FARMINGTON — The city will have $5 million in bond money in the bank Sept. 26, money dedicated to improve streets and parks.
The City Council approved Monday night issuing $5,009,039 in sales and use tax bonds for the capital improvement projects. Revenue from a new 1 percent sales tax will be used to pay off the debt.
City voters approved the new 1 percent sales tax in a June 13 special election. Onehalf of the sales tax revenue will be used for debt service on the new bonds and the other half will go into the city’s general fund for operation and maintenance.
The city collects about $730,000 annually from a 1 percent sales tax.
The new tax takes effect Oct. 1 and is a permanent tax. At the same time, a sales tax being collected to pay off a 2007 bond issue will expire and no longer be collected. Farmington’s sales tax rate will remain the same at 2 percent.
Voters on June 13 also approved the city’s request to issue up to $2.8 million in street improvement bonds and up to $2.3 million for park and recreational improvement bonds.
Ryan Bowman with Friday, Eldredge and Clark law firm said the city will issue $10,000 less than what voters authorized in the special election.
Money from the bond issue will go into two construction funds: $2,795,000 for street projects and $2,295,000 for park and recreational projects. Bowman said money in each account will not be co-mingled and can only be used for the stated purposes outlined on the special election ballot.
For street improvement, the money can be used for improvements for streets, curb and gutter, drainage, lighting, utility adjustments, sidewalks, purchase of land for a new public works building and to build a public works facility.
For park and recreational improvement, money can be used for new and existing park facilities, including equipment, parking, drainage, lighting and utilities.
The city will close on the bonds Sept. 26 and will have its money in the two construction funds and can begin work, according to Bowman.