Fayetteville readies for bond referendum

FAYETTEVILLE -- City administrators this spring will ask residents to put the city on a course for years to come with a bond referendum covering everything from parks to public safety and an arts corridor downtown.

Voters will have a chance April 9 to extend the city's 1-penny sales tax to cover more than $226 million worth of projects. There will be 10 ballot measures, each covering a different purpose.

Passage of each ballot measure will authorize city administrators to issue the bonds associated with it. For example, voting yes on the question pertaining to transportation means the City Council can issue bonds up to $73.9 million to finance road projects.

Money from one issue can't be used for another. So, if the $3.2 million planned for city-owned facilities doesn't pass, that money can't go toward something else, such as trails. That would mean the entire $226 million package would be $3.2 million smaller, and it would get paid off faster.

Administrators say passage of the entire referendum will help address longstanding needs and serve as a boost to the local economy. Other Northwest Arkansas cities have passed bond issues recently, and Fayetteville needs to keep up, Mayor Lioneld Jordan said.

"I think this bond as a whole is going to be transformational," he said. "It's going to put this city on course for the next 15 to 20 years."

Rogers voters passed a $299.5 million bond referendum in August. Springdale extended its 1-cent sales tax in February to pay for $224.6 million in projects.

How we got here

Fayetteville approved its most recent bond package in 2006, authorizing $110 million in projects. It had four questions, resulting in a ¼-cent sales tax increase and an extension of the ¾-cent sewer sales tax voters approved in 2001.

Money from the 2006 bond referendum went toward the College Avenue bridge, the arterial street loop around the city known as the Mayor's Box, improvements to College Avenue between Maple and North streets, the intersection at Old Wire and Mission Boulevard, restoring the Maple Street and Lafayette Street historic bridges and other projects.

About $20 million was left outstanding on the old bonds as of the end of last year. Chief Financial Officer Paul Becker estimates about $12.2 million will remain to be paid by the time the city is ready to issue the new bonds, and that's what the first question covers.

Right now, the one-cent tax has to be used to pay off the previous bonds. So, none of the new bond issues can pass unless the first question does, Becker said.

Even though the purpose will change, residents won't see a break in the revenue source, which is the penny tax.

"It's seamless to the voter and the retailers who are collecting it," Becker said. "It's just a continuation."

Total sales tax rate in the city is 9.75 percent. The city's portion of that is 2 percent, with Washington County at 1.25 percent and the state at 6.5 percent. In addition, a 2 percent hotel, motel and restaurant sales tax is collected to pay for parks and tourism.

If sales tax revenue stays flat -- meaning no growth at all -- the new bonds could be paid off in 12 years, Becker said. However, growth has averaged close to 5 percent over the past five years, so they'd likely get paid off sooner.

The administration's strategy is to only take on debt it knows it can pay back within a reasonable time frame. The city could take on more debt and pay for more projects that would take longer to pay off, but needs can change dramatically over 10 years, Becker said. This way, whoever is in office by the time the new bonds are ready to be paid off can make a judgment call on what best suits the city, he said.

It's just like in personal finances; only take on the debt you know you can handle, Becker said.

"Debt is a method of finance that should be used prudently. Use it reasonably," he said.

What's in it?

The largest portion at $73.9 million, and the second question of the bond referendum, will go to transportation.

Major projects include finishing the last segment of the Mayor's Box on Rupple Road from Tanyard Drive to Weir Road, installing a bicycle track on West Maple Street and implementing parts of the ongoing College Avenue, or U.S. 71B, corridor plan. Other projects include some type of bicycle path for Rolling Hills Drive and extending the street west, Zion Road improvements from Vantage Drive to Crossover Road and various sidewalk connections downtown and near schools.

The third question will be about $6.9 million for trails.

The fourth question for $15.8 million will address immediate drainage needs. The city is in the middle of a study taking a hard look at problem areas. The results will include recommendations for a possible fee to add on to utility bills to pay for ongoing maintenance.

Major parks projects included on the $26.4 million fifth question would see the completion of the Kessler Mountain Regional Park baseball complex, throwing in on a partnership with Fayetteville Public Schools to buy Lewis Park and establishing camping at Lake Sequoyah and a paddle park at the West Fork of the White River.

About $3.2 million would go toward land acquisition and site prep to attract businesses and foster public-private partnerships for economic development.

Another $3.2 million would cover remodeling City Hall and renovating other city buildings.

The $31.7 million proposed for an arts corridor and replacement parking garnered a lot of attention from the public at City Council meetings about the bond referendum. The project would have a civic space replace the parking lot west of the Walton Arts Center and turn the Fay Jones Parkland west of the Fayetteville Public Library into a nature attraction. Emphasis would be placed on public art, gathering spaces, stormwater runoff and pedestrian paths.

About $10 million of the total for the arts corridor would go toward replacing the 290 parking spaces in the Walton Arts Center lot. The City Council hired Garver Engineering to do a site analysis recommending parking options. The replacement parking could be a new parking deck, more spaces scattered throughout downtown, or both, in close proximity to the Walton Arts Center.

City officials have been talking about building a new police headquarters for about 25 years, and nearly $37 million would go toward that endeavor. The preliminary plan involves three buildings -- a main police station, a storage facility and an indoor shooting range.

Lastly, about $15.8 million would build three fire stations, in the south, central and northwest parts of town, along with necessary equipment and vehicles.

READ MORE: Fayetteville voters to decide on transportation project.

Something for everyone

Emily Brock, director of the Financial Liaison Center for the Government Finance Officers Association, said there is no correct way for a city to approach its debt service. The national association is a group of federal, state and municipal officials with a goal to advance excellence in government financial management, according to its website.

Some cities prefer to take on debt coinciding with the typical life cycle of a building or road, say about 30 years. Others, such as Fayetteville, take on a more accelerated schedule.

Either way, voters are the ones who decide which strategy is best, Brock said.

"If they didn't like an accelerated payment schedule, then they wouldn't vote for it," she said. "Or, if they didn't like a 30-year structure, then they wouldn't vote for it. It exemplifies what we think is the true nature of tax-exempt financing -- it is made in a local fashion."

Steve Clark, Chamber of Commerce president, said each of the bond issues will have a direct impact on economic growth. Talented workers typically scout for places where they want to live, so keeping the quality of life high is essential, he said.

For instance, nobody wants to live in a place that floods. Giving police and firefighters the resources they need to keep the population safe if paramount. People need spots to go -- the so-called "third place" other than work and home -- which is where the parks and arts corridor pieces fit in, Clark said. They need to be able to get where they're going, hence the amounts dedicated to streets and trails, he said.

Voters will have the opportunity to support every issue or pick the ones they want. The chamber endorses all 10, Clark said.

"The bond issue represents the best of democracy," he said. "It simply says to the citizens of Fayetteville: What would you like?"

NW News on 01/27/2019