San Marcos Mercury | Local News from San Marcos and Hays County, Texas

June 9th, 2008
City of Kyle Channel: Library committee nears site decision

STAFF REPORT

A library building committee that has puzzled for years trying to put up a new facility in Kyle is asking the public to attend its Thursday night meeting as a decision draws closer.

The City of Kyle Library Building Committee doesn’t intend to provide for public comment at the meeting, which will take place Thursday, June 12, at Kyle City Hall at 6:30 p.m.

However, the committee hopes to finalize a recommendation on a library site for the city council, which will make the final decision.

The committee will hear and review proposals and possible land sites for a new city library. The city long ago outgrew its present 2,000-square-foot location across from Kyle Elementary School. The city wants to build a new facility of around 15,000 square feet for approximately $4 million, land included.

The committee will consider up to nine possible locations. Downtown advocates have favored placing the facility anywhere from the city square on Center Street to a little further up Burleson Street. The city also has a land donation offered by Barshop & Oles, which owns property on Interstate-35, where Center Street dead ends at the highway.

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4 thoughts on “City of Kyle Channel: Library committee nears site decision

  1. If the report is accurate on the cost, $4 million dollars, how did the library increase from $3 million to $3.3 to $4.0 million so quickly?

    One can only guess what is next. The council will be asking for another $10 to $15 million for the Seton project.

    Remember all the projects the city has borrowed tax payer money for: city hall (3 million), 11 mill for county roads, 14 million for PUD, 20 plus mill for Seton, 7 million to be paid back for new target project, 4 mill for library, 4+ mill for downtown project, HEB project, road 1626, and many other past bonds. Also many bonds, like the PUD, payments have been deferred.

    Home owners be prepared! With gas prices up, your appraisals increased, the city is likely to increase your property taxes too!

  2. I put $4 million for the library cost as a round, ballpark figure, based on a confusing pencil revision in the five-year capital improvement plan presented last week. The real number in the plan is $3.5 million, which, if we’re rounding to the nearest million, we’d call $4 million. I shall explain.

    I’m not sure how to link to the plan because I’m using a mac at the moment, but if you go to http://www.cityofkyle.com/CIP08Proposed.php, find the link that says “Five Year Capital Outlay Program,” and go to Page 4 of the PDF, you’ll see the confusion. I won’t try to describe the garble, but it does look as though they have $4.2 million for the library in the capital improvement plan.

    However, I have since found what the staff was trying to say. Go back to the original page I gave and hit the link that says “Long Term Dept” [sic]. On page seven of that PDF, they show plans for 2010, which include $3.5 million for a library and $700,000 for a renovation of the old city hall. That’s where the penciled in $4.2 million on the other document comes from. I should add, since I missed this previously, that the page also shows $5 million for a new police station, which pushes the city’s wish list in the next five years past $65 million.

    Some of that debt already has been issued, but much of it has not. The city still has to find ways to swing for the old city hall, the library, the police station and a rec center, among other wishes. The rec center will involve a bond election asking for $18-20 million, probably in November 2009. As you mentioned in a comment elsewhere, Mr. Walsh, that does not include debt the city already is servicing from previous commitments.

    Kyle has grown a lot faster than anyone wanted. With growth comes demand for city services, which are expensive. It’s up to the good people of Kyle to decide what level of service they want, and what they can afford. Based on puny voter turnouts, I would guess Kylites are either satisfied, or they’re inattentive. And if they’re inattentive, it could be because they’re satisfied.

    As to the cost of the library, the city council has given the building committee a parameter of $3.3 million, and a clearer reading of the five-year plan shows $3.5 million in FY 2010. The staff hasn’t actually said $4 million, but if we’re rounding to the nearest million, that’s where it ends up.

    It should be added, Mr. Walsh, that many of the projects that you have characterized as being financed by “borrowed taxpayer money,” are nothing of the sort. The “11 mil for county roads” is really borrowed from the state infrastructure bank to change the Interstate-35 access roads from two-way to one-way, among other improvements.

    I could be wrong about this next one, but it seems the “14 mil for PUD” and “road 1626” are the same project, and, if so, it’s not a PUD (planned unit development), but a TIF (tax increment finance zone). And TIF money isn’t “borrowed from tax payers,” either. The city takes out a loan and pays it back with the difference between the TIF zone’s original property tax collection, which was miniscule, and the increased collection as the TIF zone is developed, which already is much higher. It is true that if the TIF zone property value doesn’t increase enough, the city will have to do some scrambling. However, the TIF zone is already adding a hospital and two million square feet of retail. Whether all that happens in time for the city to make its next TIF payment or two, I don’t know.

