Three options for a possible city tax increase were discussed during the Monday night meeting of the Lonoke City Council.


Leigh Ann Biernat with Stephens Inc. made the presentation for the sales and use tax leveraging options. The first option would be a 1.5 cent tax, which generate $1, 336,000 in tax collections based on the current sales tax revenue. Project funds generated by the bond issue is estimated to be $16,310,000. The estimated annual bond payment would be $1,068,000 for the thirty year bond, with a projected 20 year maturity.


The second option, would be a 1.25 cent tax, which generate $1,113,000 in tax collections based on the current sales tax revenue. In addition, a 0.25 cent tax with $223,000 in collections would be used as bond coverage, with excess that can be used for a specified city purpose. Project funds generated by the bond issue are estimated to be $16,310,000 and the estimated annual bond payment would be $1,068,000 for the thirty year bond.


The third option, would be a 1 cent tax, which generate $891,000 in tax collections and a 0.25 cent tax with $223,000 in collections that would be used as bond coverage, with excess that can be used for a specified city purpose. Project funds generated by the bond issue are estimated to be $13,565,000 and the estimated annual bond payment would be $891,000 for the thirty year bond.


According to Biernat, the figures are based on a 4.5 percent interest rate which she said is conservative in today’s market. John William Spivey, III of Wright, Lindsey & Jennings LLP of Little Rock who has served as bond counsel for the city in the past, was also present for questions. Some questions asked of Spivey was how the tax would be broken down for separate projects such as street repairs versus sewer repairs, if each project would be voted on by residents separately or as a whole and if only one item failed, would the tax not pass.


According to Spivey, each item would be designated by project, based on department and would indeed be voted on separately by voters. How they are broken down would be depend on the project itself. He said in the event an item within the one cent breakdown did not pass by the voters, that portion of the tax would then be disbursed to pay off the remain items passed, sooner.


Some concerns presented were what areas of the city would be prioritized for paving and repairs, and how those are selected. According to Mayor Wayne McGee, the worst areas will be top priority.


“I’d like a figure, to know what it would take to fix more than just spots,” Alderman Woody Evans said. “What it would take to fix everything we need to fix as far as old stuff, before we ever decide. We’ve got to have a figure to go by before we can decide what we’re going to ask for.”


“You’re probably getting up over $30 million,” McGee said.


Evan said while he understands the overall cost, but feels like they may be going citizens an injustice by not know what the city can do overall. He said he would hate to know the city could have done a lot more work if they had known, as example with $1 million more, but didn’t know because they didn’t check.


“I kinda want a dollar amount to see what it’s going to cover and fix,” Evans said.


City Treasurer Phillip Howell was asked if he felt comfortable with the figures presented, and if he felt the amount was enough money.


“I look at it two different ways,” Howell said. “I like the cent half number because it’s a little more significant number, but reality is our needs are about four times that, if we really need done but that’s not realistic. The other side of it is what can we get the city to support. That’s what worries me. Can we even get them to support a penny, I’m not sure. I hope we can. I think if we went to them and said we want a three percent tax to support a bond issue to do a more significant amount of work, we probably can’t get it passed. So, I think the cent and a half is a pretty aggressive target for us to get passed in the city right now. That’s more of a personal opinion than a fact, I guess. I think most people are tax averse until you prove to them what you’re going to do with it.”


Howell added that making improvements in the city may possibly help the city grow, which will also increase sales tax revenues.


Spivey said he will begin working on putting costs to projects and how much is need, what it would cost and where the priority areas are. By unanimous vote, the council approve to move forward with working with Spivey.


In other business, the city opened bids for the repair of the Perry’s Motel Pump Station. Four bids were received. The lowest was $88, 563.61 from J & R Contractors Inc. of Palestine. The highest bid was $138, 500 from B & B Utility Contractors Inc. of Marion. McGee said this will be the only pump station that has yet to be repaired in the city. By unanimous vote, the Council accepted the lowest bid of $88, 563.61 from J & R Contractors Inc.


McGee also informed the Council that he had received a contract concerning the construction of the new senior citizens center. McGee said he did not feel comfortable signing the contract without their consent as he has received no further information on the building.With a unanimous verbal agreement, the mayor agreed not to move forward with the contract, for now.


Aldermen Janie Derning and Efrem Jones were absent from the meeting.


Also during the meeting, the Council unanimously approved to:


-Adopt ordinance 724, a unified development code by reference; ordinance 725, waving bidding for repairs and cleaning to the sewer system by L & R Sewer up to $40,000


-Accept the 2016 water audit


- Retain all watch list properties and properties being considered for condemnation until the next meeting


- Move forward with tearing down the property at 509 Reynolds and place the property at 319 Reynolds on the condemnation list


-Use $194,090 from the water department fund to pay the difference for street asphalting, with funds to be reimbursed to the water department fund the street fund in January 2018.


- Spend $1,401.68 for tractor repairs; $5,346.45 on oil for the mosquito department; $11, 059.50 on mosquito spraying equipment; $3,495 to have the fire department page out tower relocated to the courthouse and re-installed on the water tower once the tower painting is completed; $2,503.23 for annual servicing to the new fire truck; up to $11, 268 for water well equipment at the ballpark and up to $38,000 for water well repairs


- Purchase a new console for community center equipment for $1,149.74


The next regular scheduled Council meeting will be at 6 p.m. Aug. 14 at City Hall.