Willmar City Council begins the serious discussion of how to pay for a new city hall, including likely tax hike
The Willmar City Council started discussing just how it plans to fund a city hall and community center project that could cost up to $10 million. A special work session Monday gave council members a chance to look over possible financing options, including using reserves or bonding.
WILLMAR — No matter how the Willmar City Council decides to pay for a proposed city hall and community center, what was clear during a special meeting Monday is the project will most likely require raising taxes.
"I don't see a way this project goes forward without a property tax increase," said Steve Okins, Willmar finance director.
The meeting was held to give the council a chance to have an in-depth discussion of how an estimated $10 million project could be financed. No decisions were made at the special meeting or at the regular council meeting held afterward.
Instead the full council is asking its Finance Committee to come back in 30 days with a recommendation of how the city can move forward with this project.
"I think we need to roll up our sleeves and do some homework on what this council is willing to handle and if this community is willing to raise taxes," said Councilor Audrey Nelsen. "We're not there, to pick a figure tonight."
Possible options raised at the meeting include using general operating fund reserves or general obligation bonds that could require voter approval.
Another funding source that could be tapped in part to help fund the overall project is the Invest in Willmar local option sales tax. Voters approved $2 million in sales tax revenue to go toward a project at the Willmar Community Center .
At issue, though, is whether the 13-year sales tax will raise enough funds to provide that $2 million.
The tax took effect Oct. 1, 2019, and will sunset when $30 million is raised or 13 years has passed, whichever comes first. Revenue so far has been only about two-thirds of what the city had hoped to collect.
There are already concerns there will not be enough to fund the Willmar Community Center or the stormwater projects that were part of the ballot question to enact the tax.
Councilor Julie Asmus proposed using reserves, bonds and the sales tax funding to do the city hall/community center project. She also broached putting off building the Willmar Recreation and Events Center for several years, to be constructed if the city can get an extension on the sales tax over the original 13 years.
The money saved by not doing the center could make it possible to do the community center, stormwater and perhaps even the third sheet of ice at the Civic Center.
"I think this is doable," Asmus said. "I think it is a good move forward."
There were some misgivings over using too much of the city's reserve funds for the city hall.
"I don't think this is the time to spend all the cash that was set aside for a reason," Nelsen said. "Is there somewhere in between that works."
On the flip side of the argument, the city has been told by its auditors that it carries too much in reserves, more than the 30 to 50 percent of expenses recommended by the state, Mayor Marv Calvin said.
"We have more money than we need, to be comfortable," Calvin said.
- Willmar looks toward future for city offices
This latest push to build a new city hall is entering its fourth year, with no ground broken. Back in 2018, Calvin had put $8.5 million in the proposed capital improvement budget for a new city hall and community center.
A task force was created to find a location and in September 2019 the council approved building the project at the site of the current community center, on Business Highway 71, across from Robbins Island Regional Park.
That certainty was thrown in doubt when a year later the Willmar Ten Investors group came forward with an idea to build the project in the old JCPenney site at the Uptown Willmar mall.
While no decision has yet been made between the two construction options, costs are not going down. When first presented, the Willmar Ten project was estimated to cost around $8 million. It is now estimated at $10 million, due to the costs of materials rising sharply, Calvin said.
While there didn't seem to be any council appetite to abandon the city hall project, there is urgency to figure out how to move this project out of the planning stages and into design and construction.
"We need to make a decision and move forward," Asmus said. "We have options and it is just a matter of people voting for it or against it then."