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Parks panel looks at borrowing

Now that a majority of Ashland voters have renewed the city's contentious meals tax, the Ashland Parks and Recreation Commission is grappling with whether to borrow against projected tax proceeds.

Borrowing would allow commissioners to buy park land and make improvements soon, rather than saving up tax revenue for years and years, Ashland Parks and Recreation Department Director Don Robertson said during a Monday night commission meeting.

"We need to get the word out that we're considering these options," he said.

On Nov. 3, voters approved an extension of Ashland's 5 percent tax on prepared meals and beverages until 2030.

Through borrowing, people who are paying the tax at restaurants and grocery delis now would get the benefits of an improved parks system sooner rather than later, Robertson said.

However, borrowing does have its drawbacks.

Interest would have to be paid, and attorneys and financial advisers would have to be paid to set up borrowing arrangements.

The meals tax could also be cancelled by the Ashland City Council after a public hearing — which would eliminate the revenue stream needed to pay back debt.

City of Ashland Finance Director Lee Tuneberg briefed parks commissioners about different borrowing options during the Monday night meeting.

A full faith and credit bond could be backed by meals tax revenues, but if those fell short, other city revenues would have to be used, he said.

The benefit of that type of bond is that the interest rate is lower and the city would not have to keep cash reserves on hand, Tuneberg said.

A revenue bond typically would have a higher interest rate and the city would have to set cash aside that would equal more than an annual debt payment, he said.

During the fiscal year that ended June 30, the parks department got $375,000 in meals tax proceeds.

The parks system gets 20 percent of meals tax revenues. In the past, it could only spend that money to buy park land.

When voters renewed the meals tax, they broadened the use of the money so that the parks department could also use revenues on major parks system improvements.

Robertson said some major improvements that could possibly be financed through borrowing would be developing Ashland Creek Park and replacing all the lights at tennis courts and the swimming pool — a move that would save electricity and reduce overhead costs.

The Ashland City Council would have to approve any borrowing done by the Parks Commission through a bond.

Parks Commissioner JoAnne Eggers said while she favors saving rather than borrowing in her personal life, it was useful for commissioners to learn more about how borrowing could lead to faster park system improvements.

"I would rather have assets be beneficial to residents sooner rather than later," she said.

The city has used financing in the past to acquire park land by setting up payment schedules with land owners who sold their property to the city, Robertson said in a separate interview.

But the city would not be able to use payment arrangements with land owners for improvements like new lighting or development of park land, he pointed out.

Staff writer Vickie Aldous can be reached at 479-8199 or vlaldous@yahoo.com.