In continuing discussions on how to build a new Homer Public Safety Building, the Homer City Council has said building a new police station and making fire hall improvements would probably require borrowing money through a bond. The council until this week avoided specifics on a bond. At its regular meeting on Monday, the council finally put forth the question it must ask voters if a new police station and fire hall improvements are to be built:
• Shall the city go into debt and issue a $12 million bond, and
• Shall the city pay for the bond and increased operations with a six-month, 1-percent sales tax increase?
Without formal objection, the council agreed to introduce Ordinance 16-30, the bond proposition. With council members Donna Aderhold and Bryan Zak absent, a motion to move the ordinance forward for more discussion and debate passed. It will go up for public hearings at the June 3 and June 27 council meetings, with a second reading and possible final action on June 27.
If the bond goes on the Oct. 4 ballot and voters approve it, the city would buy a 30-year $12 million bond that would cost the city $845,000 annually. It also would have to come up with $144,000 for increased operations and maintenance for a new police station, bringing the annual payment up to $989,000. An April through September, 1-percent seasonal sales tax would raise about $1.2 million. The question also would ask if voters want to raise sales taxes.
Though the council didn’t object to introducing the ordinance, council member Heath Smith raised some objections to the bond idea.
“I still struggle with funding operations and maintenance with a bond,” Smith said. “We should be able to show we can afford that outside an expiring bond.”
City Manager Katie Koester said the city can’t issue bonds to pay for operational costs.
“So we’re increasing taxes to cover the bond and also to cover operations?” Smith asked.
Mayor Beth Wythe also noted that the ordinance doesn’t restrict a time frame for the expiration of the sales tax increase.
“The sales tax won’t go away when the bond goes away. Am I reading that correctly?” she asked.
Wythe said she thought there couldn’t be two questions in one bond and the ballot proposition might have to be done in two questions.
In a memo from city attorney Thomas Klinkner, however, he said a tax increase and authority to bond — combining two questions — hasn’t been raised in Alaska courts.
While other states have disapproved combining two unrelated questions, he wrote, “This disapproval does not extend to ballot propositions that combine the question of issuing bonds with the question of levying a tax to pay the bonds. Courts have consistently approved such a combination.”
Smith said it would make more sense to ask the voters two questions, to bond and to raise taxes. He also questioned if voters would pass a bond and sales tax increase without a sunset clause.
“If there’s no mechanism for saying we’re going to do away with it, I don’t think the voters will be agreeable with that,” Smith said.
Wythe said the first draft of the ordinance was set forth to be really broad so the council could come to a consensus. She recommended introducing the bond idea for further discussion and possible changes.
With that provision, Smith said he would reluctantly agree to introduction.
“Pending the fact that we’re going to look into it, no,” he said when asked if he objected to introduction.