Wrangell’s assembly is moving towards taking on $15 million of bond debt to fund community infrastructure projects. But how to ask the community to take on the debt is a complex issue, especially when it’s not completely clear what it would cost individual taxpayers.
Much of Wrangell’s public infrastructure was built at the peak of the logging boom, or in the wake of mill closures when state money flooded the community to aid the crumbling economy.
After years of deferred maintenance, many of the community’s buildings and utilities have critical repair needs – Wrangell’s former borough manager estimated at least a quarter of a billion dollars-worth.
“The instinct to be conservative has hurt us,” Assembly Member Ryan Howe told fellow elected leaders at a borough meeting on July 26. He said that the borough’s poor financial decision-making has gone far enough – whether that’s not doing necessary maintenance on borough buildings, taking the cheapest route for repairs, or leaving millions of dollars in low-interest accounts.
Since the beginning of the year, Wrangell’s assembly and administration have been trying to start filling the hole. In January, the government began raising rates on nearly every utility in town, including the borough-owned cemetery. Now, they’re looking at asking the community to take on $15 million of bond debt for a couple of major infrastructure projects.
But they know it’s a hard sell.
“I’ve already heard it around town – a lot of people say ‘I’m not voting to raise my taxes any more than my rates have gone up,’” said Assembly Member Dave Powell, adding that he’s concerned the public won’t be on board with a bond. “I mean, I hear it all the time, you know, ‘I’m ok with the rates going up, everyone knew they had to go up.’ But now you’re gonna throw in this [bond], and it’s gonna look terrible, this is gonna look terrible.”
Powell added that all the deferred maintenance on borough buildings might be a red flag for residents. If the government hasn’t done the upkeep on borough buildings in the past, he asked, how are people going to know that the borough won’t be back in this same situation in 20 years?
The $15 million in bonds would cover two projects.
One is the first phase of a major refurbishment for the community’s Public Safety Building, which houses police, fire, DMV office, a children’s social worker, and the community courthouse. The building is in rough shape – a survey last year found it couldn’t pass a fire alarm inspection and had extensive rot. The engineer could put a screwdriver through the floorboards. That bond would be for $10.5 million, but a full refurbishment could cost much more.
The other bond of $4.5 million would cover a portion of a major maintenance project for Wrangell’s three public schools. Other money for the renovations would come from the state’s education maintenance fund.
At the July 26 work session to help decide how to draft a bond proposal, assembly members chose an option presented by the finance director that would balance the potential bond debt between property taxpayers and the borough’s general and special revenue funds. That means less of the debt payments would rest solely on property taxpayers. But rates would still need to go up.
The proposal would increase taxes on a house in Wrangell valued at $200,000 by $1,210 per year (from $2,550 annually under the current rate of $1.275 per $100 of assessed value, to $3,760 per year under the proposed rate increase to $1.88 per $100 of assessed value). That would be lower for houses outside what’s called the borough’s “service area.”
But it’s not clear exactly how the proposed increase would break down for individual taxpayers. That’s because the borough is working on reassessing every property in the community.
There isn’t a set timeline for when those reassessments would be back – and it might not be before Wrangell voters would have to vote on a bond proposal on October 4.
Borough Manager Jeff Good said he knows it’s not a great time to be looking at raising even more rates. But economically, sooner is better than later, he said.
“Interest rates are going up, so if we wait another year… and again, the timing, it’s awful. But we’ve been doing a lot of increases as far as all of our rates, and we’re paying for everything,” Good acknowledged, continuing: “But at the same time, we’re not going to get this interest rate again, at least for a while. It’s just – it’s our only opportunity to get this thing done.”
Assembly Member Patty Gilbert said she believes Wrangell residents are willing to take on the debt, but that they also need to see local maintenance being done – filled potholes, repaired siding, and so on. She said seeing those results will make citizens trust the process of taking on debt.
The borough also needs to do a better job informing the public about grants it obtains to do projects, and about maintenance that is being done, she said.
“I think we need to really get the message out there that we’re repairing sewer pumps, and we’re repairing water lines, and people can rest assured that the sidewalks that they keep tripping over every day walking their dog will be looked into,” Gilbert said. “I think that would be good as an approach to selling bonds and doing this ballot proposition.”
Assembly members also discussed the possibility of changing local code to make sure that once the community paid off the bond debt, the assembly would be legally required to lower property taxes to pre-bond levels.
Finance Director Mason Villarma told assembly members that regardless of how the bond proposal process goes, the community needs to have better long-term planning for maintenance of public buildings.
“There’s a big commitment here,” Villarma said, “So I think what we would want to do as borough administration is probably actually write out a comprehensive maintenance plan so this scenario doesn’t happen again, because I don’t think we can ever climb out of it if it happens again.”
They’ve scheduled a special meeting to give the bond debt an initial consideration on August 8 at 5:30 p.m. in the borough assembly chambers. It’s the start of a possibly years-long process to apply for a bond, and around two decades to pay off the debt.
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