Oxford studies bond issue
Oxford taxpayers will likely face a significant tax hike to pay for new infrastructure. The biggest questions are when and how much.
While city officials believe they will have the cash to excavate an old city dump and relocate Price Street to prepare a site for a new activity center adjacent to the present one, two desperately needed roads to be built in partnership with Lafayette County will require financing through bonds.
“By law, you can grow your general fund by 10 percent per year,” bond advisor Demery Grubbs told the Board of Aldermen. “You can put on another 0.97 mills this year. Bond issues don’t count under that 10 percent growth.”
Each mill of ad valorem rate in Oxford in Fiscal Year 2014-15 is expected to generate about $287,000 in taxes, Grubbs added.
City and county officials have informally agreed to partner on two road projects. One is an extension of West Oxford Loop from its current northern terminus at Anderson Road to Old Sardis Road (State Highway 314), and the other would connect Sisk Avenue in front of Oxford High School with University Avenue and State Highway 6.
City Engineer Bart Robinson said a rough cost estimate on the two roads is a combined $12 million, of which the city and the county would each pay half.
Planning the projects requires a more precise cost estimate, which could vary greatly depending on whether landowners donate right-of-way or hold out to for cash. City and county officials have long argued that property owners would be more than repaid for such contributions by resulting higher land values and that purchasing the right-of-way might put both projects out of reach.
Officials must also determine when the projects would need funding, how long construction would take and how fast bond rates are likely to rise.
“If you borrow the money, you’ve got to start spending it immediately, and you’ve got to spend it all in three years,” Grubbs said.
An intent resolution would allow the city to start the bonding process, he said, while retaining the option not to complete it.
If the decision is made to go forward, the city could simply issue the bonds unless 10 percent of qualified voters petition for a referendum. Passage of a bond issue would require approval by 60 percent of voters.
The figure most often estimated for a bond issue is $12 million – roughly three additional mills for 20 years – which would also fund construction of the new indoor recreation/fitness/meeting facility.
“The consensus of this board is that we want to move forward with infrastructure and the activity center,” Alderman Jay Hughes said.
Alderman Janice Antonow noted a three-mill tax raise, which would cost an additional $30 per year on a $100,000 home, sounds more modest than it would be in reality.
“If the county issues bonds, our taxes go up that much, too,” she reminded her colleagues. “City property owners pay both city and county taxes.”
The Board of Aldermen will continue discussions on financial issues for several more weeks before officially adopting in September the FY 2014-15 budget, which begins Oct. 1.