Newton residents have one final chance to weigh in on a proposal to issue a total of $3,735,000 in taxable essential corporate purpose general obligation bonds to finance a multi-faceted housing initiative at three public hearings set at Monday's Newton City Council meeting.
For months the council has been mulling the staff proposal to issue millions of dollars of debt to finance implementation of housing initiative designed to improve the city's curb appeal and facilitate new housing construction in the city.
The proposal includes the continuation of the City's current focus on property nuisances and rental inspections, financing for the reinstitution of the Dangerous and Dilapidated buildings program, implementation of an Abandoned and Dilapidated buildings program and funding for low and moderate income resident home improvements.
To facilitate new housing development, the program calls for city funding for the installation of infrastructure and financial incentives for home buyers, builders and property owners. Funds for potential property acquisition are included.
The needs to be addressed in the housing intiative were identified through the development of the city's recent Comprehensive Plan, a comprehensive local housing report and current demographic factors.
Three seperate public hearings will be held to approve financing for the various components of the overall initiative. Each component is being deemed an essential corporate purpose, though based on different sections of Iowa Code.
Late last year, former council member Dennis Julius asked on behalf of constituent Dennis Messick whether any of the proposed bond costs could be subject to reverse referendum petition calling for a citizen vote on the matter. The city's bond counsel indicated that state law is written broadly enough so that each of the components of the initiative could be deemed an essential corporate purpose and not be bound by reverse referendum provisions.
However, Newton residents are still allowed to challenge to the District Court the Newton council's decision to issue the bonds as essential corporate purposes. The council's decision to issue the bonds is final unless the court finds the council exceeded its authority.
Staff is recommending that bond underwriter costs be added to the total bond issuance which will allow for the $3.65 million originally proposed to be available for implementation of the housing program.
The project descriptions of the separate public hearings are as follows:
Pulbic Hearing 1 - D&D program and administration cost
- The acquisition, restoration, or demolition of abandoned, diplapidated or dangerous buildings, structures or properties - $1,100,000
- Administrative costs - $160,000
- Underwriter costs - $30,000
- Total - $1,290,000
Public Hearing 2 - Infrastructure
- Infrastructure support for housing program through streets, street lights, sidewalks, sanitary sewers, bridges, drainage, storm sewers, water and other public improvements - $835,000
- Underwriter costs - $20,000
- Total - $855,000
Public Hearing 3 - General development assistance
- The furnishing of financial and other assistance in the promotion, development, implementation and completion of the housing program - $1,085,000
- Housing program targeted to assist low/moderate income families - $150,000
- Acquisition of property in furtherance of the housing program - $320,000
- Underwriter costs - $35,000
- Total - $1,590,000
City staff is also recommending that all the bonds be issued as taxable, a move that will increase interest rates and cost more to repay.
The recommendation is being made due to the increased flexibility of taxable bonds, including fewer reporting and compliance requirements and to allow for the possible private benefit that may go to an individual, company or corporation through the housing program.
The staff report to council in advance of tonight's meeting does not include information on the long-term impact of the bonds on a Newton property owner's city property tax bill. However, at a special meeting on Monday where the council was asked to consider issuing bonds to finance a number of capital projects, the council was hesitant until more information could be provided on how the capital project bonding and the housing initiative bonding would impact next year's budget and the property tax bills of local residents.