by utilizing some of the funds from the 2-mill tax to first acquire the fire station’s land — the location of which has yet to be decided by council — and to make a more informed decision next year about funding for the construction.
To reach Bryce Martin, call 970-871-4206 or email bmartin@SteamboatPilot.com.
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