    As to the “7 million to be paid back for the new target project,” as your semantics indicate, that money isn’t “borrowed tax payer money,” since it’s being “paid back for the new target project.” The developer is fronting the costs for infrastructure and the city will kick back 50 percent of the sales tax generated only by that development for ten years, up to $7 million.

    In other words, the city has left homeowner taxes out of the Target project and the Kyle Parkway TIF. The city is fronting $20 million to move the Seton project, but it gets the hospital, the retail and the road improvements in exchange. If you think that’s a dumb investment or a bad trade, I’d love to hear the argument. I would argue against all the sprawl drawn into the plans, but I don’t seem to have a lot of company around here on that matter.

    The city has cut its property tax rate in half over the last ten years with several consecutive years of reductions. Of course, actual tax liability has increased because of increases in property values. Kyle is down to about 28 cents per $100 right now and I don’t know how they can go any lower.

    But it’s also true that city wants some expensive projects down the road and it will ask property owners to approve new taxes. Property owners will have to ask themselves if it’s worth a few cents for every $100 of their property to add those amenities, and if they trust the city to deliver them.

  3. Mr. Peterson,
    Thank you for your insight, I appreciate the information and I agree with some of your comments. Just one question, how do cities generate money (excluding utilities) to pay back TIFS, loans, projects etc… or simply who pays sales and property taxes to the city?

  4. Mr. Walsh,

    If I see what you’re getting at, then you’re right, it is taxes. But it’s a particular type of taxes, commercial property taxes and sales taxes, that do the heavy lifting.

    Going back to this area’s BC (Before Cabela’s) era, Kyle, Buda and the Hays school district have aggressively pursued a commercial tax base for precisely that reason. That’s why the city is willing to borrow money for a TIF, the Seton development and other similar projects. It’s because the commercial tax base they create will take pressure off homeowners, who would otherwise pay outrageous property taxes.

    It’s instructive to remember the dialogue around here not even five years ago, before the Hays CISD area had any kind of commercial tax base. The area was growing very rapidly with residences and homeowners were besides themselves about high school taxes.

    Suppose a new family comes to the area with two kids in school. It costs something like $8,000 per kid per year to fund the school district. But if that family moves into a $200,000 house and the school tax rate is $1.75 per $100 of value, then that family is putting a $16,000 drain on the school system, but it’s only making a $3,500 property tax contribution.

    The best way to redress that disparity is by generating commercial development, because commercial properties make enormous property tax contributions without pouring kids into the school system. If, for example, this Target development creates the $25 million in taxable property value it needs to be eligible for reimbursement from the city, then a school property tax rate of $1.75 generates $437,500 in school taxes. Before commercial development came around here, the school district would have to add four cents to the tax rate to raise that kind of money, and homeowners would end up paying it.

    To my knowledge, by the way, the school district has never sacrificed a dime of property taxes in these various tax refund/abatement deals made by Buda, Kyle or the county, nor has it been asked to. Furthermore, commercial development has enabled the school district to go out for two straight bond elections without asking for a tax rate increase. It used to be around here that if we gave the school district permission to issue $100 million in debt to build the needed schools, we were also giving the school district permission to raise our property tax rate three cents per year for three years. Those days are gone, maybe for good, because commercial development generates enough tax revenue to build schools without raising the tax rate. One year not long ago, the Frisco school district was able to pass a $400 million bond without a tax increase because of its fast commercial development.

    The Kyle Parkway TIF is designed to buy and to be entirely paid for by commercial property. Similarly, the city money going for one-way access roads on Interstate-35 is intended to enhance traffic flow along the highway’s commercial properties, thus making them more valuable, though many business owners on the highway will tell you they prefer two-way access, for obvious reasons. The Kyle Parkway and I-35 frontages are set up for commercial uses. As to the parkway, the increased property taxes generated by the frontage are earmarked specifically to pay off the parkway. Once the parkway is paid off, all those taxes go to the general fund.

    So, the city incentivizes commercial development in order to generate commercial property taxes, and the city calculates that it still comes out ahead if it rebates some of those sales and commercial property taxes. To the extent that the city still comes out ahead, that’s the amount of tax it doesn’t have to extract from homeowners to provide X level of service. Meanwhile, the commercial properties enable the school district to build new schools without raising the property tax rate three cents every year.

    In answer to your question, “Who pays sales and property taxes to the city?” it’s commercial properties, in the cases we’re considering. That’s how it’s supposed to work. Will it work out that way? It ought to.

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