Iowa City’s Gateway Project and its Growing Impact on Property Taxes

Iowa City’s Gateway Project cost estimate has escalated astronomically since 2009. The estimate for fiscal year 2011 was $32,940,000 and this year is $59,433,731. A quick glance at the picture below shows that Iowa City will spend far more than it will receive in federal grants to raise Dubuque Street to the 100 year flood level plus one foot and replace the Park Road Bridge with a new bridge built to the 200 year flood level plus 1 foot (see the Council January 21, 2014, minutes here on page 3). Further, there is no guarantee going forward that costs will not continue to increase and adversely impact Iowa City property taxes even more.

Gateway project from FY16-FY18 Fin Plan rev 160309

You can see from the above (found here on page 538) that much of the expense of this project will be the responsibility of those who pay property taxes in Iowa City, since it is these households and businesses who will bear the burden of repaying the $17.875 million in general obligation bonds. And with an Iowa City Community School District bond vote looming on the horizan, there could be a double whammy to the cost of owning property in Iowa City. Even those who rent rather than own their homes may take a hit to their pocketbooks as landlords may pass the cost of the property tax onto their tenants, and many business leases require the tenant, and not the landlord, to pay the property tax.

In addition to the above, $4.5 million of the costs of the Gateway Project will come from the Wastewater Treatment Fund. The money in this fund comes mostly from those who pay user fees. To put this amount into perspective, $4.5 million is about 35.8% of the Wastewater Charges for Fees and Services (revenues) for a year. See  on page 392 (here) under the column “2016 Revised.”

It is safe to state that, but for the federal grants (taxpayer money) and voter approval of a local option sales tax, there would be no Gateway Project. What support was there for the sales tax?–not much. Only 15.14% of Iowa City voters turned out to vote on the 1% local option sales tax on May 5, 2009, which passed with barely 50.05% of the vote (there were 7 more yes votes than no votes) and was to be 100% for remediation, repair and protection of flood impacted public infrastructure and local matching funds for dollars received from any federal or state programs to assist with flood remediation, repair and protection of flood impacted public infrastructure.

To illustrate how the projected costs of the Gateway Project have increased over time, consider previous years’ estimates.

$9,140,000 from the Iowa City July 2009 Capital Improvement Program. You can see below that raising Dubuque Street was not part of the published program (also see here on page 18).

The Gateway Project in its Infancy July 2009

The Gateway Project in its Infancy

$32,940,000 in the FY2011 Budget & FY2011-2013 Financial Plan found here on pages C-4 and C-15 (add totals for Dubuque Street Elevation and Park Road-Third Lane Improvement together).

$33,443,253 in the FY2012 Budget at this at this link on pages C-32-C-33/186/187 and shown below (add totals for Park Road-Third Lane Improvement and Iowa City Gateway Project (Dubuque St.) together.

$35,356,842 in the FY2013 Budget at this link on pages C-13-C14/463-464 (add totals for Park Road 3rd Lane Improvement and Iowa City Gateway Project together).

$40,137,858 in the FY2014 Capital Projects Fund found here on page 476/38 showing $8,680,000 in general obligation bonds (compare this smaller number to the $17,500,000 in general obligation bonds shown today).

Gateway project from FY2014 Capital Projects Fund

$51,308,434 in FY2016 Adopted Budget & FY2015-2017 Financial Plan (found here on page 533).

$59, 433,731 today.

Given the enormous increase in costs to local taxpayers of raising Dubuque Street, it is fair to ask 1) whether a scaled down project, perhaps only replacing the Park Road bridge, makes sense, 2) whether there is a better more reasonable use for the sales tax dollars, and 3) can every homeowner, business, and tenant afford the hit to their pocketbook? Surely, the enormous increase in dollar cost to the community is worthy of a follow up city council discussion, evaluation of alternatives, and vote?  After all, many communities get to vote on school bond issues smaller than the cost of the Gateway Project.

 

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