Sales tax increase moves closer to November ballot

The Eureka Springs City Council used a series of votes to move a bit closer to getting a proposed 1-cent sales tax increase on the November ballot.

At its regular meeting held Monday, April 13, the council — with two members absent — voted 4-0 on the first readings of three ordinances required to get an issue on the ballot that would increase the city’s sales tax by 1 percent.

The proposal is aimed at getting the city’s influx of tourists to help pay for much-needed improvements to water and sewer infrastructure.

The council agreed on the 1 percent proposal, with revenue from the tax increase dedicated to repaying a $17 million, 20-year bond, and had ordinances drafted before Monday’s meeting. The council needs to give final approval to the proposed ordinances in August to meet the deadline to have the items placed on the November ballot, council members have been told.

“We will have to pass three things on that ballot,” city finance director Michael Akins told council members during a workshop held March 23. “We will have to pass, number one, the sales tax. Then we will have to pass an authorization to use that sales tax for water improvement bonds, and one for sewer improvement bonds.

“Now, this could go a lot of different ways.  … If we get the sales tax passed and the two bond ordinances don’t pass, that means we still get the sales tax, we just wouldn’t be able to utilize it for a bond to get a big chunk of money to do a bunch of repairs.

“If the bonds pass and the sales taxes don’t, we don’t get anything. It doesn’t mean anything. So, for us to do what we want to do, all three of them need to pass.”

Akins said the payment on a $17 million bond would be about $1.3 a million a year for 20 years. He said information he has received indicates that a 1 percent sales tax increase would generate enough additional revenue to satisfy the bond payments.

“So, you would have the $17 million up front, and then you would make the payment of the $1.3 million a year,” Akins said. “If the tax generates the $1.7, as it is doing right now, that would leave you about $400,000 extra to put into your water department, put into savings for future projects or whatever.”

Interest rates on municipal bonds are at 4.24 percent, Akins told the council, and there is some urgency to get the plan approved as soon as possible.

“[Rates] could go either up or down,” he said. “… We would want to do this as soon as possible so we can get going on this, but the Aug. 18 would be the last city council meeting that we could pass the ordinance … then the election would be Nov. 3.”

At the April 13 council meeting, there was little discussion of the proposal, which the council has said repeatedly will require extensive public education.

The key is making sure that voters know that a sales tax increase would bring in additional tax revenue from tourists, thus allowing those visitors to help pay for infrastructure, the council has stressed.

“For people out there, we need to really make this clear for the public to understand it,” council member Steve Holifield said. “… Basically, we’re asking for the sales tax increase, then we’re asking for a bond to say this is almost like borrowing money on what would come in through the years. So, we’d have that chunk of money up front to start working on stuff right away.”

Recent water and sewer rate increases, along with Infrastructure and Improvement fees, have been a burden for some residents, and this proposal should provide the needed relief, council member Susane Gruning said at the March 23 meeting.

“With the rate increases that we’ve had, and then if we increase the 1 percent sales tax that comes in from tourism and other people visiting the town, not just on the residents, we can help cover these expenses,” Gruning said.

Those facts have to be made clear to the entire community, she added.

“It’s got to be very clear to the public that if we only vote for the sales tax, that’s going to trickle in slower, where if they vote for the bonds, both of them ... then we have the money up front to be able to do what we need while we pay it back with the sales tax,” she said. “I think we all get it, but we need to make sure that everybody in Eureka that votes for this understands this.”

Three proposed ordinances were approved on their first readings by council members Holifield, Terry McClung, Harry Meyer and David Avanzino at the April 13 meeting.

One proposed ordinance would establish the 1 percent sales tax for 20 years, another calls for an election and a third explains the bond-payback procedures. All three need to be approved for the proposal to be successful, the council agreed.

Passing the sales tax would likely eliminate the I&I fees on residents’ bills, the council discussed.

Each ordinance has to be approved three times, so any changes or adjustments can be made before the next vote, which likely would come at the council’s next meeting scheduled for April 27.

THIRD TIME A CHARM

With two council members absent, resident Lyla Allison’s proposal to purchase city-owned lots adjacent to her property — which had been rejected twice by the council — was finally approved.

The council voted 4-0 to approve Allison’s third proposal to purchase a group of lots on Anderson Road near her home and two sheds.

Gruning and council member Rachael Moyer, who had voted against two earlier proposals, were not at Monday’s meeting.

“I took into consideration the last three council meetings I have been at trying to get this boundary resolved,” Allison told the council Monday. “I feel like I have made a proposal that took into account all of some of the council members’ concerns.”

Allison said the lots total roughly one-13th of an acre.

“I included two photographs from the historic register that I received from the historic museum that shows the sheds on the property registered at 48 Anderson,” Allison said. “I know that that does not show any ownership of those, but it does show that those were intended to go with this property. They were built and have been owned by the property owner at that address for all of these decades. The city has not tried to do anything with the property, and as far as I understand, there are no plans to do anything with the property. I just cannot imagine why me purchasing them would be an issue.”

Allison’s proposal to purchase the lots for $5,500 was turned down at the March 23 council meeting, with Holifield and Avanzino joining Moyer and Gruning in voting no, but council members had a different response at Monday’s meeting.

“Lyla, I just want to say, for the record, I think you’ve gone above and beyond in proving your case to this council,” Avanzino said. “I’m ashamed that you’re in the position that you are in. With that, I will make a motion that we accept this proposal as presented.”

With no further discussion, McClung seconded Avanzino’s motion, which was approved 4-0.

PUBLIC WORKS HAPPENINGS

In his public works update, director Simon Wiley said his department has recently replaced 25 feet of sewer main on Cushing Street and 20 more feet of line are set for Center Street.

The city is also nearing completion of a project to replace old water meters.

“We have 23 meters left to change out,” Wiley said.

A water leak was being repaired near Quality Inn, and an abandoned service line was also repaired at Clear Spring School.

A big project on the horizon is the replacement of about 120 feet of a six-inch water main at the Osage Creek Lodge at 101 E. Van Buren.

“This work will begin [Tuesday, April 21], and it’ll happen at nighttime. So, they’re going to do all the excavation, all that work at night, but we’re still gonna have to repair the road during the daytime,” Wiley said. “I look for that lane probably be closed for three days, just so everybody’s aware. We’ll have traffic signals up for that and the whole nine yards.”

The annual Eureka Springs Spring Clean-up will begin on Monday, April 20, Wiley said.

“Tickets are $25 and they’re available at the public works office,” he said. “So, if you’d like to participate in that spring clean-up event, just head down to our office and purchase tickets and we’ll take care of it.”

The event will include curbside pick-up of bulky, non-hazardous household items, excluding items like tires and hazardous waste.

“Of course … no batteries, no paint, no tires, things like that,” Wiley said. “Chemicals, the herbicides, pesticides, none of that kind of stuff. No liquids, no freon, nothing like that.”

OTHER ITEMS

In another approval, Anna Smedley was selected to be a member of the city’s planning commission and Board of Zoning Adjustment.

She attended her first meeting in that role on Tuesday, April 14.

Smedley is the executive director of the Eureka Springs Community Center.

The council also voted to have a company come in and shred all city documents that have been stored for a number of years that the city is no longer legally required to keep. All those records have been digitized, the council was told.

In his comments to close the meeting, mayor Butch Berry told the council that the city was recently informed it has been selected as a 2025 Tree City USA designee.

“This recognition highlights our community’s unwavering commitment in planning, caring for and celebrating trees,” the mayor said. “It reflects the dedication of our residents and our staff in preserving natural beauty and environmental health of our city and it’s an honor to be recognized at the national level for these efforts.”