10 STORIES TO FOLLOW IN 2019
ESTIMATING EXPENSES As part of The Woodlands Township’s ongoing study on incorporation, Matrix Consulting Group and The Novak Group have released draft financial models of what incorporation could cost.
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negotiated with Montgomery County, which currently provides some of those services. Costs could also vary based on levels and models of service. “There’s a wide range between worst, best and targeted [costs],” Matrix Vice Presi- dent Alan Pennington said during the session. Matrix’s model also accounts for new rev- enue sources the township would have as a city, such as alcoholic beverage tax revenue, fines and forfeitures, and fees fromamunicipal court. New revenues could total $10.2 million annually, which could offset some of the new costs in the first year of incorporation. Throughout the study—before it was named the lead firm—officials with Novak had been working separately from Matrix on their own independent model. Novak’s model estimates about $19.7 million in new annual costs, plus at least $2.9million in startup costs. It also includes about $9.9 million in revenue sources annually. Novak Group President Julia Novak said the models are not meant to sway the board or residents one way or another but to give a clearer picture of what the financial effects might be. “We have not been asked to give an opinion about pros and cons of incorporation but really more what the facts are in terms of the financial impacts,” Novak said during the presentation. “A lot of this ultimately comes down to the policy decision of identity and independence and the ability to respond to things that you as a governing body want to respond to.” PROPERTY TAXEFFECTS Despite startup costs Bunch said the models may not be indicative of how much tax rates could
for the existing services. Preliminary models
show incorporation would likely cost millions in addi- tional expenditures annually to take full control of services such as
police and public works departments. While a finan- cial model has not been finalized, a maximum initial tax rate for what would be needed to incorporate will be released in the coming weeks, after which resi- dents will be able to provide feedback. FINANCIALMODELS Perhaps one of the most significant aspects of the study is determining the short- and long-term costs of incorporation. Matrix and Novak both presented draft financial models during the township’s Nov. 28 incor- poration planning session. Prior to the presentations Bunch said the financial models are not final andwill be reviewed by the town- ship staff. The township board of directors is expected to provide feedback on the reports during its Jan. 23 planning session. “The report data … is preliminary and does not rep- resent the final report that will be used to establish a maximum initial tax rate for the purposes of calling an incorporation election,” Bunch said. Matrix’s model estimates about $20.5 million in new annual costs for new services such as a city sec- retary, municipal court, police force and public works as well as $7.3 million in startup costs for new facili- ties and equipment. However, officials with Matrix said some of the fig- ures, such as the annual costs for police service and public works, are dependent on if contracts could be
increase, as the town- ship has set asidemore than $20million in reserves to help offset initial costs. While a maximum initial tax rate was not pro- posed in the models, township staff previously esti- mated each cent of property tax added to the existing rate—$0.2273 cents per $100 valuation—would raise about $2 million in revenue for The Woodlands at an average cost of $43.24 for homeowners, assuming the average home value in The Woodlands at $477,000. Amaximum tax rate is expected to be brought back to the board in the first quarter of 2019 for consider- ation as part of the final financial model. Addition- ally the maximum initial tax rate will require voter approval should incorporation be placed on a ballot, according to the enabling legislation.
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