A home building company looking to erect 200 new houses in Truesdale is asking the city government to help subsidize the cost of neighborhood construction with a special tax, city officials said last …
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A home building company looking to erect 200 new houses in Truesdale is asking the city government to help subsidize the cost of neighborhood construction with a special tax, city officials recently said.
Developer T.R. Hughes Homes is in the process of planning the subdivision project, located on Veterans Memorial Parkway just west of Faith Christian Family Church. Normally, subdivision developers are responsible for the cost of building public streets and utilities, but T.R. Hughes is asking for Truesdale’s assistance in the form of a tax on the new homes being built.
Mayor Chris Watson said representatives of T.R. Hughes met with city leaders in May to discuss the establishment of a "neighborhood improvement district," a special tax zone that would help fund the public improvements. The way this works is a bit complicated, but here’s the quick version:
1) A lender (typically a bank or finance agency) issues a loan that helps pay for construction of streets and/or utilities within a set area.
2) A special property tax is collected on all properties within the improvement area — in this case, the T.R. Hughes subdivision. No one outside of that set area is charged the extra tax.
3) A board of directors is established to oversee the special tax funds and repay the loan for the public improvements.
4) The extra tax levy eventually expires, usually after 20 years, according to Truesdale City Attorney Katie Joyce.
In short, the people who buy homes in the new T.R. Hughes subdivision would be asked to pay extra taxes to pay off the public improvements that made their neighborhood possible.
For the developer, and potentially the new home buyers, the advantage of doing things this way is that there’s less up-front cost to build the new homes, Joyce explained. The cost of the public utilities is instead spread out over time.
City officials don’t yet know the amount of the loan that would be proposed for the neighborhood improvement district.
To be clear, this idea hasn’t actually been approved yet. As Alderman Mike Thomas explained, T.R. Hughes must bring a formal petition to the city government and then the board of aldermen must hold a public hearing where anyone from the community can express their thoughts. That could possibly happen in June.
If the neighborhood improvement district is approved, every new home buyer within the subdivision would be informed of the special tax as part of their paperwork for purchasing the home.
“There will be no surprises for any of the property owners,” Thomas commented.
Although the use of a neighborhood improvement district to fund infrastructure is relatively new to Truesdale, the practice isn’t unheard of in the surrounding area. The city of Warrenton has used two such districts in recent memory, one of which is still active, said Warrenton City Administrator Brandie Walters. The active district, in the Ashland Meadows subdivision, is a 20-year levy to pay for a $312,000 road, sidewalk and street light installation in 2002.
