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Lewes, Delaware
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September 27, 2010     Cape Gazette
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September 27, 2010

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14 FRIDAY, SEPTEMBER 24- MONDAY, SEPTEMBER 27, 2010 N]~WS Cape Gazette Officials debate: pay off debt or improve infrastructure By Ryan Mavity The Rehoboth Beach commis- sioners will incorporate a 25 per- cent property tax increase into the first draft of the 2011-12 budg- et. The commissioners agreed to let City Manager Greg Ferrese put the proposed increase into a first draft of the budget to deter- mine whether to go forward. The draft is typically ready by early to mid-January. A 25 percent increase would raise property taxes from $1.55 per hundred dollars of assessed value to $1.94 per hundred, rais- ing an additional $280,000 in rev- enue. At the current rate, proper- ty taxes, based on Sussex Coun- ty's 1968 assessment, add $1.13 million to city coffers. The commissioners agreed not to move forward with three oth- er revenue-generating tax pro- posals, including raising the gross-receipts tax on residential rentals, establishing a gross-re- ceipts tax on hotels and motels and establishing a gross-receipts tax on commercial real estate rentals. In five separate letters to the commissioners, hotel owners ob- jected to a city gross-receipts tax - hotel patrons already pay an 8 percent gross-receipts tax to the state - but did not object to an in- crease in the property tax. For most of the year, city offi- cials have been discussing rais- ing additional revenues to help pay for future capital improve- ment needs, such as a new police station, a new municipal building and Boardwalk maintenance, among other needs. Commis- sioner Stan Mills, Ferrese and city accountant Burr Dukes have been working on a- five-year cap- ital improvement forecast to highlight the city's future needs. Mills described the forecast as a work in progress that could help address long-range budgeting needs. The commissioners continue to debate whether to use in- creased revenues for capital im- provements or to pay down the city's debt. The city has three outstanding loans. The first is for the water towers at Second Street and off Route 1, for which the city re- ceived a $3 million loan, Mayor Sam Cooper said. A $1 million balance remains, with a payment due in December and two more years of payments. The city borrowed $6 million from Citizens Bank to finish the Streetscape project on Rehoboth Avenue; $2.4 million was used for Streetscape, $500,000 for the Lake Gerar Bridge and the rest went to the Construction of the new building and licensing com- plex at 306 Rehoboth Ave. and Phase 1 of the Boardwalk recon- struction project. Cooper said the city has a balance of $4 mil- lion, at 4.28 percent interest, left to pay back by 2017. Lastly, the city received a $5 million loan at 2.7 percent inter- est for the Lynch well project on Route 1, which is due to be paid back by 2027. Mills said the city could pay off the debt and save money for fu- ture capital improvements by al- locating surpluses from parking and transfer taxes to debt serv- ice. Commissioner Kathy McGui- ness supported a small property tax increase, which would not target a specific industry but would apply to both residents and businesses. McGuiness said this Would be a fair and equitable approach "Everybody contributes if you raise the property tax," she said. Commissioner Pat Coluzzi said the average property tax bill in the city is $400 per year. "The amount of tax increase we are proposing is probably a dinner at one of the restaurants in town, over 12 months,,' she said. Commissioner Bill Sargent said, "I'm not sure we've estab- lished a need foran increase. I think .we have to decide, is this the kind of time, and the eco- nomic conditions, where we want to raise taxes? I question very, very seriously whether this is the time to raise taxes." Sargent said the city should not be committing itself to capi- tal improvement projects until it has secured state and federal funding for the ocean outfall project. Sargent worried that if the city were to bring in more revenue it would be inclined to spend it. Cooper also expressed doubts about increasing taxes. Continued on page 16 Milton's First Classic Car Show Friday September 24th Noon to 4 pm-public welcome Town Parking Lot-Magnolia Street Sponsored by the Milton Chamber of Commerce FOR YOUTH DEVELOPMENT FOR HEALTHY UVING FOR SOCIAL RESPONSIBIUTY rams ng our l ages State-of-the-art fitness/wellness centers Indoor pools Personal training FREE babysitting No contracts 100s of classes including yoga, pilates, spinning & water exercise! Stop in & let us introduce you to the opportunities! SUSSEX FAMILY YMCA 20080 Church Street Rehoboth Beach 302-296-YMCA www.ymcade.