Egg Harbor Taking On $2 Million in Debt

File photo by Craig Sterrett.

Cost overruns for completing Hwy 42 project not as bad as expected

The Egg Harbor Village Board this month voted 4-0 for the sale of $2 million in 15-year promissory notes. The debt would cover unforeseen costs of the village’s improvement projects in the state Highway 42 corridor, as well as the village’s $595,000 half of the purchase in 2025 of a fire truck to serve the village and the Town of Egg Harbor.

Due to mostly fair weather this past winter, the projection for the cost overruns on the highway corridor project went down by $200,000 between February and April, said Megan Sawyer, Village Administrator. Previously, the board had discussed taking on an additional $2.2 million in debt.

Joe Murray, Senior Municipal Adviser for Ehlers, said promissory notes give municipalities greater flexibility for spending than municipal bonds. He said if the village does not need to use all of the funds for the fire truck and Hwy. 42 infrastructure work, it could use it for other purposes. He also said the portion of the funds for the fire truck will be invested to gain interest into 2025.

Village President John Heller told the board he has heard “a lot of chirping” from neighbors and constituents who are concerned about property taxes and village spending. He suggested that the board try for 20-year notes to slightly limit the initial tax impact, but village trustees settled on 15 years. Trustee Cambria Mueller said taxpayers would pay less in the long run if they pay more on taxes during the upcoming tax year while having a shorter term for the debt. 

Taxpayers with homes worth $300,000 paid $682 for debt service on their 2024 property taxes, and those same people with $300,000 properties are projected to pay $139 more for debt on the 2025 bill. Murray said the total debt service levy is not expected to go down significantly until 2029 and 2031, when bonds from marina and library projects come off the books.

The Wisconsin Constitution limits municipal and county debt to no more than 5% of equalized value – which comes out to $31.74 million compared to the village’s $634,919,000 villagewide tax base.

Increased real estate prices and a partial revaluation of taxable properties increased the villagewide equalized valuation by 30% by December 2023, enough to move the village back toward that threshold. The village now has more than $22.7 million in debt, which puts it at 68.7% of its state-mandated debt ceiling. 

“With the expansion of the tax base, I think we’re in good shape now,” Heller said in an interview outside of a public meeting, referring to the state constitutional limit.

He emphasized that the village spent a lot of money during the past few years to improve Church Street and for the Hwy. 42 redevelopment project. 

“I think we’re in a situation where we can hold the line for a while,” Heller told the Peninsula Pulse.

Ehlers said the village has a credit rating of AA-minus, and he doesn’t see anything looming that would cause that rating to deteriorate. He said that’s a solid rating – the fourth-best possible.