Officials: Proposed property tax increase would retire

CNJ staff photo: Sharna Johnson Court officials say a proposed courthouse would keep inmates separate from the public and jurors, a security risk they say the existing courthouse does not address.

Sharna Johnson

A proposed property tax increase to build a courthouse would retire in about 20 years — after the bond is paid off. A proposed increase in gross receipts tax will not sunset unless county commissioners choose to end it when a jail is paid for in about 25 years.

The Curry County Commission is asking voters to approve the two bond questions in the Nov. 2 general election to pay for a proposed $33 million criminal justice complex in downtown Clovis.

The project would be the most expansive — and expensive — construction project Curry County has embarked on in its 100-year history. And it seeks to address county needs until 2025, officials have said.

A general obligation bond question asks voters to approve an increase in property taxes to raise $16.5 million for a new courthouse.

The second bond question asks for a .25 percent gross receipts tax increase for capital outlay projects.

The county has said the intended use for the GRT increase is to build a jail, renovate the existing jail and to operate the proposed courthouse.

“We’ve got to address the jail,” Curry County Manager Lance Pyle said. “That’s the intent (of the commission).”

The GO bond for courthouse construction — which would cost approximately $35 more a year in taxes for a $100,000 home’s owner — would go away at the end of 20 years or whenever the $16.5 million debt is retired, unless voters approve an extension, Pyle said.

The GRT bond, however, does not have a “sunset clause” and .25 percent tax would continue to be charged on goods and services in the county even after the debt is retired, unless the commission chooses to end it, Pyle said.

As a percentage of goods and services sold in the county, the amount generated by the bond could fluctuate with economic conditions, Pyle said, and is expected to increase with inflation and community growth.

Pyle said current projections place the GRT revenue at $1.8 million a year initially, with $1 million earmarked to pay the bond’s debt and the excess being used for operation of the jail and courthouse, which is estimated to cost a combined $1.2 million a year more.

The legal language used in the GRT bond question gives the county latitude to spend the .25 percent increase on any capital improvement project, which is defined as design, construction, improvement or acquisition of public property for:

• Wastewater facilities

• County jail

• Juvenile detention center

• Roads

• Airport facilities

• To pay gross receipt tax revenue bonds.

Pyle said to stay within legal requirements for using the money, he will have to move money around and use the GRT revenue to pay for other capital improvements the county has budgeted. Pyle said he then would take money in the general fund earmarked for those projects and direct it to the judicial complex’s operation costs, such as utilities, payroll and other expenses.

Bond attorney Duane Brown said the county had the option of more constrictive language for the GRT bond, identifying a specific project and end-date, but to do so would not have made it possible to meet operating expenses and would have been short-sighted.

“The language that’s in the question is virtually right out of the statutory requirements, (and was chosen) in order to provide flexibility down the line. We could phrase it so it could only go to this project, but we rarely do that. … There’s other needs and you’re not going to use all the money for debt,” Brown said.

Without that flexibility, the county might build the structures, but not have the money to turn on the lights or meet other needs, he said, something he said he has seen happen with major projects in other New Mexico counties.

“The county here didn’t want to do that … just to get it built and have to come back and fix the second part,” Brown said. “I think this is really very insightful on the county’s part … this is really a comprehensive approach.”

Financial advisor Kevin Powers said the county has approximately a $28 million bonding capacity under state requirements. He said that prevented commissioners from seeking the full $33 million from a single GO bond, forcing the split ballot questions.

Brown said as such, designing the bond questions and planning for the use of the money was challenging.

Brown said in all reality, even though as separate questions voters could choose one and not the other, they are symbiotic and depend on each other to fulfill objectives of the project.

“It’s one of those things that in the design of this, there wasn’t a perfect way to do it, but we did what we could with what we had,” Brown said.

If approved, the GO bonds could be issued as early as January and the GRT would take effect July 1 with bonds issued in close proximity to that date, Powers said, in an effort to take advantage of “historically low interest rates.”

Within six months from the date bonds are issued, federal regulations require the county to have spent 5 percent of the money, Powers said, and complete spending in three years.

While construction is ongoing, money from the GRT not yet needed for operations could be used for other capital outlay projects in the county, he said.

Powers said the fall of 2011 would be a solid projection for GRT bond issuance, placing a deadline for completion of spending for the courthouse in January 2014 and the jail in fall 2014.

Pyle said under those timelines — if approved by voters — the buildings could be ready to be occupied by 2013.