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Fairmont levy won’t affect property taxes

FAIRMONT — A growth in Fairmont’s tax base has sparked good news for the city’s property owners. A proposed preliminary levy increase of 7.3 percent for 2021 will have zero impact on property taxes for city residents, thanks to the community’s overall growth in new industrial, commercial and residential construction.

Individual property owners might still be faced with a higher tax if the valuation of their property increases or if the school district and/or county ups their levies.

The Fairmont City Council approved the preliminary 7.3 percent levy on Monday by a 4-1 vote, with Wayne Hasek dissenting. The figure is considerably lower than the 11.5 percent originally proposed at a council work session last month.

The council will finalize the levy on Dec. 14, but City Administrator Cathy Reynolds said staff plans to continue to work to reduce the levy. The preliminary levy can be reduced, but not increased, before it is finalized.

She noted that the budget included funding for a new community development director position, a part-time community services officer position, contracting for human resources services and an 8 percent increase in the cost of health care coverage.

Paul Hoye, city finance director, outlined the proposed 2021 budget, pointing out significant differences from the 2020 budget due to separating capital improvement projects from the general fund, as was recommended by the city’s auditor.

General fund expenditures remained comparable to last year, with public safety, general government, parks and recreation and public works costing about $9 million of the $29.5 million budget. Debt service, economic development, the airport, lake restoration and the SMEC building required about $3.7 million of the budget.

About $2.3 million, including liquor store funds, is earmarked for numerous capital projects including police safety and training equipment, a new squad car, firefighter safety gear, a motor grader and a truck mounted paving machine for the street department, repairs at the aquatic park, revamping the Amber Lake parking lot and boat landing and the Dutch Creek wetland restoration project, which also uses government grants.

The biggest chunk, $16.6 million, was allotted for capital improvements including a new fire truck, street improvements, a transfer of funds from the local option sales taxes collected to the proposed community center and a new $9.5 million public works building to replace the existing structure which has some sections about 60 years old.

Council members balked at the public works building. Some questioned the need for a new building, while others accepted the need but questioned the price tag.

Hoye explained that for the past two years, the city has increased the levy to cover repayment on 15-year general obligation bonds at an estimated 3 percent interest rate, a method it would normally use to finance the public works building, but the city’s financial advisors indicated that 30-year bonds at 1.5 percent would be the way to go. By stretching out the payments at a lower interest rate, no additional levy increases would be needed to pay off the building bonds.

“We’re comfortable in extending out the term which would bring down the annual debt service payment,” he said, calling the bond interest rate “unbelievable.”

“It’s a great time to be issuing debt. With construction costs, it’s a great time to be building,” he said.

Randy Lubenow said he had requested correspondence about the building from OSHA after a surprise inspection in 2015.

“I just don’t know what the problem is, what we’re fixing. Why spent $9.5 million?” he said.

“Did you get a tour of the building?” asked Mayor Debbie Foster.

“I’ve been in the building,” Lubenow said.

Foster said that Reynolds had sent an email to all council members covering the background of the OSHA inspection and the city’s subsequent decision to move forward with a new building.

Lubenow said he received the email but asked why OSHA issued no citations if there were problems with the building.

“At the time, we’d already had a facilities assessment completed, with plans put into place to look at a new building,” Reynolds said. “We had that in our hand at the time OSHA did that (inspection).”

Typically, she said, OSHA would give a set amount of time to fix any violations, but because the city already was taking corrective action by exploring a new building, they did not issue any citations at that time.

“It has limited effect to tell you to fix it if you’re already making plans to fix it,” Reynolds said.

“It’s something that we need to move forward on,” she said, noting that five years has passed since OSHA’s visit. “You could go in and try and correct all those problems, but by the time you correct all those problems, you’d still have an old building. You’re going to have to bring it up to code as you go in and make those corrections. Your cost is going to be on the high end to do all that, and you’re still going to have an old building with lots of problems.

“Staff has looked at this, and in today’s environment, it makes the most sense to move forward.”

“I don’t have a problem with a new building, but $9.5 million for a building that size seems way, way high,” said Tom Hawkins.“I would think you could do an awful nice building for $6 million. For what’s going to go in there, it seems way out of line to me.”

Bruce Peters asked where the source of the $9.5 million figure.

Troy Nemmers, city engineer/public works director, said the number budgeted for the building was based on the architect’s final plans in April.

“The cost per square foot is about $155 for a finished building. We’re dealing with a 56,000-square foot building that has office spaces as well as work spaces, a full mechanic’s garage with three stalls and storage for many vehicles,” he said.

Passing along questions he heard from citizens, Peters asked about the possibility of building just a shop and using the existing building for vehicle storage.

“That’s one of the problems with the existing facility,” Nemmers said. “There is no HVAC (heating, ventilation, air conditioning). It also has shorter doors. There’s several vehicles that we can’t fit inside the garage.”

While council members acknowledged the need for a new building, they expressed hope that, when it came time to move forward, construction bids would come in significantly lower than the architect’s estimate.

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