Crestwood aldermen debate possibility of asking voters for tax hike

Mayor Robinson ‘not smiling right now’ with regard to mall’s future

By BURKE WASSON

While Crestwood aldermen decided this month to retire the Proposition S tax-rate increase one year early, they also have discussed the possibility of asking residents to approve another tax-rate hike.

The Board of Aldermen decided March 11 to prepay $525,000 of excess cash above a federally required balance limit tacked onto the city’s refinanced debt with Royal Banks of Missouri and retire Prop S — a tax-rate increase of 20 cents per $100 of assessed valuation approved in April 2006 by voters — a year early. Instead of ending in 2013, the Prop S tax, which currently generates more than $520,000 per year, now is slated to be retired in 2012.

But should the city eventually find itself in a position where it needs the $525,000 that was prepaid toward $2.08 million in debt financed through the note, city officials have discussed a variety of options.

These include converting the city’s tax-exempt note with Royal Banks of Missouri into a taxable note. This option, which was rejected by the board March 11 in favor of prepaying debt, would allow the city to keep a balance more than the tax-exempt note allows, which is 5 percent of the greatest expenditure month during the previous calendar year.

Financial adviser Carl Ramey of Stifel Nicolaus & Co. has told the board that converting to a taxable note can be done at any time and that it would be possible for the city to recover the full $525,000 it already has prepaid.

But the costs associated with regaining that $525,000 include $17,500 in professional fees to convert the note from tax-exempt to taxable. A taxable note also would increase the interest rate on the note from its current level of 5.44 percent to roughly 6.75 percent.

On March 11, aldermen also discussed the possibility of asking residents to increase the city’s tax rate if it is determined that the $525,000 prepaid to Prop S is needed.

Ward 4 Alderman John Foote noted the city’s dependence on sales-tax revenue could be better balanced with its property taxes and that in the event of continued declines in sales-tax revenue at the Westfield Shoppingtown Crestwood, “our residents will step up and do what is needed.”

“If there is a shortfall, and I’m not saying there is, we’re going to have to address it as a community just as we addressed the need for additional funds (through Prop S) to retire the debt,” Foote said. “You cannot run the city on nothing. And we are seeing an erosion in our sales taxes, specifically the mall. But I believe our residents will step up and do what is needed.

“Specifically, when you compare us to sister cities. If you live in Kirkwood, you would be paying 65.1 cents per $100 and we’re paying only around 37 (cents per $100). If you lived in Webster (Groves), it’s 80 cents (per $100). For the same services, we’re paying 20 cents (per $100). Now those municipalities have continued to balance their costs on property and sales.

“We have excluded property and try to get a hundred percent on sales taxes. We had a mall that performed. We all see that diminishing. Now if we watch our money and if we look at this and we do the right thing to control costs and we pull together, there’s no reason why we can’t keep the services and keep the benefits of our fire, our police and our parks. But it doesn’t come free.”

But Ward 1 Alderman Richard Bland be-lieves it is “irresponsible” to prepay $525,000 to retire the city’s $2.08 million in remaining debt and then “if we guess wrong,” ask residents to increase the city’s property-tax rate.

Bland and Ward 2 Aldermen Steve Knarr and Chris Pickel were the only three aldermen March 11 to vote against prepaying debt.

“I think we’ve kind of heard the first mention of a tax increase tonight, at least formally, which kind of flies counter to some of the other things that we’ve heard,” Bland said. “One of the things that we’ve heard is we’re confident that we’re going to be able to make it through the year fi-nancially and we’re not going to need the funds that we’re discussing and we’re voting on tonight.

“Then I’m also hearing if that’s not the case, then maybe we go to the citizens and they’re going to allow us to discuss a tax increase. We’re gambling here. And I think (Ward 3) Alderman (Gregg) Roby brought it up at the last meeting. We’re not making a good decision or a bad decision. We’re trying to decide which one of the bad decisions is the better of the bad. And that’s plain and simple.

“We’re gambling. And quite frankly, I don’t see us holding a hand that I would go all in on. We’re taking a look at the financial future of Crestwood. We’re factoring in a mall that is currently underperforming. And I have no expectation that it’s not going to continue to underperform. The only question is how much more if any? … Am I crazy about paying interest on money that we potentially don’t need? No, I’m not. But I do view that as an insurance policy against coming up against a shortfall.

“A couple years ago, the city had a shortfall. We had to go to the citizens, and Prop S was passed. That was supposed to fix that shortfall. And I think it’s very irresponsible to say if we guess wrong, we can go back and ask the city and the citizens to increase and pay more taxes to help us out of our shortfall again.”

As for the stalled sale of the the city’s largest source of sales-tax revenue — the Westfield Shoppingtown Crestwood — city officials still are uncertain whether a deal will take place.

“I just happened to notice that when you mentioned the sale of the mall, I didn’t see you smiling,” Ward 4 Alderman Steve Nieder said at the board’s March 11 meeting.

“I’m not smiling right now,” Mayor Roy Robinson said.

“And why is that?” Nieder said.

“Because I don’t know what’s going on,” Robinson said. “I’ve heard a lot of ru-mors.”

“So have I,” Nieder said.

“So I don’t know what the story is and our attempts,” Robinson said. “The city attorney knows I’ve bugged him numerous times to find out what’s going on. The last thing we had was about a week or so ago.

“And they were in secret negotiations … I don’t know what you can do about it. All we can do is ask. And I’ve heard a lot of rumors and a lot of things going on. If one of them is true, I may take other action.

“We’ll just have to wait and see if any of it is true. But as far as I know, it’s still ongoing. But I think reality sets in. There has to be something wrong because this thing was supposed to close Feb. 12. And then at the end of the month, it didn’t. So something is not kosher. So I don’t know what it is.”