Spring Hill leaders lay out plan to potentially introduce property tax increase

Spring Hill leaders lay out plan to potentially introduce property tax increase


At their Monday night meeting, the Spring Hill Board of Mayor and Aldermen discussed a potential plan to introduce a gradual increase of property taxes over a five year period, stemming from the tens of millions of dollars’ worth of projects currently in development throughout the city.

Additionally, Alderman Matt Fitterer submitted an ordinance that would limit all proceeds made from any future property tax increases in 2019 to be used solely on road projects. The proposal sparked an intense, in depth discussion during the meeting over the city’s debt capacity, implementing an increase on property taxes, as well as its multitude of infrastructure projects.

Fitterer made clear at the beginning of the meeting that the intent of his ordinance was to merely facilitate the spending of any new earnings from a potential property tax rate increase, and that he was in no way advocating for, or proposing a property tax rate increase.

In 2017, city staff had outlined a list of roughly 20 development projects – mostly roads – that were deemed to be a top priority for the city. With new deadlines being established, more projects being added, and costs sometimes exceeding original estimations, city staff continue to tirelessly discuss how to pay for it all.

“As we’ve gone through the expenses – and we’ve looked at the roughly 20 projects that made the priority list – they totaled $182,865,000,” said City Administrator Victor Lay. “Fortunately, we’re expecting some of that money to come from other places, [from] things like the build grant, $25 million. Now we want to look at going forward… how do we fund this?”

Accounting for all the city’s numerous revenue sources; things like the adequate facilities tax, traffic impact fees and the $25 million from a federal grant, the city would only be on the hook for just under $90 million of the roughly $182 million needed for development projects. While less than half of the required amount, the task of being able to fund all these projects without blowing out the city’s debt over the next 10, 20 years is still no small task.

All these factors is what eventually led the city to consider a property tax increase.

“So when we look at this, you say, ‘is there any other moneys to avoid property tax increase, can we shift our money anywhere else,’” Lay said. “Well, that’s adequate facilities, or traffic impact fee, or water and sewer development fees, or you don’t do the project. When you look at it holistically, those are your choices.”

Lay continued by citing some dangers in relying on revenue sources other than property taxes for paying off debt. He said things like traffic impact fees or adequate facilities taxes can be inconsistent in the revenue they draw in.

For instance, Lay said that the city had brought in over $3 million in adequate facilities taxes this fiscal year, but that they project to bring in less than $2 million this following fiscal year due to the cyclical and inconsistent nature of those types of revenue sources.

If the city were to impose Fitterer’s suggestion of dedicating funds from a potential property tax increase only to road projects, Lay said, based on current projections, that the city would likely be forced to come up with new revenue sources, lest they abandon certain projects.

“If you concentrate it solely on [roads], then there’s no library, there’s no police department, unless you’re willing to come up with another source of money,” Lay said. “You’re looking at a new debt of $845,000 a year. [With the adequate facilities tax],we’ll be in the negative next year a million dollars. If we’re in the negative, then general fund has to pick it up and take care of it. Traffic impact fee, if you don’t do anything, you’ll be in the negative next year about $2 million, and you’ll continue to be in the negative through year ten about $1.5 million. This is daunting stuff.”

Currently, the city’s property tax rate is split into two camps; .6569 cents on the Williamson County side, and 60 cents on the Maury County side.

Lay laid out a possible phasing plan for a gradual increase on property taxes, which would see rates increase over a period of five years. The increase to the current rate would be 5 cents the first year, 31 cents the next year, 41 cents the next year, and finally, to 43 cents in 2023 and 2024.

For context, a home valued at $300,000 currently sees property taxes of $450 for the Maury County side, and $492.68 on the Williamson County side. If the property tax rate increase were imposed as laid out, by the end of the phasing that same home would see property taxes of $772.50 for the Maury County side, and $815.18 on the Williamson County side.

Ultimately, the property tax rate for Maury and Williamson County homes in Spring Hill would increase from 60 cents and .6569 cents, respectively, to $1.03 and $1.09, respectively.

Vice Mayor Bruce Hull was not in favor of the phasing plan, arguing that it wouldn’t be wise to gamble on the actions of future city leaders.

“As far as the phasing, my comment on that is it takes a lot of political will to increase property taxes, and if you’re going to do it, just do it,” Hull said. “Don’t try to commit future boards to doing a tax increase every year, because it won’t happen. And the thing is, once we bond these projects, we’re on the hook for that debt, and so we’re setting ourselves up to fail if we do that.”

Additionally, Hull pointed out that even if the city were to try to squeeze the funds from other revenue sources, ultimately, the residents of Spring Hill would pay for it one way or another.

“As we talk about the best way to fund this debt, at the end of the day, all of us as consumers are paying for it one way or another, whether it’s through a higher priced home because we raised the impact fees, or we’re paying more at the store because we raised the sales tax,” Hull said. “The property tax is the one that’s able to best resist a downed economy. If we put all our eggs in fees to development, when the economy checks… which it’s going to… we’re going to put ourselves in a pinch if our funding relies on development fees only, or a majority. We need the stability of the property tax.”

Alderman Vincent Fuqua agreed with Hull’s comments, saying that they displayed “good leadership.”

The power and stability of property tax as a revenue source was further illustrated in the study; assuming Spring Hill sees a growth per capita of at least 1 percent a year, each penny added to the property tax rate yields $116,000 annually to the city.

As the meeting Monday night was a nonvoting meeting, no ultimate decisions were made on whether to implement a property tax rate increase, or whether to commit its funds solely to road projects.

Given the gravity of the decision, city leaders decided to continue the discussion during a specially called meeting on Tuesday, March 26 at 6 p.m. at City Hall. The meeting will be open to the public, and have opportunities for public comment.

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