The decision before city leaders now is whether it’s a good idea to max out the credit card, so to speak.
City leaders have been talking about a bond program somewhere between $500 million and $600 million, but thanks to significant increases in property valuations released Tuesday, they now believe the city could support a program between $800 million and $900 million without increasing the amount of the mill levy that goes to debt service.
Various stakeholder committees are in the process of working through thousands of requests from city residents, advocacy groups and city departments that are worth at least $2.9 billion — probably more, because some of the ideas don’t even have price tags on them yet. (Follow that link for upcoming opportunities to make your voice heard about these projects.) The news that the city can support a larger bond program without changing the tax rate means more of those projects are likely to make the final cut.
Whatever program gets recommended by the Mayor’s Office and approved by City Council will go to voters this November. City officials could also ask for a mill levy increase and fund even more projects, but that starts to be a tougher sell politically and just tougher for the city to pull off in the 10-year time frame it has to issue bond funds.
“There are a lot of demands on the program itself, and this gives them a little more room to satisfy some of the backlog and some of the new projects that are before them,” Denver CFO Brendan Hanlon said of the stakeholder committees working on the bond package.
The projects under consideration include around $789 million in deferred maintenance on existing city assets. Mayor Michael Hancock and City Council members have called for this general obligation bond to make major investments in transportation and mobility.
Hanlon said there are three issues the city needs to consider before deciding to actually spend $900 million on roads and sidewalks, rec centers and libraries, parks and trails.
- Is it fiscally responsible to take on that much debt?
- Does the city have the ability to deliver a bond program that large? That is, can it actually do all the projects within the timeframe required by law?
- Are these valuations sustainable over time or could a future downturn reduce values to the point that it would change these calculations? And is it sustainable for homeowners, who will pay more taxes because their homes are worth more?
“It is good news,” Hanlon said. “We’ll be able to address more of our needs. I just want to make sure that we’re cautious and fiscally responsible when it comes to the decision. I’ve heard a few folks say, ‘Just because you have the ability to max out your card doesn’t mean you should max out your card.’ You want to be thoughtful about what you can afford.”
“I want to make sure whatever we promise, we can deliver,” he added.
Denver’s property tax rate is currently set at 81.547 mills. People in various special districts pay more. Of that, 8.433 mills goes to debt service associated with the 2007 Better Denver bonds. The general idea — though it’s not set in stone — has been to ask voters to issue new bonds that could be supported by that same mill levy.
Each mill represents a dollar tax on a thousand dollars of assessed value, and your assessed value is likely to be 7.2 percent of your actual value, based on changes being made in the state legislature under the Gallagher Amendment. So the owner of a $300,000 house will only pay taxes on $21,600. The debt service mill levy comes out to $182.15 — until your value goes up or down in the next round of assessments.
Commercial properties pay taxes on 29 percent of their value, and under the Gallagher Amendment, they carry 55 percent of the total property tax burden.