Coppell weighs tax increase for North Lake land debt
10:53 PM CDT on Saturday, August 29, 2009
The Coppell City Council is considering raising residents' property tax rate as much as 5 cents – but the city isn't in financial straits.
City services aren't being threatened. Staffers aren't facing pink slips. And the general fund has a healthy surplus.
The council is trying to figure out the best way to begin paying down $26.5 million in bond debt from the purchase of land outside the city limits. It's the same land that voters overwhelmingly approved buying in 2006.
"The only reason there's a question about raising taxes on the table is the North Lake debt service," City Manager Clay Phillips said.
Almost everyone on the council agrees that at some point the city will have to raise taxes to pay down the debt. Some favor phasing in a five-cent increase over two years.
The question at ongoing council meetings is whether to increase taxes this year as residents muddle through a historic recession – especially when their past tax contributions have created a $10 million general fund surplus that is not currently earmarked for other expenditures.
The council is to have a public hearing on the matter Tuesday. It's scheduled to vote on the final rate on Sept. 8.
At last Tuesday's public hearing, more than 150 residents packed the council chambers to show their disdain for higher taxes. Many wore T-shirts that said, "No new taxes."
But some residents say it's not just a possible tax increase that has them stirred up. They say a majority of council members haven't publicly discussed the matter enough.
They wonder whether the issue would be on the table if the next council election wasn't more than 18 months away. And they accuse officials of making up their minds before hearing from residents.
Talks of a recall effort have already begun.
North Lake is just north of LBJ Freeway, connected to Coppell by a small strip of land. But the property borders Coppell and Irving and is mostly in the Coppell school district. Coppell and its school district bought parcels of the land as part of settlement agreements stemming from their opposition to long-held plans for development in the area.
The city issued about $26.5 million in bonds last year to buy about 468 acres, all but about 100 acres of which is lake acreage. The annual payments for the debt are about $2.8 million.
Mayor Jayne Peters wants to hold off at least a year before raising taxes.
"With these economic times, do we need to be raising the tax rate?" she said. "Based on the fund balance, we can afford to absorb it."
But Peters will only get to vote on the matter if there's a tie. And so far, only council member Marvin Franklin has publicly voiced opposition to raising taxes.
The current tax rate is 64.146 cents per $100 of assessment, which amounts to a tax bill of about $1,603.65 for a $250,000 home.
According to a budget memo presented to the council earlier this summer, the tax rate at some point will have to go up to 69.146 cents per $100 of value to service the debt. That's an increase of about $125, or 7.8 percent, for a $250,000 home.
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