Bond levy doesn’t tell whole story

Published 1:02 am Friday, October 3, 2008

I have become concerned in recent months about the City Council’s plans to purchase the Tollgate Farm. The Council and its supporters have presented the plan in such trifling and romantic ways as to obscure the actual costs and consequences that the community will suffer if the plan is accepted by approval of the excess tax levy. My purpose in writing this article is to disclose to the citizens of North Bend some of the hidden costs that we would all pay.

The supporters of the plan break the costs down into nice, bite-sized pieces: “- a $200,000 home, $122.21 per year or $10.81 per month, or approximately the cost of one, medium-sized pizza. The weekly cost is $2.35, less than the cost of the average latte -“

Describing the expense this way hides the actual costs to you. Using the above numbers, the 20-year, out-of-pocket cost would be $2,444.20. However, you still need to consider your “opportunity cost.” Opportunity cost is the cost of investing your money elsewhere. Say, for example, you took that $10.81 and invested it every month for your child’s college education. You would have saved $5.019.64 after 20 years at the conservative rate of 6 percent.

The city’s contribution to the purchase is $5,000,000. They want to float a bond for $3,560,000, and the remaining $1,500,000 will be “raised through other means.” There are no guarantees that it will be able to raise these funds. Also, the numbers appear to have been purposely understated, and therein may hide the truth.

The council claims that approximately $281,000 per year for 20 years will be generated to repay the bonds. By its numbers, the total cost to repay the bonds would be $5,620.000. The interest and other costs appear to be equivalent to a 37 percent credit card! Total purchase price: $7,120,000.

It gets worse. The $281,000 expected levy revenue is based on a total assessed value of $460.6 million. North Bend currently has an assessed value of more than $463 million. The math doesnOt make sense. In addition, assessed value has increased 147 percent from 1992 through 1999. During the next 20 years, it will surely continue to increase, thereby raising your property taxes continually while the city overcharges.

Millions of dollars of your hard-earned money could be overcharged during the next 20 years! What will they do with the extra money? DonOt expect to get it back or pay off the loans early. They will surely find a way to spend it. What about the annual cost for maintenance and upkeep? There has been no disclosure or budget for what it will cost to maintain this property every year. This could be a significant amount of money.

Buying Tollgate Farm is very bad for our landlords, tenants and businesses. Landlords will pass this new tax expense through to their residential and retail tenants. Tenants are already incurring the expense of the recent stormwater utility charge. Thousands of dollars will be put on the backs of those businesses trying to make a living in our community. Business will be hit the hardest at a time when we need policies that promote business.

How North Bend grows will determine the economic stability and quality of life that develops here. As a community, we should invest in projects that add value. Buying Tollgate Farm will raise your taxes but wonOt raise your property value. Developing Tollgate Farm to its best and highest use will. The Tollgate supporters use fear tactics by saying that the developers will build an unsightly industrial park. They will build only what the city allows them to build! The city has the power to dictate the use, open space, appearance and standards of what is developed.

The city is currently operating in the red, dipping into its reserves. It is losing money because it can’t generate the necessary income to operate due to the ongoing building moratorium.

The city’s long-term financial outlook will be grim if the council doesn’t act now to secure a solid economic base. Developing Tollgate Farm is exactly what the community needs. It will generate building and property tax revenue, much-needed commercial space, new business and jobs. Increased competition will encourage downtown repair and capital improvements in order to retain tenants.

All of North Bend’s residents would experience a financial benefit. That’s the way it should be. We won’t lose our “rural character” by taking care of our community. There is an abundance of rural space all around us. I encourage you to vote no to the excess tax levy on Sept. 18.