Voters strongly supported Summit County’s desire to borrow $50 million to protect open space last November, and now taxpayers may have more insight into how much it’s going to cost them in taxes.
Following a Summit County discussion early last month, the debt committee convened to provide a recommendation about how the general obligation bond should be issued. The committee suggested the county issue the full $50 million with a term of 15 years.
Matt Leavitt, the county’s financial officer, said that while 68% of voters supported the initiative when it was on the ballot, market rates have changed over time. The most recent data estimates that the tax impact on a $685,000 primary residence will be $60 annually. For a primary residence valued at $715,000, it’s closer to $65 per year.
The actual amount will be different for each homeowner based on a number of factors, Leavitt said, but generally, Utah property tax calculations find that as market values go up in an area, the tax rate goes down.
The figure is a bit higher than initial estimates in August that expected taxpayers would pay around $45 to $50 per tax year on a primary residence valued at the same amount based on issuing the bond with a 15-year term.
Ahead of the election, the County Council also considered whether to issue the bond over 25 years, although the current policy states general obligation bonds should be issued over 15 years. Leavitt said the information was updated to reflect the new values before it was placed on the ballot. Based on those estimates, voters were told the tax impact on a $715,000 primary residence would be $40 annually or $73 per year on a business or secondary residence of the same value.
Leavitt said that the County Council may want to consider revising its fiscal policies to change the term length for the general obligation bond from 15 years to ensure the value of the asset is the same as the life of the bond. However, extending the term of the bond an additional 10 years would likely bring higher borrowing rates and could cost taxpayers up to $7.2 million in interest.
The county should also consider that, by incurring the $50 million debt, it will have a liability on its books, Leavitt said. Additionally, if the county uses bond proceeds on a project, it may be incurring an expense without a corresponding asset.
If the County Council were to purchase a conservation easement on a parcel of land or give money to a land trust to do so, it must hold an interest in an asset for the life of the bond — or 15 years. Leavitt said the county could also go into the purchase with an entity like a land trust as a joint venture. Another option is to record an intangible asset like intellectual property or goodwill.
Chair Chris Robinson said they would have to consider all the options before determining how to spend the money.
The county is also expected to commit up to 85% of the bond proceeds by the third year to be compliant with the terms. The rest of the money must also be spent within five years. The County Council seemed hesitant to issue the full $50 million bond based on that time period and the risk of penalties because there is money still leftover from the last open space bond.
The County Council must adopt an authorizing resolution to issue the bonds and begin a 30-day contest period by March 30 if it wants to move forward with the process this year. If the elected officials do, by mid-April the bond rating should be received with a competitive bond sale taking place shortly after. Leavitt said this allows the county to close and deliver the bonds before the tax roll closes in May. Then, the auditor will set tax rates by June with disclosure notices sent to property owners by July.