Council votes to create tax zone

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Despite outcry from residents at hearing, financing measure passes 7-0

Even though many residents came out Tuesday night to speak against the financing measure, the City Council unanimously agreed to create a tax-increment reinvestment zone for a proposed convention center on university land.

And even though the City Council has been discussing the project for years, it was the first time it held a public hearing on the proposed public-private partnership that would also bring an Embassy Suites Hotel and Houlihan’s Restaurant and Bar to Denton.

The tax zone allows the city to capture tax revenue from the hotel and restaurant that would be built next to the convention center. That money, in addition to hotel occupancy and sales taxes, would go toward repaying the bonds that would finance the convention center’s construction.

City staff said that they continue to plan for the convention center as a self-supporting project, with no direct impact on the general fund and the individual taxpayer.

Former council member Mike Cochran was reluctant to testify, but he said the situation demanded it. He called convention centers an economic development fad that is fading.

“Around the country, they are losing money,” Cochran said.

David Zoltner told the council that the financial projections were too optimistic.

Another resident, Gerard Hudspeth, said no one was asking what to do if the project fails.

But council members said they felt comfortable creating the district, saying that it was just one step in studying the feasibility of the project.

Earlier in the day, the City Council got its first look at the 2014-15 budget. While Denton’s taxpayers will likely be spared an increase in next year’s budget, utility ratepayers probably won’t be.

The finance staff said that an anticipated property tax increase isn’t needed for two more years, but utility customers can likely expect rate hikes next year. Denton Municipal Electric customers could see a 5.4 percent rate increase. Water, sewer, garbage collection and recycling rates will jump, too.

Council member Dalton Gregory asked how that might affect the average person’s bill, but Chuck Springer, the city’s director of finance, said that information won’t be final until the end of July, when the budget proposal is finished.

The relief for property taxpayers comes from the city’s property growth, which is expected to increase at least 8 percent this year, Springer said.

Overall, the city expects about $101.6 million in revenue next year. Expenditures are expected to exceed revenue, but not as much as last year, Springer said.

Last year, the city drew down $1.38 million from its fund balance. This year, the city expects to draw less than $635,000, Springer said.

By policy, the council has told the city staff to maintain the reserve balance at 20 percent of expenditures, as going lower can affect the city’s bond rating.

At the end of 2014-15, the fund balance should be about $23.5 million, or 23 percent of expenditures, Springer said.

Council member Kevin Roden said he was disappointed that sales tax revenue overall did not appear to be growing, especially considering how many new retail stores have opened in the past two years.

The city staff projects about 3 percent growth in sales tax revenue for 2014-15 and for the next five years, Springer said.

That has been the projection for the past three years, too, he said.

The city continues to make paying for street repair and reconstruction a priority as part of the annual budget. The city plans to spend $12 million next year, the third year of marked increases in that budget, Springer said.

By 2016-17, the council should be allocating enough to street work that the city is no longer losing ground on repairs.

Mayor Chris Watts told fellow council members that underfunding street repairs had gone on for years and recovery would take time.

“But I’m encouraged to see these kinds of numbers [in the budget],” he said.

The council will see the proposed budget after the tax roll is certified July 25. The city will hold two public hearings on the budget, one in August and one in September, before voting on the final documents Sept. 16.

PEGGY HEINKEL-WOLFE can be reached at 940-566-6881 and via Twitter at @phwolfeDRC.

IN OTHER ACTION

During its regular meeting Tuesday, the Denton City Council also:

• Accepted a $7 million grant from the state of Texas to build a west side runway at Denton Enterprise Airport

• Awarded a $3.6 million contract to Mabak Directional Drilling for auger services needed by Denton Municipal Electric, a $185,100 consulting contract to Modern Geosciences to create municipal setting districts downtown, a $357,3901 construction contract to Quality Excavation for the Highland Street sewer project,

• Approved a $68,420 change order for FCS Construction for an expansion at the landfill and the purchase of 11 light-duty vehicles from James Wood Auto Park for $407,131

• Authorized agreements for the Denton Blues Festival for $1,200, for the Thin Line Film Festival for $2,050, and for services from Interfaith Ministries for $1,300

• Authorized the city manager to acquire about 40 acres for $36,000 for a stormwater detention project near S. Fort Worth Drive and 1.4 acres for $180,000 for the widening of Mayhill Road

• Began eminent domain proceedings for two parcels, one in the 1300 block and one in the 1200 block of North Mayhill Road


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