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Sanger city manager presents cost outline

Profile image for By John D. Harden / Staff Writer
By John D. Harden / Staff Writer

SANGER — The city manager told council members Monday night it will take 10 years and about $8.7 million to rehabilitate the city’s most distressed roads and water utilities.

City Manager Mike Brice presented his proposal to the council during a workshop session, where he outlined how the city would finance improvements and upgrades to the city’s infrastructure.

According to Brice’s plan, the costliest expenses are repairing roads and adding a new water well costing about $3.3 million and $2.7 million, respectively.

“Most of the improvements are in the older parts of town,” Brice said.

Over the next 10 years, Brice said the city must rebuild more than a dozen miles of roadway, replace or add more than 27,000 feet of water lines, replace or add more than 27,000 feet of sewer lines and add a new water park.

To fund the projects, Brice suggested that the council raise taxes and issue about $4 million in debt using certificates of obligation, which doesn’t require a citywide vote.

Sanger’s financial adviser Ted Christensen told the council that it’s a good time to issue debt because rates are at historically low levels.

“But you’re always taking a chance because you never know how the economy is going to behave,” Christensen said. “But on paper, this is a good time.”

The city currently sets money aside for routine maintenance, but officials say they are getting further behind in their ability to make a dent in the needed improvements.

“Our current funding isn’t prudent,” Brice said. “We keep getting further behind and never ahead of the game.”

For example, the city budgets about $150,000 annually for street maintenance, but at that level, the city has enough funds to repair only half of the roads in the poorest conditions, Brice said.

“And if we only repair half, the other half is getting worse and then we’ll have more roads to add to our list,” Brice said. “It’s just a ongoing cycle.”

Several options are available for funding the road repairs, including using bonds or establishing a special district that will raise property taxes by 50 percent to 100 percent for some residents, Brice said.

However, Brice and city staff members recommended that the city raise the property tax rate by 3 cents per $100 valuation to generate an additional $120,000 annually.

“Property taxes are the most sustainable way to find funds,” Brice said. “It’s a revenue stream that doesn’t disappear and it can be used for other things in the future.”

Raising the tax rate by 3 cents equals a tax increase of $30 on a homeowner with a $100,000 home.

The current tax rate sits at 63.33 cents per $100 valuation.

“This should generate enough funds to complete all of the identified projects over the next 10 years,” Brice said. “This sustainable revenue source will continue to generate funds for ongoing street maintenance after the 10-year plan is complete.”

Water supply system improvements include adding a water supply well, associated piping, extending lines along the east side of Interstate 35 to View Road and extending lines along the west side of I-35 from FM455 to Belz Road.

Total water system improvements will cost about $3,983,575, which is to be paid with fees and financing $2.6 million with revenue bonds, Brice said.

The use of bonds would require a 16 percent increase in water rates to finance the bonds.

Regarding sewer system upgrades, Brice told the council that $2.6 million is needed over the next 10 years.

Mayor Thomas Muir said wastewater is probably the city’s most needed expense.

Brice proposed that $1.3 million be used to repair inflow and infiltration issues and an additional $1.3 million in bonds be used to extend lines along I-35.

City staff said sewer rates would need to increase by 10 percent to pay off the bonds.

Based on a usage of 5,000 gallons per month, water rates will increase from $28.40 to $33.12 and sewer rates will jump from $28 to $30.80 per month.

City staff also recommended adding the cost of a water park to the bond package because, according to officials, it will be years before the city has sufficient funds to build the park otherwise.

Officials said the park would enhance the quality of life in the city.

Council members plan to discuss tax rates during budget meetings this summer.

JOHN D. HARDEN can be reached at 940-566-6882 and via Twitter @JDHarden.