PRAIRIE GROVE -- Prairie Grove City Council voted last week to call a special election on Feb. 9, 2021, to ask voters to allow the city to refund bonds secured by a 1% local sales tax and a 0.75% local sales tax and then use the two sales tax rates to issue new bonds to finance up to $18.3 million in new construction projects.
In all, the special election ballot will have nine questions for voters to answer, either by checking a "For" or "Against" box on each question.
Ryan Bowman with Friday, Eldredge and Clark law firm in Little Rock attended the City Council's Nov. 16 meeting to explain the ballot questions to council members.
"This is a complicated ballot," Bowman told council members.
Bowman said council members should stress to the community that the city will be able to complete the proposed improvements without a tax increase. The current 1% and 0.75% sales tax rates would end but then be replaced with a new 1% sales tax and a new 0.75% sales tax.
Revenue from these taxes would be deposited into a construction account for new projects and can only be used to pay off the new bond issues. The 1% sales tax and the 0.75% sales tax would expire when the debt is paid off.
"A 'yes' vote (on all questions) allows you to do what you want to do as a city," Bowman said.
Bob Wright with Crews & Associates financial firm said refunding the two issues and turning around to sell new bonds would give Prairie Grove "a lot of bang for the buck." Wright said many other cities are doing the same thing to make improvements without increasing their sales tax rate.
"It's a good time to get this done," Wright told City Council members.
The city is seeking to refund a 2014 bond issue (originally issued in 2005) secured by a 1% sales tax that can only be used for sewer improvements and to refund a 2012 bond issue secured by a 0.75% sales and use tax.
Amending The 2005 Ordinance
The first question on the election ballot is asking voters to amend the 2005 ordinance and allow the city to use net collections from the 1% sales tax for capital improvements, not limited to sewer improvements, and to allow the city to extend the sales tax another 15 years to 2051.
Bowman said this first question must be approved for the city to be able to change the purpose for collecting the tax and to extend the life of the tax.
Questions Related To 2014 Bond Issue
The second question on the ballot asks that the city be allowed to refund the maximum principal amount of $500,000 from the 2014 bond issue using sales tax proceeds.
If voters give the city the authority refund the 2014 issue, then it is asking voters to separately approve the issuance of bonds in three areas that would be paid off with collections from a new 1% sales tax:
• A maximum of $995,000 in fire improvement bonds.
The money would be used to purchase a new fire pumper to replace one from 1995. Any money left over would be used to outfit the truck.
• A maximum of $2.95 million in water improvement bonds.
This money would be used to replace the remaining 1933 water infrastructure on multiple streets in the old part of Prairie Grove and to replace other 50- to 70-year-old cast iron lines in the city.
• A maximum of $6.95 million in sewer improvement bonds.
The money would be used to expand the wastewater treatment capacity from 900,000 gallons per day to 1,350,000 gallons per day by adding new equipment to the plant. A rough estimate of this upgrade is $3.25 million.
The remaining money would be used to upgrade and replace 1938 sewer lines.
Questions Related To 2012 Bond Issue
The next set of questions on the ballot deal with a 2012 bond issue secured by a 0.75% local sales tax.
First, the city is asking voters to allow it to refund a maximum principal amount of $1.45 million with sales tax revenues.
If voters give the city the authority to refund the 2012 bond issue, then it is asking voters to separately approve issues for construction projects in three areas, with the levy and pledge of a 0.75% local sales tax to pay off the bonds:
• A maximum of $3,495,000 in street improvement bonds.
This money would be used to extend Viney Grove Road from Bush Street to Buchanan Street, including improving the intersection at Bush Street and Viney Grove Road. Estimated cost for street work, a bridge and engineering is $2.5 million.
• A maximum of $995,000 for park improvement bonds. The money would be used for a new splash pad and other rehab work at the Aquatic Center.
• A maximum of $2.95 million for drainage improvement bonds. Plans include work to improve drainage issues along Buchanan, Neal, Kate Smith, Mock and Cleveland streets.
In a memo to City Council members with "talking points" about the election, Larry Oelrich, director of administrative services and public works, said the new bond issues would be for 25 years but he anticipates the debt would pay off sooner than expected. He noted that sales tax revenues have more than doubled the past 10 years.
Oelrich said bonds backed by sales tax revenues are good for the community because they spread out the cost of infrastructure improvements to a larger base.
"Anyone who comes into the community and benefits either directly, or indirectly from city infrastructure helps pay the cost if they purchase or spend dollars inside the city," Oelrich said. "All of these projects are projects which the city has been working on for many years and will benefit our citizens through improved infrastructure and improved services."