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Council debates three options for $1 million USDA grant to soften tax spike
Summary
City staff told the council it had secured a $1,000,000 USDA grant and proposed three ways to use it to reduce or smooth an expected debt‑service spike; staff recommended front‑loading $250,000 in 2027 with a year‑by‑year step‑down, drawing both support and concern from councilors.
City staff told the New Prague City Council it has secured a $1,000,000 USDA grant and presented three options for using the money to reduce the impact of rising debt‑service levies.
Josh (S2), the staff presenter, said the grant is expected to reimburse $1,000,000 in qualified expenses and that staff identified about $1.8 million in qualifying project costs. "In 2027, I'm recommending the city use $250,000 towards debt service," Josh said, describing his preferred approach of an initial larger payment that would decrease by roughly $25,000 a year thereafter.
Josh outlined two alternate approaches: exhaust the grant quickly over two years to sharply lower short‑term levy pressure, or spread the grant over the full length of the bond (roughly 30 years) to shave about $33,000 a year from the levy. He said the recommended approach aims to moderate an expected spike while giving the city flexibility as tax‑capacity and other fund balances evolve.
Some councilors voiced impatience with what they described as a still‑high tax impact even after using the grant. One councilor criticized the projected average residential tax impact and said, "8.16 is not acceptable to me," arguing the city must be more fiscally responsible. Other councilors favored using the grant more quickly to provide tax relief sooner.
Josh told the council the packet includes a new green summary sheet showing the proposed levy increase of $639,004.43 (an 11.41% change) and an average residential impact of $8.16. He said the USDA representative is finishing the final paperwork and that staff expect reimbursement funds this summer; the council asked staff to run alternate scenarios and post detailed calculations before the next budget meeting.
The council did not take a formal vote on which option to adopt; members asked staff for detailed scenario modeling and for follow‑up analysis of how callable bonds, fund carryovers and other overages might be applied to reduce future levies.
