June 9, 2017 at 4:32 p.m.
Public Works discusses PRAT projects
Consensus is that Rhinelander taxpayers need to see immediate results of tax
Public Works discusses PRAT projects
Although many options were discussed, including using the proceeds going forward to pay for a large-scale project via bonding, it was decided, in the short-term, to use the first and second quarter receipts to fund additional street repair projects this summer.
Mayor Dick Johns told the board that most likely the city would probably have an additional $160,000 from the second quarter
The PRAT raises money that must be spent on street and infrastructure work through a 0.5-percent tax on tourism-related sales at city merchants.
"All the discussions on the PRAT we've talked about in the past have been if, if, if," Johns said. "Well, here's the money. When are we going to start and what are we going to do?"
Public works director Tim Kingman said he estimates conservatively that the city would collect about $360,000 this year in PRAT revenue that could be used for budgeting additional summer street work. The second quarter just finished, but the city probably won't get that money for up to two months.
"What I would anticipate happening would be one-and-a-half to two times during the third quarter and perhaps a little less in the fourth quarter," Kingman said.
"We have nothing to compare it to," agreed committee chair Tom Gleason.
"We're not assured of this revenue, but I would anticipate that there would be additional commerce that would generate additional tax money," Kingman said. "I would say the third quarter will do that for you."
Committee member Mark Pelletier said the PRAT will probably be similar to the room tax, where the last three quarters being the highest in terms of collection.
"Because Jan. 1 to March 31 is the slowest time of the year for sales around here," Pelletier said. "But once you get to the second quarter when you start seeing people in town, then third when you start getting Christmas shopping. Yeah, you can't go spend it (yet), but this (first) is going to be our lowest quarter.
"I figure if you want to do something this year, I would figure on around $160,000, that would be second quarter," Johns said.
"That's probably a good number," Kingman agreed. "While we also have to be thinking, as a group, is that we don't want to be spending this as it comes in. Ultimately, we want to look at what can be financed under a bond as we move forward."
This prompted a great deal of discussion on a couple multi-million dollar projects that would also involve water and sewer improvements that the PRAT money could be used to make payments on.
"Although we are looking at $360,000 to $400,000 range, that annual revenue represents much bigger amounts of money that could be used to finance a larger project," Kingman said.
One possible project that was discussed was Stevens Street, which estimates for redoing the street and utilities would be in the neighborhood of $30 million if the work was done all the way out to the bypass. Kingman said the "immense amount of money" involved in the project when it was looked at a couple years ago pretty much resulted in the idea being shelved.
Alderman Steve Sauer said he had some concerns about using some of the PRAT to possibly finance some large projects.
"My No. 1 concern in financing with this PRAT is that theoretically it could go away," Sauer said. "It's written into law currently, we were given a pass currently. But if we start borrowing out 30, 40, 50 years on these major projects based on the fact that we're 100-percent sure we're going to have this, but we aren't. The PRAT law may change, it has changed over the recent years."
He said that if the city is going to have a discussion about using PRAT revenue to finance large projects, it should do so after the tax has been in effect for a full year. He said the city should take the third and fourth quarter receipts and use that in planning projects for next year's construction season, with an idea of what the first and second quarters would bring in next year.
"You need to show some sort of an immediate effect on this funding," Sauer insisted. "Because there are some naysayers out there, there are some people out there who still aren't too happy about this. My thoughts are, we got that $160,000 theoretically by the end of summer, we should look at spending that $160,000 and making some immediate changes; some immediate grind and overlays, because the common person, the common county driver, doesn't understand those $12 million projects. They understand that they are driving through potholes."
He added that even though, by state law, all PRAT moneys have to be spent on infrastructure repair or upgrades, if people don't see work done this summer, some would accuse the city of trying to misdirect the funds.
"I think we should be repairing something this summer," Johns agreed. "Take a chance on the second quarter. I mean, these people have waited long enough."
Pelletier said while he agrees with Sauer that some projects have to be done with the money this year, he feels that the PRAT "is here to stay" just as the county has its own .5-percent tax.
"But to run things out 30 or 40 years to redo all of Stevens Street? For anyone who doesn't live on Stevens Street or drive on Stevens Street, I do not want to face them," Pelletier said. "Because they are going to say all this was, was to fix that. The other way to look at it, from the finance end, since this has to go for repairs, we're looking at a 20 or 30 year bond, can this money be used for interest? My guess would be no."
Alderpersons George Kirby and Sherrie Belliveau also agreed that some work needs to be done this summer beyond what had already been planned.
The committee briefly discussed doing some work on Timber Drive, which is in bad need of work, but no final decision was made.
The full city council is scheduled to discuss possible uses for the PRAT revenue at Monday's meeting.
Jamie Taylor may be reached at [email protected].
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