Coral Springs' decision to fund the construction of the new $28 million municipal complex by issuing revenue bonds has become one of the major talking points in the upcoming elections.
City Manager Erdal Donmez avers that the city has sufficient financial resources to service the proposed debt for the new facility without cutting back services of resorting to increasing the millage rate. Some people, however, want the city to fund the project by issuing general obligation (GO) bonds. GO bonds can be issues only if taxpayers approve of the spending.
Howard Melamed, one of the two candidates for City Commission Seat 4, alleged the city's plan to fund the facility by issuing revenue bonds was "crafty." Revenue bonds are never used by municipalities and only by utility companies, he claimed.
"The way you pay for the revenue bond is by increasing taxes," he said. "The reason you don't want to go before the population with a GO bond is because the population doesn't want tax increases. It will be very hard for some people to vote for a $28 million bond issue that is going to increase their taxes."
Donmez doesn't understand the logic behind the demand to fund the municipal complex with GO bonds. "If we have the funding, what is the purpose of asking the voters if they want to tax themselves more?" he asked. "The city's budget has a debt service line item for servicing the outstanding debt that the city has. Some of these bonds will be paid off in a few years."
The proposed debt will not affect the city's Triple A rating in any way, Donmez said. "All three rating agencies know that the city is going to borrow for the municipal complex. That did not change the city's rating. They know we have sufficient financial resources."
The city has, historically, issued more non-ad valorem bonds than GO bonds, Donmez said. "We have financed a variety of projects this way, including roadway improvement, the acquisition of City Hall South, and the purchase of computer equipment and vehicles. Our previous GO bonds, in 1986, 1994, 1995, 1998 and 2006, funded public safety and park projects."
The use of non-ad valorem bonds, such as revenue bonds, for funding construction of municipal buildings is common practice, the City Manager said. "The city of Alachua did it in 2006, while the Town of Miami Lakes constructed its city hall and government center in 2010. Other examples are Winter Garden, Miami Gardens, Miramar and Lauderhill."
Melamed also criticized the city for not lowering taxes. "For two years in a row, we have had surpluses, but taxes are never reduced," he said. "This year, they are proposing another increase."
The city isn't increasing the millage rate, Commissioner Dan Daley said. "Any time property values go up but the taxing rate remains the same, you still have to advertise a tax increase. It should not be counted as a tax increase. Property values are rising; it is a good problem to have."
"Every year, the cost of the city doing business goes up, the same way the cost of going to the grocery store goes up," Vice Mayor Larry Vignola said. "By keeping the tax rate the same, it allows us to compensate for the cost-of-living increases."
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