Capital Improvements Millage Proposal
“Shall the City of Novi, Michigan, be authorized to levy a new additional millage on taxable property within the City, not to exceed the annual rate of 1.0 mills ($1.00 per $1,000 of taxable value) for a period of 10 years, commencing in 2017, for the purpose of funding pathways, sidewalks, parks, buildings and other capital improvements and capital projects, including, but not limited to, parks and facilities, land acquisition, pathways and apparatus (such as a fire truck, heavy equipment). These funds shall not be used for operations or payroll. The estimated amount of revenue that will be collected by the City in the first year that the millage is authorized and levied is $3,284,805.”
What is the Capital Improvement Program?
The Capital Improvement Program (CIP) is a planning tool used by the City to identify and schedule capital improvements needed to service residents and businesses. Novi’s CIP is a six-year plan (FY 2017-2022) that addresses projects that are needed, or will be needed, across a broad spectrum of areas. The projects within the program are defined as any new equipment, construction, acquisition or improvement to public lands, buildings or structures in excess of $25,000. The City’s CIP currently identifies some $97 million worth of capital improvements. The program is approved by the City Council and included in the budget.
Why is a Capital Improvement Millage being proposed?
A dedicated Capital Improvement Millage would allow the City to invest in those improvements that have been identified as necessary and required in the City’s long-term planning process. The millage amount reflects those anticipated costs. If it doesn’t pass, many of these projects will not have the funds to be actualized.
Why is the Capital Improvements Millage being proposed instead of a bond?
An increased millage would allow the City to “pay as they go” for needed capital improvements and capital projects with $3.2 million added to the general fund each year for 10 years. If the City were to issue a bond for $32 million for the same amount of projects, the City would pay off the bonds over a period of 15 years with interest, making the total cost for the same projects $40.2 million.
What would a CIP millage pay for?
An increased millage would generate an estimated $3.2 million of additional revenue annually to support capital projects including design and construction, as well as the acquisition of land and the purchase of capital assets.
Some Projects in the Current CIP
What can the millage be used for?
The millage can be used for any capital improvement in excess of $25,000. It WILL NOT be used for roads, drains or sewers, and CANNOT be used for operations or payroll.
How much would this cost me?
Calculate your additional cost
To determine your additional cost of this Capital Improvement millage, multiply ½ your home’s true cash value (market value) x .001.
Home’s Market Value = $250,000
Home’s Taxable Value = $125,000
Multiply $125,000 x .001 = $125
The approximate annual cost to this homeowner would be $125.
The approximate annual property tax increase, for CIP millage purposes, to the owner of a home having a true cash (market) value of $250,000 (taxable value of $125,000) would be $125. See the Calculate Your Additional Cost box at right.
How will this impact the City’s overall millage rate?
The City’s Summer 2016 tax rate is was recently lowered from 10.2 mills to 9.95 mills thanks to a one-time .2500 mill reduction to drain mills. Assuming the CIP millage is approved, the Summer 2017 tax rate will be 10.5376 mills. That rate factors in the expiration of the 2002 debt mills of .3250 and 2010 debt mills of .3374 plus the new 1 mill CIP millage for a net millage increase of .3376 mills. Even with the millage, Novi’s tax rate would remain among the lowest in Oakland County.
How long would an increase millage last?
The proposed millage would last for a period of 10 years.
If a millage is approved, when would it take effect? When would capital projects begin?
If approved, the millage would be effective on the July 2017 summer tax bill.
How will the City determine what projects will take place?
The various projects will be selected based on the goals set by City Council as well as the replacement costs associated with each project.
What if the millage does not pass?
If the millage does not pass, several of the projects will be delayed or shelved completely due to a lack of funding.