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Riverlea News September 2015

Infrastructure Levy
Operating Levy
Your property taxes
 

Infrastructure Levy

  1. What is the infrastructure levy?

    The infrastructure levy is a proposed 15.76 mil property tax levy to fund the replacement and repair of much of the Village's existing infrastructure. Specifically, the levy would fund a $7 million bond issue to pay for the removal and replacement of our streets, curbs, and water lines (including the service lines, which are made of lead), and to make significant repairs and upgrades to our storm sewer system. The street base, water lines, and storm sewers are as old as the Village itself (1920s vintage), and the street surface and curbs date from the early 1980s. All are at, or near, or past the end of their expected useful life.

  2. How do bond issues work?

    Municipal bonds are one of the most common ways for municipalities to borrow money for capital projects. The bonds have a maturity equivalent to the average (weighted) expected life of the improvements – in this case 28 years – with the interest rate determined partly by prevailing market rates and partly by the credit-worthiness of the issuer. Our bond counsel has estimated that our bonds will carry an interest rate of 4.25%. Because the Village doesn't have enough assets on hand to act as a security against the amount being borrowed, we need to pass a dedicated property tax levy for that purpose. The levy would remain in place until the bonds are paid off.

  3. What would this cost me?

    Using the formula described on page 2, a 15.76 mil levy would mean a tax increase of about $483 per $100,000 of assessed market value, or about $1,450 per year for a $300,000 home.

  4. What about other sources of funding?

    As many of you know, the Ohio Public Works Commission (OPWC) provides grants and zero-interest loans for local infrastructure improvements through its State Capital Improvement Program (SCIP). SCIP rules require that at least 20-30% of our project (the cost of the water lines) be financed through loans, and we can't apply for a loan unless we can show that we're able to service it. Having an infrastructure levy in place is therefore a necessary condition for us to apply for state funding.

    If we're successful in obtaining state funds, as we hope, then we'll use the money to pay off the bonds early and roll back the infrastructure levy accordingly. There are no guarantees here, but we're committed to aggressively pursuing this option. We can keep applying for OPWC funding in consecutive years until we're successful.

  5. Would we have been better off annexing to Worthington?

    If we had annexed to Worthington then the infrastructure repairs would have been funded through a special assessment on property owners in Riverlea. The cost would probably have been about the same. However an assessment is treated as an encumbrance on the property, meaning that if the property is sold the balance has to be paid off in full. This would have complicated home sales and potentially depressed property values. It's unlikely that Worthington would have pursued OPWC funding for a project of this nature.

  6. What if the infrastructure levy doesn't pass?

    Unlike the operating levy, failure of the infrastructure levy wouldn't lead to an immediate crisis. However our infrastructure isn't going to get any younger, and the cost of replacing it isn't going to get any cheaper. Several factors suggest that the sooner we pass a levy, the less it will cost:

    • As explained above, having an infrastructure levy in place is a necessary condition for us to apply for state funding. That means that the sooner we pass a levy the more chances we'll have to apply, increasing the chances that we'll be able to roll back the levy.
    • Interest rates are currently at historically low levels and are likely to go up in the near future, meaning that the cost of a future bond issue could be substantially higher than it is now.
    • Every year the Village pays a significant amount to patch up our existing infrastructure – e.g. filling potholes and fixing water line breaks. At this point, given the age of our infrastructure, this is basically throwing good money after bad.
    • Within the next couple of years the slurry seal that was applied to the streets in 2010 will need to be replaced. That will cost several hundred thousand dollars and would be another example of throwing good money after bad.
    • Every year we run an increasing risk of a catastrophic failure to our water lines, which are nearly 100 years old. Such a failure would require emergency repairs at much greater cost and disruption than if they're planned in advance and done in conjunction with the street replacement.
    The elected leadership of the Village, in close consultation with the Street Commissioner, the Village's engineering firm, bond counsel, and others, have been discussing these issues for several years now. We understand that the infrastructure levy will place a significant financial burden on many people in the Village, ourselves included. However we believe that it's time to stop kicking the can down the road and build a safe and attractive physical environment for Riverlea that reflects the prosperous and vibrant community that we are.

    Again, a public forum on the levies will be held in the Circle Park from 4:00-6:00 pm on Sunday, September 20. We hope that many of you will be able to attend. And please be sure to vote!

About our Property Taxes.
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