JV Budget Workshop Meetings – July 19-20, 2021
Residential Property Tax Concerns:
This is not a summary of all of the comments made during the discussions in the meeting; however, there was a clear message regarding the desire to increase residential property taxes. Many of the JV Residents learned in the last few months how much “surplus funds” had been accumulated over the past several years and we got to see the intended purpose for those funds. There are at least three major “building” projects that are in various “discussion phases” that the City Council has a desire to move forward: a new city hall estimated around $10.2 million, a new golf club-house with possible offices for city employees that could be around $7.5 million, and a new building where the existing city hall is now for possibility another $8-10 million.
During the meeting, Michelle Mitcham, Sheri Sheppard, and Gary Wubbenhorst were pushing to have a Special Called Election in November to have Jersey Village voters approve a Proposition for a $20 Million Bond Referendum. They also discussed the possibility of reducing the Bond Referendum to $15 million. If approved, that would allow the Jersey Village Government the freedom to execute contracts for the construction of new buildings or other major projects without future oversight or voting to approve or reject buildings or projects not identified at this time. Simply put – Jersey Village City Council would have a “BLANK CHECK” in the amount of $15-20 Million plus existing “SURPLUS FUNDS” (up to perhaps $18 Million) that they have already indicated their determination to spend without voter approval. The contract to spend $10.2 Million for the construction of the New City Hall on the property called “Village Center” is still pending even though not one dollar has been received for even one square inch of the land that the JVCC paid in excess of $8.2 Million for several years ago.
The proposed budget includes two different scenarios of the 2021-2022 budget. One without the bond referendum and another one if they are successful in getting the Jersey Village Voters to approve the $15-20 million bond referendum. The fact that they would need to get voter approval to sell bonds to generate enough money to fund all of their major building projects was a big part of their discussion on their dilemma on how to set the 2021-2022 Tax Rate. The Jersey Village City Council is either going to set the TAX Rate at the historical .07425 percentage rate or they may increase it up to as much as .07880. This is in addition to the ever-increasing residential property tax values set by HCAD.
The current JV City debt is over $9 million. If the voters were to approve the JV City Council’s planned additional $20 million Bond Referendum, the JV Taxpayers will be in debt for over $29 million. Also, additional interest payments on the new $20 million bond over whatever number of years it would be paid out. While current interest rates are artificially low at this time, the current inflation rate will cause interest rates to rise very quickly. Municipal Bond rates vary based upon the size of the overall debt and the city’s ability to pay even in down years. The interest rate would be set when the bond(s) is sold, but If they somehow could get an interest rate of 2%, the total interest paid over the life of the bond could be $8 million as estimated by one of the council members. That estimate is most likely much lower than what the actual amount would be over the life of the debt. The interest the city is paying on the Certificates of Obligation Bond Debt from the purchase of the Municipal golf course is right around $6 million over a 25-year period. The city purchased the golf course in the year 2000 for $7+ million. The bond payoff on the golf course is at the end of the year 2025. If the city is paying $6 million in interest on the $7 million golf course purchase, how is it reasonable to believe the city will only pay $8 million in interest on a $20 million bond?
At the end of the meeting, the decision by the Council Members was to call a Special Election in January if possible, if not they will wait for the city’s normally held May Election. When the Mayor, Bobby Warren, was asked about the current tax rate and Homestead Exemptions, his comments were revealing in the choice of his words. He said that the reason that the tax rate was reduced last year was because the valuations had increased over the past years and the surplus funds had grown too much with the previous tax rate used for many years. He indicated that the Homestead Exemptions and the tax rate would be reviewed for possible changes in future years if property values continue to rise.
Every taxpayer in Jersey Village should be asking the City Council Members where is the money coming from to pay for these projects? These building expenses are not the entire costs for these projects. Every building and/or function must be maintained including normal operating expenses once in operation and the ever-growing interest on the remaining debt. These costs are added to all other city operating expenses.