DuPont faces higher property tax; City Council expected to send measure to ballot
DuPont city officials didnt think theyd need to ask voters for money to build a new city hall and police and fire station to serve the rapidly growing south Pierce County city.
Now, three years after those buildings opened, it appears they dont have a choice.
The City Council is expected Tuesday to send a measure to the November ballot asking voters to raise property taxes in DuPont to make the debt payments on the buildings and keep three firefighters on the job. Without the additional money, officials say, the city will have to make significant cuts to programs and services.
The special council meeting will begin at 6 p.m. at DuPont City Hall, 1700 Civic Drive.
Mayor Michael Grayum, who took office in January, said the budget crisis come on the heels of DuPonts explosive growth. The citys population has grown 155 percent to 8,640 from 3,384 in the last 10 years.
We are at a tipping point, he said.
The council last week directed the preparation of a resolution sending the proposed measure to the ballot.
The proposed measure would increase DuPonts property tax levy from the current rate of $1.16 per $1,000 of assessed value to more than $2.13 for seven years. DuPont property owners also now pay a levy of 50 cents per $1,000 of assessed value for emergency medical response.
If the measure passes, the owner of a $233,000 home the average price in DuPont this year will pay $227 more in property taxes to the city.
Reaction has been mixed as the community has discussed sending voters the levy.
Jeremy Scholtes and his family moved to DuPont four years ago when he transferred to Fort Lewis. He said it can be hard for military families to find a great community, but thats what he found in DuPont. He said he doesnt mind paying a few hundred dollars more a year to sustain a wonderful community.
Its something thats special and doesnt exist all along the I-5 corridor, he said at a community forum in May on the citys budget challenges. Video of the forum is posted on the citys website.
DuPont resident Mike Gorski said he opposes the proposed measure because other options to repay the debt havent been fully vetted, and it would leave the community with virtually no ability to meet the needs of its residents in the coming years.
The idea of growth in the city of DuPont for the next seven years is basically out of the window, said Gorski, who plans to help write the statement for the voters pamphlet opposing the measure.
He said the city tied the firefighters to the proposed levy because theres no argument it can make to get voters to pay for the citys mistake.
City officials had thought they wouldnt have to ask voters to dip into their wallets to pay for the buildings. They figured DuPonts construction boom would generate enough revenue from real estate excise taxes typically paid by the seller when property is sold to repay the debt until the citys tax base grew enough to take over those payments.
But the collapse of the housing market and weak economy left the city short of the money to do that.
In addition, a federal grant has paid for the three firefighters at a cost of $300,000 a year, but it expires next year. Losing them would drop the minimum firefighters on duty each shift to two from three, officials said.
Real estate excise taxes were supposed to pay $770,000 on the annual debt payment for the civic buildings, which will be paid off in 2039. Other revenue, including utility taxes, pays the remainder for each annual payment. This years total debt payment is about $1.3 million, city records show.
This year, the city dipped into its reserves to make the payment. Last year, it borrowed money from its equipment replacement fund to do so.
Under the lease-lease back arrangement, the city leased the 7 acres its owned off Center Drive to a private developer to construct the buildings. The city then leases back the buildings until it repays the debt.
At the time, the advantage of this method was thought to be that the developer assumed all the risk in constructing the buildings, even though the cost of financing the project was slightly higher compared with issuing traditional bonds. The city borrowed $18 million for the project.
If voters reject the proposed measure, the city will have to cut programs and services paid for from its general fund to make the payment. The $770,000 payment equals about 12 percent of this years $6.6 million general fund. No specific reductions have been identified.
The mayor also has launched an initiative to bolster the citys tax revenue by recruiting business and promoting tourism. The city is reviewing changes to its sign code to help business promotion.