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Estate-tax boost eases Pepper Pike debts
(by Sali McSherry - December 03, 2008)
Estate-tax boost eases Pepper Pike debts
By SALI McSHERRY
Pepper Pike has received about $2.75 million in estate taxes through October, according to Finance Director Prashant Shah, making this the highest year since 2003, when $3.99 million was received.
Estate taxes are deposited in the general fund, as required by state law. The annual road-maintenance program and other capital improvements, such as sanitary sewers and culverts, are supported by estate taxes, Mr. Shah said. They also may be used for general operating costs, he said.
Over the past few years, Pepper Pike received almost $2 million in estate taxes in 2007, $1.2 million in 2006, $408,000 in 2005 and $1.16 million in 2004.
Typically, Mr. Shah said, he has conservatively estimated that the city would receive about $500,000 annually.
The city's five-year capital-improvement projections for 2009-2013 for the service, building, police and fire departments will be paid through the city's budget, and no debt will be incurred, Mr. Shah said.
The city's annual operating budget is about $10.5 million for 2008 and will increase to about $11.2 next year, up about 5 percent across the board, he said. Pepper Pike will retire about $700,000 worth of debt by 2011, Mr. Shah said.
Estate-tax revenue was higher than anticipated this year, he said.
A $3 million bond that had been issued in 1998 for street improvements will be paid off this year for about $350,000, he said. Another bond, issued in 2001, also for about $3 million and for street improvements, will be retired in 2011, which was at a cost of about $350,000 annually.
Several capital-improvement projects in the works, including a sewer project and conversion of a pump station, are special assessments, meaning they will be paid by property owners benefiting from the improvements, he said.
In issuing a bond for the proposed new police station, Mr. Shah has offered City Council several finance structuring options, with 10-year, 20-year and25-year amortization periods. For instance, Mr. Shah said, if the city borrows $6 million for the construction of a police station, the average annual debt service for a 25-year period would be about $400,000 per year. If the city borrowed $6 million over 10 years, the debt service would be about $710,000.
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