Part of the recently approved sales tax increase will boost funding for ongoing street maintenance (resurfacing, pothole repair, etc.), but funding for capital-intensive streets reconstruction projects is still needed.
To fund some of these significant road-construction needs, City leaders may ask voters to approve an $87 million General Obligation (GO) bond in November. Find out more at an upcoming event.
If voters approve the bond in November, City leaders propose using results from a recent comprehensive engineering study to apply funds in an 80/20 split – meaning 80 percent of funding would go to the major streets residents use most and 20 percent would be spent on local neighborhood streets.
Quick Facts about the GO Bond
Q: How much will a new GO bond increase my property tax bill?
A: Because the City is paying off two existing bonds in 2019, a new GO bond would have minimal new financial impact on property owners – less than $5 a year for the average residential property owner.
Commercial properties are calculated differently. At the City’s current bond rate, commercial property owners can expect to pay $25.72 total a year per $100,000 of taxable value.
A bond calculator will be added shortly to help property owners get a more accurate estimate.
Q: What happens to my property tax if the GO bond isn’t passed in November?
A: Based on the average home value in Salt Lake City of approximately $339,500 and the City’s current taxable value, property taxes for the average homeowner would go down approximately $41.35 annually as the two bonds are paid off – one from 1999 for the Main Library and another from 2009 for The Leonardo.
Q: Where did the $87 million bond amount come from?
A: $87 Million was chosen for the potential General Obligation bond because City leaders wanted to find the greatest balance between addressing our streets need and limiting cost to City residents. Because two current bonds will be paid off in 2019, the fiscal impact on the owner of an average home in Salt Lake City is an estimated maximum of $5 annually to improve City streets.
Q: Why does the City need to reconstruct streets now?
A: Because of the long-lasting effects of the Great Recession on City resources, competition with other priorities, and years of frugal budgeting, Salt Lake City has not spent what is needed to preserve and rebuild roads. Also, due to the City’s climate during winter, the freeze-thaw cycle worsens the road conditions. Over the past several years, the cycle has been more pronounced and the streets are showing that wear. Now is the time to increase investment in the City’s infrastructure in both reconstruction and maintenance.
Q: How will the City make sure this doesn’t happen again?
A: The City will use increasing sales tax revenue to double the work done to maintain the City streets that are in good condition. This will extend their life and make sure that we are maximizing the money spent to reconstruct roads.
Q: How would road projects be selected?
A: The City’s worst roads have been identified by a comprehensive pavement study conducted in 2017. If voters approve the bond in November, City leaders propose using results from this study to apply funds in an 80/20 split – meaning 80 percent of funding would go to major streets that residents use most and 20 percent would be spent on local neighborhood streets.
The prioritization of these streets will be conducted by the City’s Engineering Division and the Roadway Selection Committee using the following criteria (in no specific order):
Q: What are the amount and terms of the bond?
A: The proposed bond amount is $87 million over ten years. This could be issued in one bond, but more likely, the $87 million will be issued in three to four bonds over the coming years. This will allow the Engineering Division to plan for the number of projects that can be accomplished in required three-year phases and minimize the financial impact on residents.
Q: What will the bond fund?
A: The bond will fund the reconstruction of the City’s “worst streets first” with 80% of funding going to the worst arterials (major roads) and 20% going to neighborhood streets in each of the City’s seven Council Districts.
Q: How many streets will be improved by $87 million?
A: The bond will fund reconstruction of the City’s worst streets allowing the City to take a more proactive approach to improving the overall quality of City maintained streets.
Q: Why can’t the City use existing funds or save to reconstruct City streets?
A: The City uses funding from the Capital Improvements Program (CIP) fund and General Fund to support projects like street reconstruction. However, the amount needed to “catch up” in reconstructing Salt Lake City’s streets far outnumbers the amount that would be available in the CIP or General Fund at any given time. If the City were to try to complete these much-needed street projects using the CIP and General Fund, it would take far longer and therefore result in higher long-term costs. A General Obligation bond allows for a more equitable distribution of costs (paid by all property owners, existing and future) and because the City has a AAA bond rating (highest available), is a more affordable and responsible way for the City to fund large infrastructure projects.
Q: What is the difference between Market Value, Assessed Value, and Taxable Value when looking at property tax impacts?
A: Market Value is the amount you can sell your house for, Assessed Value is the County’s valuation of your property (usually less than market value), and Taxable Value is the figure you actually pay tax on. In Salt Lake City the Taxable Value is 55% of the Assessed Value for a primary residence with exemption. Commercial and secondary residences do not receive an exemption and are taxed on 100% of their Assessed Value.
Q: How can I find the Taxable Value and Assessed Value of my property?
A: The taxable value of a property is public information and can be found through the County Assessor’s Office parcel search. Property owners can enter the address of the property and click “Property Tax Information” to find the most recent taxable value of the property.
The Assessed Value that would be used in the Streets Bond Calculator is listed as Market Value on this report. That is the Assessed Market Value of your home as determined by Salt Lake County.
Q: Why do my property taxes change each year?
A: There are three reasons why property taxes fluctuate from year to year: 1) A tax rate increase from one of the taxing entities including the county, utility districts, libraries and school districts; 2) an increase in the assessed taxable value of your property, and 3) how the values of other properties in the area fluctuate.
Q: Why doesn’t the City just tighten its belt rather than increase property taxes?
A: The City is continually implementing cost-saving measures to be responsible stewards of tax-payer money. Examples of recent cost-saving measures include small changes like reducing staff travel, office expenditures and purchasing police vehicles in bulk to receive quantity discounts, and large changes like repurposing $2.4 million through comprehensive review of City accounts, being more diligent about using one-time money to pay for one-time needs, and energy efficiency improvements in buildings and parks.
Q: What is the difference between an arterial main road and a local neighborhood street?
A: An arterial usually refers to a high-capacity urban road such as 300 West that delivers traffic at the highest level of service possible. A local street is a smaller road that carries less traffic and has fewer lanes.
Q: Why is the City proposing an 80/20 split of funds used for the reconstruction of roads?
A: The Council and Administration agreed on an 80/20 split to ensure that funds are applied to both the most-traveled streets (arterials serving the most people) and smaller neighborhood streets throughout the City. The cost of reconstructing the larger arterial roads is also more expensive.
Q: What happens if residents don’t approve the bond?
A: The longer the City waits to rebuild roads, the longer it will take to reconstruct the streets that are already in poor or worse condition. Postponing a “rebuild” means more streets in poor condition; increased overall maintenance costs for the city; decreased maintenance cycles, and increased car repair costs and impacts for residents. The City will continue to reconstruct a limited number of streets, but will be unable to take a more proactive approach, meaning streets will only be replaced when they are in the most desperate of conditions and the costs will be higher as construction and labor costs increase.
Q: When will the street reconstruction projects begin?
A: If approved, the first new street reconstruction projects will begin design in 2019 and construction in 2020.
Q: When will I see the increase on my property tax bill?
A: Tax bill increases will come in phases, because the City will issue a few smaller bonds (no more than $87 million total) rather than one large $87 million bond. This means the full impact to property tax bills will not happen all at once. This allows the City to maximize bond funding over the full 10-year period allotted. The first bond of approximately $20 million would be issued in either 2019 or 2020 and would appear on property tax bills in the following tax cycle.