by Logan Gruber
operations@thenewsleaders.com
Monday, June 15, the city council will hold a public hearing on utilizing tax abatement to purchase Colt’s Academy from the school district.
What does that even mean? Let’s break it down.
Tax abatement means taking the taxes that would normally be collected and sent to one fund, and diverting them to another. In this case, the taxes in question would be collected on multiple businesses in town, totaling $134,000/year. Those taxes would normally go to the general fund, but instead would go to pay for Colt’s Academy throughout the course of approximately the next 15-20 years.
The general fund would be reimbursed through the half-cent sales-tax money though, according to city administrator Judy Weyrens.
If the city would choose to not use tax abatement, the other option to pay for Colt’s Academy would be through the issuing of sales-tax revenue bonds. However, those sales-tax revenue bonds would be at a higher interest rate than the tax abatement.
“The difference between tax abatement and sales-tax revenue bonds is 0.8 percent, which would save the city $110,000 during the course of using tax abatement instead of revenue bonds,” Weyrens said in a Newsleader interview.
The issue on the table Monday night will be whether to use one of these two methods to pay for Colt’s Academy. More details will be made available during the council meeting.
As for the cost and timeline of purchasing Colt’s, it’s still being worked out. District 742 will likely continue to use the building – even after the city purchases it – for about two years, until July 1, 2017.
Regular city council meetings are held at 6 p.m. on the first and third Mondays of the month in the council chambers at city hall, 25 College Ave. N. These meetings are open to the public, and a public hearing for any topic a citizen might want to speak about before the council is held near the beginning of every meeting. The meetings are also broadcast live on the city’s cable access channel on Charter at channel 181 and on Midcontinent at channel 10. Agendas and meeting minutes may be viewed at city hall, or online at cityofstjoseph.com.
