The city of Clear Lake is setting the stage for its $700,000 contribution to the school district’s proposed health, wellness and recreation center.
And it’ll likely mean a “nominal” increase in property taxes for residents, Clear Lake City Administrator Scott Flory said.
A public hearing related to the city’s contribution to the project will take place at 6 p.m. Monday at Clear Lake City Hall, 15 N. Sixth St.
“This is simply enabling us to take the necessary steps required under Iowa law prior to actually issuing the debt,” Flory said.
The Clear Lake City Council unanimously approved a letter of intent with the Clear Lake Community School District to build a health, wellness and recreation center on district property south of the Clear Lake High School gym, north of First Avenue North and east of North 20th Street, in December.
The letter of intent formalized months of discussions between city and school officials about the project.
According to the letter of intent, the school district will lead the design, construction and financing of the project based on its needs, while the city will be responsible for its day-to-day operations, including staffing, cleaning, general maintenance and routine repairs of the facility.
The city will contribute no more than $700,000 in general obligation bonds and no more than $300,000 in general fund revenue to support and/or reimburse the school’s funding of the elevated walking track, multi-purpose rooms, indoor playground area and other amenities to be determined after the required notices and public hearings.
If the City Council approves the bond issuance after the public hearing, the estimated tax increase would be 88 cents per month — or $10.59 a year — for a residential property owner with an assessed value of $175,000, Flory said.
That number is based on a 10-year note with a net interest rate of 1.5% through a private local bank.
“I expect the interest rate to be better than 1.5%,” he said. “That is a conservative projection on my part.”
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Flory said the net impact of debt issued will be less after fiscal year 2021, even with the health, wellness and recreation center bond because the city will make its last $250,000 debt-service payment for the fire station project.
The debt-service rate for the fire station bond payment is about 36 cents per $1,000 of taxable valuation, so residents would see a net decline of 25 cents per $1,000 of taxable valuation with the new debt.
“This is a really small impact in terms of debt asking as far as the city’s contribution is concerned,” he said.
The Clear Lake School Board established the language for a March 3 ballot question in November.
If approved by voters, the school district would be able to contract indebtedness and issue general obligation bonds up to $18 million to secure the elementary school entrance; repair and improve the elementary, middle and high schools and the athletic facility at the Lions Field Complex; and construct additions to the middle and high schools, including the health, wellness and recreation center.
The proposed health, wellness and recreation center is estimated to cost about $10.2 million.
The School Board will be discussing the letter of intent as well as voting on a resolution calling for the March bond referendum at its meeting Tuesday.
Flory said if the referendum passes on March 3, he anticipates the city would conclude the bond issuance process before the end of the year depending on the market.
“If it stays strong, we will go sooner than that, but not before July 1,” he said.
A formal 28E agreement would be executed no later than 30 days after the successful passage of the public referendum, the letter of intent says. If the referendum fails by the required percentage, the letter of intent will be void.
Photos: Clear Lake boys basketball vs Charles City, Jan. 7
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Reach Reporter Ashley Stewart at 641-421-0533. Follow her on Twitter at GGastewart.