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Wednesday, September 18, 2019
   
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Hiking and Camping: Tax Increase Expected After Debt Waived

Category: Hospitality & Tourism

SBJ Staff

The River’s End RV Park & Campground is off the hook for repaying the city of Tybee the $7 million the city spent to buy the property.

Tybee property owners should expect a tax hike to offset the debt waiver, said Councilman Dick Smith, who engineered the new financing plan.

Tybee City Council agreed unanimously Thursday night to forgive the approximately $900,000 in principal and interest the campground has been assessed since the city’s February 2006 purchase of the 18-acre site on the north side of U.S. Highway 80. Remaining principal and interest is also waived under the new financing provisions.

The action came on a motion by Smith, seconded by Wanda Doyle and supported by Paul Wolff and Barry Brown. Councilmen Eddie Crone and Charlie Brewer were absent.

Money to repay the debt will be earmarked as a line item in future city budgets. A tax increase of about 1.5 mills likely will be needed to cover the cost, Smith said.

Smith added he had been seeking the new financing arrangement for his entire two years on the council. But it is only now, as he and four other incumbents who lost seats in the Nov. 3 election are about to depart, that the measure won passage.

In an interview Wednesday night, Smith said he thinks the four members of the incoming council who voted for the 2006 purchase – Wolff, Doyle, Shirley Sessions and Kathryn Williams – should face the reality and enact the tax. “They have the responsibility to tax the taxpayers,” he said.

And if a council vote on the issue were to end in a tie, Mayor Jason Buelterman should cast the deciding vote in favor of the tax. As mayor in 2006, Buelterman pushed for the city to take on the debt, Smith noted.

Buelterman voiced enthusiasm for Smith’s proposal Thursday night.

Though Wolff and Doyle voted to change the campground debt payment arrangement, they made no mention of taxes. Nor did any other member of the governing body bring up taxes.

But the reality is that a tax must be enacted, said Smith, who gets to leave that chore to the new council.

No use waiting for the county to hand over Special Purpose Local Option Sales Tax money to cover the debt, Smith said, noting the county is keeping the SPLOST to design and build a new jail. And property values aren’t likely to rise any time soon and thus deliver more revenue through a higher tax digest, Smith said.

The city is out of options, he insisted. “We are going to have to increase your taxes to pay for the campground.”

Smith predicted the night before the council vote that he would win approval to the financing switch. “I think everybody who has half a brain will jump on this,” he said Wednesday night.

The city pays up to $578,000 in debt expenses annually on the $7 million purchase. About $350,000 of the bond debt is covered from a loan to the campground from the city’s general fund. The remaining debt is paid from revenues the facility generates.
Smith said before the vote it seems foolish to lend the campground money for 20 years and then have the campground spend the next 20 years repaying the loan. Why not forgive the loan and make direct general fund allocations to the debt, thus ensuring the campground begins making money after the debt is paid off in 20 years, said Smith.

As it stands, he said, “We’re going to owe just as much in 20 years as we owe now. We’re robbing Peter to pay Peter.”

Under the plan approved by the council Thursday night, after 20 years the debt will be gone and “this really will be a cash cow,” he said.

The 2006 council’s reluctance to levy a dedicated tax to pay for the facility led the council to issue an Intergovernmental Recreational Bond instead of a General Obligation Bond, which would have required citywide voter approval, according to Smith.

The millage increase would have served as security for paying off the bonds.

Minutes of the Feb. 23, 2006, closed session at which the council discussed the campground purchase show that bond attorney Bill Camp advised that the land buy might take 20 years, “would have the highest interest and would take a increase of 1.4 mils” and annual payments of $528,000.

Smith said the city is stuck with the interest rate of about 5 percent because lenders have no reason to renegotiate a lower rate.
He added that a city bond counsel told him Tybee could have secured an interest rate from one-half to 1 percent lower had it gone with a General Obligation Bond instead of the Intergovernmental Recreation Bond. But Smith speculated the General Obligation Bond probably would have failed to get voter approval and, thus, council declined to try it.

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