The City will be making several “big ticket” expenditures in the next few years. This letter explores how they will be financed.
I think both options (hotel or tax increase) stink. And, I’m not endorsing either one. But, the City will need a lot of money in the next few years to replace city hall/police station and to do needed infrastructure work. Realistically speaking, the money will come from one of two places: A bond issue (which will raise taxes), or selling the Adams Street property. (Hotel development in other locations will help the City’s finances on a long-term basis. But it won’t provide enough money for the public buildings/infrastructure.)
The opposition to the hotel is well-reasoned and passionate. However, I’m not as certain they are as passionate in their willingness to accept a tax increase. Currently, St. Helena is significantly more dependent on property taxes than Yountville or Calistoga.
Property taxes as a percentage of General Fund:
St. Helena 32%
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What the table says, in plain English, is that when Yountville and Calistoga build new public buildings or infrastructure, a greater percentage is funded by other sources, like sales taxes and hotel taxes. The fact that St. Helena’s property values are higher than those of Yountville/Calistoga explains part of the difference. But our property values aren’t twice as high.
Analysis of the table shows that St. Helena relies on property taxes for General Fund revenue more than twice as much as Yountville/Calistoga. Also, St. Helena is positioned about midway between Yountville/Calistoga and Tiburon. A bond sale would increase property taxes, which would move us closer to Tiburon than our neighboring cities. Opponents of the proposed Adams Street hotel have said that building the hotel would make St. Helena more like Yountville. That may be correct, but it should be recognized that not building the hotel would make us more like Tiburon.
If a bond issue is used it’s most likely that only the “essential” projects will be tackled (public buildings/infrastructure). If the Adams Street property is sold, there is a chance that community upgrades could be made with the sales proceeds. These types of projects could include adding bicycle paths and pedestrian trails around town, including to and near the Napa River, building a recreation center for all walks of life, a history/heritage center, etc.
We have a difficult decision in front of us, and both options have their plusses and minuses. I’d caution people to be wary of any discussion that simplistically focuses on the minuses of any particular option.