Democracy on the Front Lines
City Administrator’s Blog
June 20, 2006
You may not have noticed, but yesterday was a big day for the future of O’Fallon. The City Council approved several items last night that will have a profound effect on the quality of life in our community.
First of all, the City Council approved the 1% food and beverage tax, which will be used in an economic development project at the Shoppes at Greenmount. We have received a proposed plan to develop the area with a Hilton Gardens Hotel, a 25,000 square foot conference center, up to five up-scale restaurants, a retail center, and a bank. The money received from this tax will pay off a $6 million bond for development of the commercial center. (By the way, the Belleville News Democrat reported that this vote was unanimous but actually it was approved by a vote of 10-3).
The vote is significant because it solidifies a high-quality development at this important commercial corridor. Over the past few months, we have received several unappealing proposals at the site and we were concerned about the quality. The development across the interstate along Central Park Drive and at the Dierbergs/Target shopping center sets the tone for the type of development we want at the Shoppes at Greenmount. We were not getting that and we needed to do something to turn the tide. O’Fallon suffers from a shortage of meeting room space, and a conference center will be a destination that will attract additional economic development around it.
After the food tax was approved, the City Council unanimously approved a $21,185,000 tax exempt general obligation bond issue. It provides $6.3 million to refinance the Prop S bonds, $8.5 million to construct Phase 1 of the Family Sports Park, and $6 million for economic development at the Shoppes at Greenmount (see above). The
sources of revenue are an annual $1.5 Million from the ½ cent sales tax, $400,000 from the Hotel/Motel tax and $400,000 from the 1% Food and Beverage tax.
In related news, our bond rating was upgraded from A+ to AA- by Standard & Poor’s, the oldest national rating company. Bond ratings are a mystery to most people, but this means that our municipal bonds are a safe and secure investment. In fact, there are only four others cities (Peoria, Springfield, Bloomington & Champaign) south of Chicago with this high a rating and the City received an immediate savings of $30,000 on bond insurance for this issue and $80,000 in lower interest rates.
Reasons cited for the upgrade include O’Fallon’s “sound financial operations with strong reserves” and “moderate debt burden with limited future debt needs due to reserves from a dedicated infrastructure sales tax that are used for capital projects.” In addition, the bond rating credits the City for a diverse tax base, above average income levels, strong liquidity, and full funding of employee pension plans.
Thirdly, the City Council renewed the ½-cent Prop S sales tax as a permanent Home Rule ½-cent sales tax. This will not change how the current tax is administered or what people will pay, but it will refinance our old $7 million bond from 10 years to 20 years and will reduce our annual payments. Money saved from payment reduction will be applied in accordance with the Prop S promises made in November 2000 (streets, sidewalks, and stormwater), and will free up a portion of the bond payment money for immediate use and provide financial leverage for the $21 million bond issue (see above). Since the tax was approved, the City has repaved 40 miles
of roads, three miles of sidewalks and more than $1,000,000 in stormwater improvements with Prop S Funds.
It is difficult to underestimate the significance of these three actions as they establish the future of O’Fallon for infrastructure, recreation, and economic development. I have mentioned previously that O’Fallon depends on sales tax for survival, and the development of the Sports Park and Conference Center will provide a destination for sports and convention tourism and will bring jobs and money into the community. It also advances the City Council’s vision for O’Fallon to be the premier city in the Metro East.