MILFORD — Lou Vitola, Milford’s finance director, has been on the job since August. Over these previous few months, a major focus has been financing the development of a brand new police station.
The city will vote Jan. 26 on whether or not to let the town authorities borrow as much as $20 million for the undertaking. Within the meantime, Mr. Vitola and different officers are working arduous to persuade the remainder of the town that the undertaking must occur.
“We are able to now not merely say we don’t wish to incur further property taxes and ignore the inevitable want earlier than us,” Mr. Vitola stated.
“In survey after survey carried out by the town, security has all the time been recognized as the first concern of Milford residents,” he stated.
And not using a new station, Mr. Vitola stated the division’s means to maintain residents protected could also be hampered.
“Metropolis management have shared the sentiment that tax will increase are by no means desired, however the actuality is that at a while all issues attain the top of their working life cycle and are now not able to offering the extent of service or help required of them,” he stated.
So as to pay again the mortgage they hope to take out, metropolis leaders wish to increase property taxes in Milford. However the diploma to which taxes are raised will rely upon how a lot the undertaking will price.
Tax influence
“It’s the job of those that know finance, which might be the finance director beneath the path of the town supervisor, together with the finance committee of council to get it to the precise price,” stated Vice Mayor Jason James, who can be the chair of metropolis council’s finance committee.
“I do know we’ve got a bond referendum arising for (a undertaking) to not exceed $20 million, however I don’t anticipate that this station will price anyplace close to $20 million,” he stated. “I’d say it could be someplace between, if I needed to guess, $15 million and $17 million.”
Town estimates that if the undertaking had been to price solely $12.5 million, somebody with assessed property worth of $100,000 would pay $57 in further property taxes yearly and somebody with property assessed at $500,000 would pay an extra $287.
If the undertaking had been to finish up costing $20 million, somebody with property assessed at $100,000 would pay $92 in further property taxes yearly and somebody with property assessed at $500,000 would pay an extra $459.
Mr. Vitola’s division has put collectively a useful chart so residents can see how their taxes may probably be impacted based mostly on the assessed worth of their properties, which is obtainable on the Milford Police Plan web site.
The opposite issue governing the undertaking’s final price is when the town finally ends up borrowing the cash.
“Market circumstances impacting municipal borrowing charges are continuously altering and unpredictable,” Mr. Vitola stated.
There are eventualities the place, if the referendum passes, the tax charges outlined above may change once more.
Based on the incessantly requested questions web page on the Milford Police Plan web site, there are two methods this might occur.
If the municipality had a city-wide reassessment, certainly one of which is scheduled for this fall, a citizen’s property taxes may enhance barely.
However the web page stated this “reassessment course of just isn’t supposed to end in a big change in whole tax income and wouldn’t end in elevated income for the police facility.”
If a home-owner will increase the worth of their property by making enhancements, they may additionally presumably see their assessed worth go up. This could end in a rise of their tax charge.
However Mr. Vitola stated understanding the method is vital.
“The reassessment course of doesn’t end in elevated tax income for the town, even when the full assessed worth is elevated,” he stated.
“It is because the tax charge additionally modifications in a reassessment — it’s diminished by an offsetting quantity to maintain the full tax income at parity,” Mr. Vitola stated.
Misconceptions and financing
There are just a few “misconceptions” circulating on social media Mr. Vitola wished to debunk.
“Town just isn’t bancrupt and is at no danger of insolvency,” he stated. “The power of the town’s steady, excessive investment-grade bond score of AA-, which has been maintained since 2011, is a testomony to a decades-long follow of accountable monetary administration.”
Moreover, he stated the town is not going to have to boost taxes by a minimum of 25% to finish the undertaking.
“The utmost tax charge enhance could be 19.9%, however the metropolis expects that refined undertaking scoping and price estimating will cut back undertaking prices from preliminary estimates,” Mr. Vitola stated.
Moreover, he stated “the usage of eligible reserve funding will additional cut back the quantity of the borrowing with the aim of minimizing the influence to property house owners in Milford.”
Mr. Vitola expects the town to contribute about $1 million from its current reserve funds to the undertaking.
However the remainder of the cash for the undertaking will have to be borrowed. Town is presently contemplating numerous financing choices.
“If profitable, the referendum would authorize the issuance of debt having a most rate of interest of 5.0%,” Mr. Vitola stated.
Town may borrow from a standard business financial institution, take out a municipal mortgage or get the cash through a mortgage from the U.S. Division of Agriculture. At previous conferences, Mr. Vitola has stated he’s leaning towards the USDA possibility.
“Present rates of interest for long-term, tax-exempt municipal bonds are lower than 3.0%,” he stated. “The USDA neighborhood amenities mortgage program carried an rate of interest of two.125% as of December 31, 2020.”
Mr. Vitola stated the town expects to challenge bonds with a time period of 30 or 40 years.
“The tax charge enhance could be minimized with a longer-term mortgage,” he stated.
“Rate of interest ranges and all different components equal, a longer-term mortgage will end in larger whole curiosity prices to taxpayers over the lifetime of the borrowing, however decrease annual debt service necessities,” Mr. Vitola stated. “The annual debt service requirement is the figuring out issue of the tax charge enhance.”
Timing
Mr. Vitola doesn’t need the town to attend. He believes the longer the town places the undertaking off, the costlier it’s going to turn into.
“Town’s engineering consultants typically count on the inflationary strain on development prices noticed lately to proceed into the foreseeable future,” he stated.
“For that motive, votes in favor of the referendum on January 26 usually are not solely crucial for the police facility itself, however crucial for the timing of the police facility and the avoidance of elevated undertaking prices, which might in flip amplify the tax enhance.”
Moreover, Vice Mayor James doesn’t need the undertaking to turn into grandiose or a spectacle.
“We wish the whole lot we’d like within the station,” he stated. “We don’t want each bell and whistle. We want what is important to function and to be accredited.”
The vice mayor stated that if the town “can get this factor on the proper price, a a lot decrease price, there’s much less of a tax burden that shall be requested of the citizen.”
Mr. Vitola sees his function as a balancing act. Whereas he and the town wish to save residents as a lot cash as doable, he additionally needs to verify primary companies are nonetheless supplied in a well timed, steady and efficient method.
“Milford’s finance crew believes in lean operations and price efficiencies, weighing each doable possibility earlier than recommending tax or utility charge will increase,” Mr. Vitola stated.
“Likewise, Metropolis Council doesn’t take tax or utility charge will increase calmly, as demonstrated by the present run of 13-and-a-half-years with out a tax charge enhance,” he stated. “We wouldn’t be transferring ahead with this advice if it wasn’t a transparent necessity for Milford’s public security operations.”
If the referendum doesn’t cross, Mr. Vitola stated “step one is most probably to be an effort to understanding the rationale behind (that) public sentiment.”
