Council discusses increase in sales, lodging tax to fund capital needs
The Vestavia Hills City Council discussed several items of business Monday night, including the next steps in the pursuit of parks and infrastructure improvements.
“What we want to talk about tonight is what it takes to convert those ideas to action,” Downes said.
Downes went through each item and gave an overview of the general scope of each project, including around $15.4 million in field and facilities upgrades to Wald Park, around $7.4 million in a complete overhaul of the ballfields at Cahaba Heights, $500,000 for a redesign of the New Merkel House, about $15.3 million for a new community building in the Gold’s Gym space and $8.9 million to refinance the purchase of that building.
On the infrastructure side, the council determined to prioritize $2.2 million in repaving roads in “poor” condition, $550,000 in public stormwater pipe replacements, $2.5 million for sidewalk projects across the city, $4.6 million for widening Crosshaven Drive and setting aside funds for future use by the schools.
The grand total, Downes said, with financing and closing costs, comes to about $58 million in capital needs, which are fully detailed in a document he presented to the council.
“What we have laid out in this document is a set of priorities that you all have established in your planning efforts, and a financing need of $58M that would require coming up with $3M a year in debt service,” Downes said.
The easiest answer for that revenue need, Downes said, is to look at an increase to the sales and use tax as well as an increase in the city’s lodging tax.
By increasing the sales tax by 1 cent, bringing the total collected per transaction from 9 to 10 cents, the city would generate about $3.9 million additional annual revenue, Downes said, adding that it is similar to what surrounding municipalities currently charge.
“That would put us at par with many of the communities surrounding us. Not all, but many of those communities,” he said.
Additionally, Vestavia Hills currently has one of the lowest city lodging tax rates, Downes said, and increasing the city’s share from 3 percent to 6 percent — bringing the total collection to 17 percent — would still put Vestavia’s rate below that of cities like Homewood, but generate $178,000 in additional annual revenue.
The breakdown of how that additional revenue would be spent would be 71 percent toward the service of a bond for the Community Spaces Plan and the city’s infrastructure needs, 25 percent would be set aside as reserve for future needs the school system might have, an emergency capital need or other things that come up.
“That is what is being proposed as the way to finance the capital needs that were expressed in the strategic planning,” Downes said, in summary.
The next steps, Downes said, are to present a resolution of intent on Thursday, March 22, for the council to approve.
That measure would be a non-binding declaration of the council’s intentions to spend any bond issue and the increased revenue in a specific way, and would allow calling for a public forum on April 3 to get feedback from the community before voting on an ordinance to increase the tax rates on April 9.
“What it does is really just approve the legislative determinations that the city has made,” Downes said of the resolution.
[A copy of the proposal is available here]
City Councilor Kimberly Cook said she requested that there be some kind of declaration of where any new tax revenue would go.
“I felt that it was important for the public’s perception and understanding that they understand and feel confident that we were in consensus for what our priorities are,” she said.
City Councilor George Pierce urged residents to attend the April 3 meeting or reach out with questions, rather than speculating online.
“I think it’s a great time for our city, and we’re doing our very best to do it right,” he said.
Other Work Session Business Included:
- Hearing a proposal for a sculpture of Vesta to be placed near the Sibyl Temple. Community members proposed raising the funds to pay for the sculpture, and discussed a request for permission to place it on city property that may come up in the future.
- Discussing possible participation in a multidistrict litigation against opioid manufacturers.
- Hearing a proposal for a law prohibiting “rat running,” where drivers cut through a private parking lot to bypass a traffic light or busy intersection.