The mayor has identified money for the Event Center coming from the General Fund Reserve, Private Donors and Bonding. Bonding the project with an issuance of bonds may require a vote of the public per state law.Now, there are rumors surfacing that to get out of a public vote, the financing would be done using the general fund reserve and sales tax. Issuing bonds covered by sales tax would not require a public vote unless it is referred.
If the mayor and city council intend to issue bonds, state law requires an election with 60% of the voters in favor of the bond issuance unless otherwise provided.
6-8B-2. Election required for issuance. Unless otherwise provided, no bonds may be issued either for general or special purposes by any public body unless at an election sixty percent of voters of the public body voting upon the question vote in favor of issuing the bonds. The election shall be held in the manner described by law for other elections of the public body.
If the city council wishes to issue bonds for the event center project they would need to declare the necessity to issue bonds by resolution or ordinance at a regular city council meeting or by special meeting. Sioux Falls City Charter requires an ordinance for this activity.
6-8B-3. Resolution or ordinance declaring necessity of bond issue--Contents--Election. If it is determined by the governing body to be necessary or expedient for any public body to issue its bonds the governing body at a regular meeting thereof or a special meeting duly called may by resolution or ordinance declare the necessity thereof and may submit the question of the issuance of bonds to the voters of the public body at any annual election or at a special election called for that purpose. The resolution or ordinance shall set forth clearly the purpose for which the bonds are to be issued and the maximum amount of the bonds. The resolution or ordinance may also include the maximum rate of interest which they draw, and the maximum time within which they shall become due and payable or other matters the governing body determines relevant to the bond issue.
State law also provides that the authorization of bonds for the purpose of construction of a building or facility includes authorization to expend the proceeds of the bond for any equipment and furnishings, the purchase of any land, and the payment of all fees and expenses reasonably necessary to complete the building or facility. (6-8B-6)
Financing the construction of the event center, paying for equipment and furnishings for the building, purchase of any land and other fees and expenses necessary to complete the event center using general fund reserve and sales tax from the Capital Improvement Program raises serious red flags. The general fund is the city’s primary operating fund and to use these operating funds for construction purposes should be highly questionable as other funds have been put in place to fund capital improvements.
The first penny sales tax and property tax provides the primary revenue source for operations. The second penny sales tax primarily supports the Capital Improvements for general fund departments and is also used for debt retirement. User fees (water, sewer, electricity, parking and landfill) are second highest level of revenue support in the capital improvements program.
The only money in the 2011-2015 Capital Improvement Plan for the Event Center is $500,000 in 2011 and $500,000 in 2012. It would seem that serious realignment of capital projects programmed in the 2012-2016 capital plan and the years moving forward will need to be significantly adjusted if the Event Center project is going to be funded using second penny sales tax.
So where do you think the mayor and his team is going to propose getting the necessary funds to build his vision? I say pay attention general public. The next couple of months will be very interesting.