Article submitted for The Ord Quiz
October 31, 2018
By Trevor Lee – Director, Valley County Economic Development
Thousands of volunteer hours and donations have been invested since 2013 in order to align funds needed to replace the 1978 Ord swimming pool. In 2016, Ord voters approved a $1.25 million bond to help close the funding gap for the project. Up to the 2016 election, nearly $2.1 million had been secured of the $3.3 million needed. Of the funds aligned, including the bond, 41% are grants and private donations.
Although the 2016 bond measure was approved, the accompanying request for a 0.5% sales tax to service the bond was not approved. Next week Ord voters will be asked to approve a 0.5% sales tax to pay for the bond approved in 2016. With increasingly burdensome statutory requirements, ballot language continues to grow in length and complexity. This makes it difficult to fully communicate what a YES or NO vote means via the ballot language itself. For this ballot measure, both YES and NO votes will result in a tax increase. However, each option will impact individuals, families, and businesses differently.
Breaking down the Bond
The bond approved in 2016 was issued in August of 2018. This is a 20-year bond with average annual principle and interest payments of $86,345, resulting in approximately $1,727,000 paid over the life of the bond. Of the total to be paid, approximately $477,000 or 28% will be interest. There is no penalty for early repayment of the bond; it’s just a matter of having the funds to do so.
What does a YES vote mean?
Residents voting YES on November 6th are voting YES for a 0.5% sales tax. Based on collections over the last five fiscal years, an estimated $217,000 could be collected annually. This would allow for the bond to be paid off in as early as 7 years. The bond payments would total approximately $1,490,000. Of this, $240,000 or 16% will be applied toward interest. The sales tax would be imposed on all non-exempt transactions within the municipal limits of Ord regardless of residency. Once the bond is paid off, the sales tax would sunset.
What does a NO vote mean?
Residents voting NO on November 6th are voting YES for a property tax in lieu of the sales tax, which would result in an average levy of 0.0718. The levy will be in place for a period of 20 years until the bond is paid off at which point the levy ends. The bond payments will total approximately $1,727,000, $477,000 or 28% of which will be interest. The property tax will only be levied against properties within the municipal limits of Ord. For a property assessed at $100,000, the annual property tax for the pool bond will be approximately $72, or $1,440 over the life of the bond.
What is Ord’s current local sales tax rate?
Ord’s sales tax rate is 1.5%. Of that, 1% is for economic development and the remaining 0.5% is being used to pay off the Downtown Revitalization Bond. If the majority of Ord voters approve the 0.5% sales tax to service the pool bond, the overall tax rate will increase to 2.0%. The Downtown Revitalization Bond is expected to be paid off in 2023, at which point the overall tax rate will reduce to 1.5%.