Bismarck's growth will drive Parks and Recreation District capital improvements, maintains director Steve Neu, as the park board calls for project bids estimated at $4,240,000 for two improvement districts.

This doesn't include an improvement district for the proposed aquatic-wellness center to be built on the Bismarck State College campus. A hearing and subsequent resolution of necessity is scheduled for April 1.

The projects come with the promise of no increase in taxes. The district has authorized a call for bids on the projects. If awarded and built, the district will sell bonds to pay for the projects with expectations to pay the bonds off over 15 years.

The money to pay off the bonds will be generated through growth in property value. Park district financial director Augie Ternes factored an annual growth of 3.5 percent in determining this will provide the money for the projects.

There are three basic parts to growth in property values, Neu said.

The first, is market adjustment to certain segments of the community. "Things grow in value," Neu says.

Then there are annexations by the city, bringing in more taxable property, and improvements to existing properties that increase their value.

Finally, there are new properties, residential and commercial, coming onto the tax rolls.

The city of Bismarck has seen average property value increases of 7, 8 and 9 percent the past several years. Not all property owners are affected the same, some seeing greater increases in their tax bills, and some less. The 3.5 percent annual increase is a conservative projection, Ternes said.

Bismarck finance director Sheila Hillman said she agreed with the park district's estimates. She said that over the past several years, Bismarck has seen property tax valuation increases of between 7 percent and 9 percent. Of that, new valuation coming from annexations and new commercial and residential construction made up 3 percent to 4 percent of the valuation increase.

Last year, special assessments made up 23 percent of the park district's total budget expenditures, equal to about 9 mills. The district collects a total of about 38 mills through property taxes or about 49 percent of its total budget, the remaining 51 percent is generated through revenues such as user fees and rental along with a small amount in state aid.

The capital projects in improvement district 2008-01 include projects at Cottonwood Park South, Pebble Creek Recreation Area, Lions Hillside Park and New Generations Park. An estimated $3,390,000 will be spent.

"We've just preparing sites, building parking lots, roads, replacing equipment, dirt work, providing water and sewer; those kind of things," Neu said.

The above ground work, completing the softball and baseball fields, providing playground equipment and other amenities will be up to the user groups, Neu said.

All the general site improvements provided by the park district will not be constructed over one year, but are expected to take four years. Each year, the park board will have to hold hearings and provide a resolution of necessity before further work will take place.

And just because special improvement districts are created, doesn't automatically mean the money will be spent, Neu said.

In 2006 a special improvement district of $2.5 million was created for projects involving parking lots, signage, trail extensions and fencing at various park properties. Because of timing, the projects never took place and were moved to 2007, becoming improvement district 2008-02. Neu also said the district was reduced to $850,000 in estimated projects.

Debt payment doesn't start until 2009 and repayment of improvement districts created through 2012 for the projects will take 15 years. Bond interest rates are expected to fluctuate between 3.5 percent to 4.6 percent over that time.

Neu said that each year the park board will have to go through the process of creating an improvement district and this provides a safeguard, should the local economy see a drastic downfall.

The park board can either forego creation of the improvement district, not call for bids or reject bids to remain within budget. The park board also can pick and choose what projects it feels it can afford.

Ternes estimated the 3.5 percent valuation increase will allow the park district to pay back the bonds at more than $1 million year.

On April 1, the park board will hold a hearing on spending about $500,000 for infrastructure improvements to allow construction of the indoor aquatic-wellness center on the Bismarck State College campus. This debt is already calculated in the bond payments.

This Thursday, the park board will meet and make a decision on whether to enter into an agreement with the Streamline Foundation, which will construct the center and lease it back to the park district.

Staff have developed a budget, which shows that revenues generated by the facility will pay for 90 percent of the lease, with the remainder subsidized by the park district's general fund.

Neu said the park district does subsidize all of its facilities, many above the 10 percent level that will be provided the indoor aquatic center-wellness center.

"You have to remember, the park district doesn't get any other funding outside the user fees it generates, rentals and property tax," Neu said. "Look at the other jurisdictions. They have other means. The school district received state money, the city has sales tax, even the county received some state help. We looked at our resources and how these projects will fit in without having to raise taxes."

(Reach reporter Gordon Weixel at 250-8255 or gordon.weixel@bismarcktribune.com.)