Wrangell voters are being asked to consider bond propositions for the first time in over a decade, and weigh in on a major land sale. At a town meeting last Wednesday (September 28), members of the community came with questions.
On October 4, Wrangell residents will cast their votes on local candidates, as well as three ballot measures. Wrangell residents got a chance to listen to presentations from borough and school district officials on the ballot measures and ask questions at a town hall on September 28.
Proposition 3 asks the voters whether or not they approve of the sale or lease of Wrangell’s former lumber mill site, which the borough purchased for $2.5 million earlier this year. The borough charter states that any land sale over $1 million must be approved by voters.
Borough Manager Jeff Good explained that there isn’t a plan yet for what might be done with the property – voters wouldn’t be approving sale or lease to a specific entity. But it lets the borough start developing an economic plan for the site.
“No decisions have been made at all as far as what that property is going to be used for,” Good told Town Hall attendees. “The whole goal is – it’s the people’s property. So the whole goal of that, the economic development discussion, is to figure out what the best use is going to be long-term for the property and for the City and Borough of Wrangell.”
The other two ballot measures are bond proposals, where the borough would take on debt to fund major infrastructure projects in town.
Borough Finance Director Mason Villarma says it’s been more than a decade since the borough last took on General Obligation bond debt – that was back in 2010, to fund a school playground.
“The biggest thing is that this isn’t some big pitch,” Villarma introduced the discussion. “It’s not promotional – I don’t want to be known as the bond guy. I’m not the bond guy. This is just an informative discussion. If I was known as the bond guy, that might be a tough sell at the grocery store. I’m here to just offer the information and give you guys the tools you guys need to vote. We’re presenting a solution, and you guys get to decide if it’s really the right one.”
Much of Wrangell’s public infrastructure was built in the same time period, in the mid-1980s. Some previous borough assemblies deferred building maintenance, so now roofing, siding and other integral structural components of the buildings are beginning to crumble. Borough officials say the community needs to take on some debt to make the necessary repairs.
Proposition 1 would take out $3.5 million of debt to fund repairs to Wrangell’s schools.
“The main basis for it is we’re trying to protect the interior of the school,” Good explained, “So that – and the siding needs to be done, the roof needs to be done. So we’re trying to protect the inside of that building [with those repairs].”
School district officials say that the $3.5 million from Prop. 1 would be used to try and leverage an additional $6.5 million in state funding through an educational maintenance grant program (the DEED CIP major maintenance fund).
District maintenance director Josh Blatchley says the district has secured multiple grants from the program in the past, beginning in the 1990s, and most recently in 2006.
“Roughly every 10 years, we have been able to obtain some money and put it into the schools,” Blatchley told voters, “And I think what we’ve done – or been able to accomplish – by getting those grants and putting some money into the schools is the schools are in a little bit better shape than the Public Safety Building. That was built at the same time, but we have been doing maintenance on them throughout, but they are still old buildings.”
Taking out the bond debt for Prop. 1 wouldn’t come at a cost to property taxpayers – borough and school officials say they’d be able to cover the debt payments through a fund called Secure Rural Schools, which gets its money from federal forest receipts.
But the other bond proposition might come at some cost to Wrangell property-owners. Proposition 2 would take on $8.5 million of debt for Phase One renovations to the community’s Public Safety Building. Borough Manager Good explained that the 37-year-old PSB needs many of the same repairs as the schools – new roof, new siding.
“The siding is so gone, it’s actually starting to do damage to the interior of the building itself,” Good said, “So some of the walls we’ve had to actually go up and shore up in the past – there’s rot on the inside.”
While the interest rate on a potential bond isn’t set in stone yet, borough officials like Villarma estimate that the debt service would be around $627,000 annually, if they obtain the expected interest rate of around 4%.
Wrangell resident Joan Sargent asked what the impact of that debt service might look like to taxpayers.
“As the public,” Sargent said, “People looking at ‘Okay, we’re in huge inflation,’ go buy a gallon of milk, okay? And so we’re all thinking, ‘Okay, what’s our bottom line going to be if we vote for this, at home?’”
Villarma answered that the borough currently estimates that Prop. 2 would require an 8.5% increase to local property taxes – a total of $151,000 annually: “So whatever your property tax bill is, you can probably guess that that’s what it’s going to be.”
That wouldn’t cover the full debt service, but the borough plans to offset the cost to taxpayers by using other funding sources to assist with payments, like the local Permanent Fund and a jail contract with the State of Alaska.
One problem is that the borough is currently in the middle of having all of the properties in town reassessed. That might result in much higher assessed values for some properties – borough officials say some areas of town haven’t been assessed in a decade or more.
