Co. council looks at options to fund $11.2M annex; tax increase not off table
It may be the last resort option Dearborn County council wants to pursue, but raising taxes is not off the table to help cover expenses for an estimated $11.2 million proposed county courthouse annex.
Dearborn County council members met in a work session Thursday night, June 11, to discuss, but make no decisions about, funding the annex option recommended by county commissioners.
County commissioners voted last week to pursue the annex option with the rounded, glass entryway, that would be built between the current courthouse and administration building in downtown Lawrenceburg to address space and safety issues.
Two representatives from H.J. Umbaugh & Associates Certified Public Accountants, Indianapolis, were on hand to tell council members how a professional look at their finances may help narrow down funding options.
Council president Randy Lyness said he called Umbaugh last Friday. He scheduled a meeting for June 11, the first day the representatives from the company could attend.
"We need to know if we can pay for it," said Lyness.
Jason Semler, a partner at Umbaugh, said he would give the county a few general options then more specifics could be discussed about how to proceed.
Semler provided different options including 15 and 20-year payback and scenarios where the county financed the entire amount or only a certain percentage.
If the county financed the entire $11.2 million, with no cash down, it would actually need to finance $12.6 million, he said.
In Indiana, a government project using over $12 million in taxpayer funds would have to go to referendum, a vote of the public. This money does not included casino riverboat revenue.
The additional money to be financed would be used to cover legal and other professional costs related to a bond issue. It also includes a debt service reserve, equal to about a one-year payment, to be placed in a seperate account. Thhis helps protect the bond purchasers. They know the money for the next payment will be there even if something happens, such as the money being collected late, said Semler.
In this scenario the county would pay about $1.1 million a year. The total interest paid would be $4 million at the current interest rate plus about a half percent, he said.
If the bond issue was for 15 years with $4 million in cash paid the county would pay $780,000 a year, with a total of $2.6 million interest paid, he said.
The trend seen in the various county funds is downward. Dearborn, however, is in better shape than other counties due to the riverboat casino revenue, said Semler.
Property taxes could be raised, but state circuit breakers limit the amount people can be taxed, he said.
County auditor Gayle Pennington said several entities in the county have been hitting the circuit breaker.
Property taxes also could be used only as a back-up plan to pay the bonds, said Semler.
Lyness said he would like to see how raising property taxes would impact the average homeowner. Semler agreed that would make sense to include in a financial plan.
Council member Liz Morris said a challenge she faces as a member of the board is people who moved to the county after the riverboat casino revenue was in place. They expect a certain level of services. They do not remember what it was like before the casino arrived in Lawrenceburg, she said.
Semler said dwindling riverboat casino funds is why the City of Lawrenceburg recently hired the company to conduct a comprehesive look at the city's finances. It also may be a good idea for the county, said Semler.
Morris asked what a comprehensive study would cost and the timeframe for completion.
The timeframe would be six to eight weeks and about $30,000 if all major funds were reviewed, but it depends on the scope of the review, said Paige Sansone, a principal at Umbaugh.
Can the county only finance the project through bonds? Are there other financing options?, asked Morris.
Basically bonds are the only financing option for a government entity, said Semler.
Council vice president Dennis Kraus asked if the money had to be raise through property taxes, or if there are other tax options.
Semler agreed there are other tax options such as increasing the County Option Income Tax.
But Kraus added he feels increasing taxes should be the absolute last option.
A committee, including some of the council members, should be formed to figure out what the scope of the financial study should be, said Morris.
"I want to keep rolling. I don't want to drag it out. I just want to do it right," said Lyness.
Pennington said she would send an email out with some potential meeting dates then take the next step from there.