RICHWOOD — While some details of Richwood’s budget remain undetermined, residents can be assured they will not pay a tax rate higher than this year and developers should prepare to pay impact fees if they choose to build in the city.

The impact fee will be $5,351 for a single service unit, which is the maximum fee calculated from the equation, Freese and Nichols Engineer Kendall Ryan said.

The equation is 50 percent of eligible capital improvement project costs divided by growth in service units, or how much water an average household in Richwood uses, The Facts previously reported.

There is a little more than $8 million in possible impact fee eligible projects, Ryan said.

“It’s all about growth … It really makes growth pay for the growth itself,” Ryan said.

Councilwoman Katie Johnson asked Interim City Manager Lindsay Koskiniemi if she thinks impact fees could inhibit growth from potential business developers.

“Honestly, no,” Koskiniemi said. “I have heard that they’re surprised we don’t have impact fees.”

Builders typically build these type of fees into their cost of construction, she said.

Councilman Mark Brown said he’s heard that the hassle of building in Richwood has become cumbersome because of fees. The impact fees are definitely something the city needs if it grows, but it could stifle growth, Brown said.

Councilman Matt Yarborough made a motion to adopt water and wastewater impact fees, which he and Councilwomen Melissa Strawn and Katie Johnson voted for. Brown abstained from the vote.

After instruction from council at their budget workshop, staff made several reductions in projected expenditures including taking away $40,000 for a public works equipment storage building and $20,000 to remodel the P.K. Forrest Community Center. They also lowered animal control costs from $40,000 to $15,000, since they will contract that service.

Interim Finance Director John Washburn reduced transfers to the contingency fund and general fund, he said at Monday’s meeting, adding that these were not the final budget numbers as he learns more about the city’s financial health every day.

“Choose the current tax rate and let’s continue to work on this,” he said to the council members.

The current tax rate is 67 cents per $100 of property value, leaving 61 cents for the maintenance and operations side, according to meeting documents.

As the city issues voter-approved debt — leaving the debt payment side of their tax rate to increase from 6.06 cents per $100 of property value to 11.78 cents per $100 of property value next fiscal year — the same tax total rate will bring in $10,284 less in maintenance and operations revenue with 55.24 cents per $100 of property value, the document states.

Last year’s rate is 6.23 percent more than the effective tax rate of 63.1 cents per $100 of property value. The effective tax rate is that which would generate the same amount of revenue as the previous year from properties on the tax rolls both years.

The city informed residents they could see an 11.44-cent per $100 of property value tax rate increase during the next three years if the $5 million bond was approved, according to the bond flier. Strawn said she thinks residents will be happy that the tax rate is not going up quite that much.

The highest rate council is considering does not even come close to that, Yarborough said. The city’s contingency funds are not where they need to be, there is a debt to the utility fund and the cost of living is always going up, he said.

Strawn made the motion to set the maximum tax rate at 67 cents per $100 of property value, though council can adopt a lower tax rate in the future. Brown and Katie Johnson voted for the motion.

Yarborough voted against it and declined to comment on his decision by phone Tuesday.

Mayor Pro Tem Mike Johnson acted as mayor Monday as Mayor Steve Boykin was absent.

Maddy McCarty is a reporter for The Facts. Contact her at 979-237-0151.

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