MARION — Despite the ongoing financial hits from the pandemic and derecho, Marion plans to move forward with major city projects in the new budget year including a bigger library and improvements to the Seventh Avenue streetscape.
Marion’s preliminary budget for fiscal 2022, which begins July 1 and ends June 30, 2022, was presented this week to the City Council. The total recommended expenditures for the general fund, the chief operating fund for the city, is nearly $28.3 million. The recommended expenditures in the capital fund, typically used for building and purchases, is more than $43.4 million. A final budget is set to be adopted March 18.
The current cost estimate for Marion’s cleanup from the Aug. 10, 2020, derecho is $43 million, though the city won’t have to pay for the entirety of the recovery.
“That’s a big number,” Budget Manager Zachary Wolfe told The Gazette. “Our general budget is around $25-26 million, which funds most of our ongoing services. So that was wiped from an event that lasted one hour.”
Marion expects the Federal Emergency Management Agency to reimburse about 75 percent of the cost, with the state covering an additional 10 percent — meaning Marion expects to pay 15 percent or $6.5 million, a city memo shows.
The fiscal 2022 budget sets aside funding to cover about half of the city’s cost, or $3 million. The remaining amount will be included in the following year’s budget.
Additionally, the city is taking out a short-term loan over four years to help with the upfront costs as FEMA reimbursements will take months to arrive.
City Manager Lon Pluckhahn told The Gazette he plans to recommend Wells Fargo as the lender to the council. “We are looking at $20 million,” he said.
Wolfe said taking a loan gives the city more flexibility than bonding.
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“We expect it will cost us $200-400,000,” he said. “The rates have come in more favorable than initially. If FEMA processes reimbursements quickly, it could be closer to $200,000. If the opposite happens, then it’s closer to $400,000.”
Wolfe said the cost of the loan is built into the city’s debt service, with $200,000 from property taxes and the other $200,000 from the debt service fund balance, or money already set aside.
“That’s just the interest,” Wolfe said. “With the total cost for the city at $6.5 million, that’s about $438 a household.”
The city still plans to take on major projects.
A new and larger Marion Public Library broke ground in October and aims to be complete in March 2022.
The $18 million project is being funded by a $3.3 million capital campaign, $5 million in local-option sales tax funding, $3 million in property damage insurance and the sale of the current library site, $6 million in bonding and $1 million in tax increment financing.
In addition, the extension of Sixth Avenue is expected to be paved in the spring and the Seventh Ave Streetscape then will be launched. The project, a decade in the making, is expected to cost $6.5 million, with most of the funding coming through bonding.
The highest degree of change will happen between 10th and 12th streets and will turn Marion’s main drag into a festival street — meaning it’ll become more walkable with an option of closing for events.
The city also is in the process of constructing a public services building. The $10.8 million project will be financed with revenue bonds, according to the city website.
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The project includes one of the largest geothermal facilities in Iowa and will incorporate renewable energy systems.
Taxes and fees
For the second year in a row, the city proposes reducing its property tax rate, this year by a penny and a half per $100,000 of taxable valuation. The proposed rate is just under $14.20 per $1,000 of taxable value.
But even with the lower rate, the average homeowner would pay a larger city tax bill because of rising property values in the growing city and because a larger percentage of that value is subject to being taxed.
“Overall, the city of Marion is looking to reduce 1.5 cents but it’s not a decrease in taxes, because of rollback,” Wolfe said. “We’re including the cost in the current tax rate and were looking to pay down our debt. We had a major event and it impacted our city.”
According to the city memo, residential properties per $100,000 assessed value would see a 2.31 percent increase in the city tax bill.
According to the city, its total assessed value of property in fiscal 2022 is $3.2 billion, an increase of 2.2 percent or $69.9 million from fiscal 2021. The total taxable value for fiscal 2022 is $1.80 billion, a boost of $64.3 million or 3.72 percent, Wolfe said.
“In Iowa overall, many communities are not growing, but Marion is one of the fastest growing communities,” he said. “The tax impacts the city and tax evaluation has increased. With that, that has put some increased pressure. We are still growing, but not at the same rate we were.”
City utility rates for sewer, garbage and water also are set to increase in the upcoming fiscal year due to increases in expenses to operate them.
If the increase in the property tax bill is included with the utility rates and annualized, according to the memo, the annual increase estimated for the average homeowner in Marion with a $168,700 home is $93.10, or 4.1 percent.
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