The Streets Reconstruction Bond could result in an estimated property tax increase of $5 or less for the first year for an average primary residence valued at $339,500. However, because the City is paying off some existing bonds in 2019, it is estimated that the $5 increase would be reduced – with an average primary residence paying an estimated net $0 per year in the following years.
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.
The City will pay off some existing bonds in 2019 and, as a result, the property tax levy to pay those bonds will end. If the City were not paying off those bonds, the property tax increase for the Streets Reconstruction Bond would be an estimated $48.02 per year for an average primary residence valued at $339,500 and $87.30 per year for a business or secondary residence of the same value (or $25.72 a year a year per $100,000 of taxable value).
$87 Million was chosen for the Streets Reconstruction Bond because City leaders wanted to find the greatest balance between addressing our streets reconstruction need and limiting the cost to City residents.
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 noticeable and the streets are showing that wear.
The City will use revenue from a recent sales tax increase 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 when roads need to be reconstructed.
The 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.
No. The recently approved sales tax will help boost funding for ongoing street maintenance (resurfacing, pothole repair, etc.) but funding for capital-intensive street reconstruction projects is still needed. Saving the amount required for these major reconstruction projects using sales tax funding would take decades and would ultimately be more expensive due to rising construction and material costs.
Bond funding can only be spent on streets reconstruction projects. The goal would be to fund the reconstruction of the City’s worst streets first with 80% of funding going to the worst arterials (major roads) which require more money to reconstruct and 20% going to neighborhood streets which typically require less money to rebuild.
The first new streets reconstruction projects will begin design in 2019 and construction in 2020.
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.
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 out numbers 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 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.
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 a 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.
There are great funding needs in the areas of transit and transportation – not only in Salt Lake City but countywide. While Salt Lake County’s portion of the sales tax will address regional roads and transit, the critical need to rebuild Salt Lake City’s most traveled streets and continue to expand transit is still larger than available funds. A General Obligation Bond remains the preferred funding choice for addressing large infrastructure needs because it generates a meaningful amount of funds, provides accountability to residents, and is the least expensive form of government financing. Having new sources of revenue – whether from the County sales tax or other sources – are necessary for projects that contribute to our City’s quality of life.
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 so it will require a larger percentage of funds.
An arterial usually refers to a high-capacity urban street, such as 300 West, that delivers traffic at the highest level of service possible. A local street is a smaller street that carries less traffic and has fewer lanes.
Maintenance includes preventative activities such as crack sealing, pothole repair and resurfacing that help prolong the life of a street.
Reconstruction is generally performed when a street has deteriorated to the point of no return, often requiring the street to be excavated and rebuilt from the bottom up using layers of rock and asphalt.
The City has a bond rating of AAA, which is the highest rating available. This means that the City has a great history of managing debt responsibly and has extremely strong creditworthiness. Having high a bond rating is like having a high credit score and greatly influences interest rates and bond pricing.
Sidewalk repair is funded through the Capital Improvements Program and is not included as part of the Streets Reconstruction Bond projects.
Streets reconstruction is defined as curb-to-curb. When the Roadway Selection Committee is evaluating streets for reconstruction, the condition of the associated curb and gutter will be reviewed in addition to other existing projects, including any stormwater or utility repair that are planned on or near a street.
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.