But Villarma emphasized that the assessed value of a property and the mill rate – or the rate a property is taxed per $100 of assessed value – are independent variables. The borough isn’t going to ask taxpayers to double their payments, even if their house doubled in assessed value, he said.
“The assembly’s got to stay committed to saying ‘We’re not going to overcharge the public for these two debt services,’” Villarma said, “So essentially, this is what we need, we need eight and a half percent to be able to meet our obligations in the future, comfortably and sustainably.”
Wrangell resident Andrew Hoyt wondered if property taxes are set in stone as the sole way to pay back a bond.
“Is increasing the mill rate the only option here?” Hoyt asked. “It would seem to me that’s somewhat of an inequitable tax, so to speak, because not everybody in town owns property, so you’re putting that burden on those who have chosen to invest in the community itself by living here and owning property. I’m just wondering and curious if the option of increasing the sales tax in town by a penny, say, has been discussed by the borough by the city administration and such, because it would seem to me that that is an across-the-board tax on everyone who lives in Wrangell?”
Villarma agreed that more options could be on the table. Right now, Wrangell’s sales tax is fully spoken for, though. Eighty percent (80%) goes to the community’s General Fund, and 20% to the school district.
“You could target specific things in a sales tax hike, you could lift the cap, there’s an abundance of things you could do,” Villarma agreed, “And I guess I’ll say: Nothing’s set in stone until the budget cycle – when the assembly sets the mill rate, they set the budget and how we’re actually funding these. This is just the proposed and estimated way of doing it.”
And, Villarma added, grants or other funding obtained after passing a bond could be used to pay down the debt as well.
“If there’s other revenue sources that come in throughout the time or the life of the bond, we can still subsidize or pay that off through those mechanisms,” Villarma said. The borough plans to take out 20-year bonds, if the measures pass during the election. “So that’s kind of a commitment on the administration’s side: we’re not going to stop looking for external sources of funding, just because we get the $8.5 million from the voters.”
Capital Facilities Director Amber Al-Haddad provided an example: the playground funded by the last General Obligation bond the community approved was paid off by outside funding sources.
“Back in 2010, the community approved a bond proposition for the playground, around a million dollars, with the idea that the mill rate would be increased to cover the debt service on that,” Al-Haddad explained. “In the end, we were able to get a DEED (Department of Education) CIP grant for that project, so the mill rate didn’t change based on that project. So, you know, that’s a prime example of exactly what makes sense talking about ways to pay that debt back without impacting the community.”
Some town hall attendees wondered about the project itself – would it cover every critical element to keep the building standing?
“It’s probably a silly question, but I gotta ask it,” said Charles Haubrich, “Have you guys looked at demolition and just rebuilding it?”
They had, responded Al-Haddad. At the last estimate, obtained two years ago, renovating the Public Safety Building would cost over $16 million, and a new build, housing the same public services, could reach well over $30 million.
She continued that there isn’t a plan to issue another bond to cover subsequent phases. This bond would cover the critical structural needs, and other internal fixes could be done piecemeal, as the borough found funding.
Some questioned how the Public Safety Building was able to deteriorate to such a critical condition when Wrangell property owners have been paying taxes through those years.
Al-Haddad explained some issues weren’t known about until they reached emergent levels. For example, the building’s internal gutters were leaking and compromising the structural integrity, but because they were internal, it wasn’t clear until workers did destructive testing.
The borough discovered that in 2016, after finding an infestation of carpenter ants and looking further. They’ve been trying to figure out what to do ever since.
“We’ve been working on this and deliberating about what to do for a long time, because it’s so expensive to do anything,” Al-Haddad said. “But it’s a problem, and it’s not going to get any better.”
Moving forward, Wrangell officials assured the attendees that the borough is implementing systems to better keep up with building maintenance.
“We’re gonna do biennial inspections on all of our buildings, so we’re going through each building every other year, and doing a thorough inspection,” Good said, “So that’s what we’re trying to develop now, trying to get ahead of stuff, and try to be a lot of plan long term, so that we hopefully won’t end up in a situation like this in the future. That’s our goal.”
“The other thing we’ve done to piggyback on that,” Al-Haddad continued, “Is, we’ve purchased software that allows us to now have an automated preventive maintenance program. So you know, all the systems have been put into that database, and we’ve populated, you know, the frequency of checking, you know, the variety of systems in that building, so we don’t miss those critical pieces.”
After about an hour of presentations and questions, Villarma wrapped up the Town Hall meeting, thanking attendees: “No matter how you guys vote, you know, this isn’t a pitch or anything like that. We just appreciate citizens that are asking the questions and concerns and it just shows that you guys care.”
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