In a previous column, I briefly touched on how our new public works structures will be financed. Now I will discuss the funding of the unanticipated additional costs to build the justice center and fire stations.
The original estimate was $82.125 million. Market conditions made the costs soar. We are now looking at $113.9 million. So the difference is about $32 million.
The council was quite thorough in reviewing options to cover the increased cost. The desire was to avoid new taxes if possible and to avoid burdening future councils with excessive long-term debt. With this in mind, they chose to authorize a 20-year (rather than 30 year) councilmanic bond to fund the extra costs.
With the choice of PBB (priority-based budgeting) and Whitebirch financial modeling as tools, the council decided to pay the bill in three ways.
The council dedicated future fire impact fees to the fire stations and apparatus. It starts with just over $1 million from 2017; then $300,000 per year beginning with 2018 and extending through 2042.
The city anticipates taking in about $15 million from the sale of surplus land and buildings. This process is likely to be completed in three or four years.
The city will utilize $3 million currently available in the Land and Park Acquisition funds. Also, the city will dedicate REET 1 (real estate excise tax) funds to the tune of $12.8 million. $500,000 annually beginning with 2018 revenues and continuing through 2043.
The total is approximately $39.3 million. That is expected to cover the $32 million as well as the financing costs of the bond.
So what is the cost to residents of Tukwila? The money used to pay the bill is money that will no longer be available for other projects. The impact is indirect rather than directly out of the pockets of residents. For example, the parks department had several projects that they expected to pursue. These will now be on the back burner. Is that OK? Remember that they used PBB. Is one thing more important than the other? Of course. In this respect, city budgets are like our home budgets.
Tough choices have to be made.