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Streets or open space: Where should city sales tax money go?

Les Stukenberg/The Daily Courier<br>
This past fall, the City of Prescott rebuilt Mt. Vernon Street/Senator Highway for $3.4 million.
<br><b>Below:</b> Prescott Parks and Recreation Director Joe Baynes points out the location of a new trail on an open space purchase near The Preserve subdivision.

Les Stukenberg/The Daily Courier<br> This past fall, the City of Prescott rebuilt Mt. Vernon Street/Senator Highway for $3.4 million. <br><b>Below:</b> Prescott Parks and Recreation Director Joe Baynes points out the location of a new trail on an open space purchase near The Preserve subdivision.

PRESCOTT - A quick look at the City of Prescott's street-improvement budget shows some heavy-duty expenses:

More than $4 million dollars for pavement preservation; $3.4 million for the reconstruction of Senator Highway; $2.3 million for reconstruction of Park Avenue; and $1.8 million for the Ruger Road realignment.

Coming in at a total of $18.9 million, this year's street and open space fund includes more than 25 line items.

"Long-term, there are a lot of road projects that the community wants done," Budget and Finance Director Mark Woodfill said.

That may not bode well for the recent push for purchase of the community's top open space parcel - the site of the historic Granite Dells Resort.

Money crunch

Even though open space figured prominently in the 1-percent sales tax extension that voters approved in 2000, land acquisition makes up less than 3 percent of this year's street/open space budget allocations.

At $500,000, open space comes in eighth on the list of streets/open space expenditures for the current year. So far, the city is planning to spend about $150,000 of that for an Arizona State Trust Land easement to help complete the 50-mile Prescott Circle Trail.

A budget crunch several years ago prompted the Prescott City Council to devote nearly all of the 1-percent sales tax money to streets, limiting the open space allocation to $500,000 per year and redirecting millions that the city had planned to put toward open space purchases.

Meanwhile, a number of major street projects have been completed in recent years. Among them: the Williamson Valley Road widening, the Rosser Street reconstruction, the Mount Vernon reconstruction, and the Clubhouse Drive relocation.

Originally, the city had planned to increase its open space allocations to $3 million per year after 2010-11, with the allocations increasing incrementally through the end of the tax in 2015.

But, with the city's share of Highway User Revenue Fund (HURF) money from the state dwindling virtually every year, Woodfill noted that the bulk of the money now going to streets in Prescott is coming from the local sales tax.

The 2012-13 budget indicates that 17 percent of the city's street revenue comes from HURF, while 73 percent is coming from the 1-percent sales tax. (The remaining percentages come from a combination of inter-governmental partnering and miscellaneous sources).

Also tightening the streets budget was the recent economic downturn, which reduced the amount of money generated by the sales tax from nearly $15 million per year at the economic peak to the current annual total of $12 million.

In order for the street program to continue as it has, officials say, the city needs to continue to devote the bulk of its sales tax money to streets.

Financial alternatives

But open space advocates maintain that a variety of methods are available to the city for a purchase of the high-priority parcel.

For instance, Dan Campbell of the Granite Dells Preservation Foundation proposes simply postponing one of the street projects for a year, and using the money for the open space purchase.

Several Foundation members emphasized that the city swept $2.9 million from its open space fund in the 2010-11 fiscal year - money that they say would have gone a long way toward paying for the Granite Dells parcel.

As another option, Foundation members say the city could borrow the money for a pending street project through Municipal Property Corporation bonds, and pay the loan back through future sales tax revenue.

But City Manager Craig McConnell says any postponements or borrowing for street projects now would have long-term effects on the street program. After 2015, he pointed out, the sales tax will be dedicated solely to streets. At that point, the sales tax level also will decrease to 0.75 percent, from the current rate of 1 percent.

If the city were to bond for a street project or open space now, McConnell said, it would be paying back the bond in coming years through a tax that is meant to go exclusively to streets.

(Voters agreed in September 2009 to extend a 0.75-percent sales tax for streets from 2016 to 2036).

Prescott City Councilman Chris Kuknyo maintains that the city has other, more crucial priorities.

"We need to focus on what a city should be doing," he said, noting that - along with street projects - the city recently approved a $35 million wastewater treatment plant expansion.

Voter support?

Jason Gisi of the Granite Dells Preservation Foundation says that a more palatable financing option might involve going to the voters for approval of a bond to pay for the purchase of the land.

"If the city purchased the Wirth property and never purchased another piece of open space, that would be the one," Gisi said of the Granite Dells land.

Even so, he allowed that money constraints make the multi-million-purchase a tough sell.

"Let's be honest, it's a tough time for (the council) to spend money on open space," Gisi said. "That's why it may make more sense to take it to the voters."

A combination of low interest rates and low property costs make this an opportune time for such a move, Gisi maintains.

"On a 20-year bond, it would be the cheapest financing we'll ever see," he said. "My personal opinion is this would be something the voters would be interested in."

And while he allows that "from a value perspective, this land is never going to be cheap," Gisi said, "2013 would be the best value."

Gisi, a local land developer, joins other Foundation members in worrying that the opportunity to preserve the Granite Dells Resort parcel might disappear in future years.

"The threat is that a high-net-worth individual could buy it, and then split it (for home development)," Gisi said.

Woodfill emphasized that the current city budget would not allow for any purchases that exceed the current $500,000 open space allocation. Any larger-scale purchase would have to wait for the next fiscal year, which begins on July 1, 2013.

City officials expect a discussion of the Granite Dells Resort parcel to be on the Prescott City Council agenda sometime in January.


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