Hoover Mayor Frank Brocato proposes sales, rental, lodging tax increases

Hoover Mayor Frank Brocato tonight proposed raising the city’s sales and use tax, lease and rental tax, and lodging tax to eliminate projected budget deficits, increase money for schools and pay for projects requested by residents.

Brocato said he wants to increase the city’s portion of sales taxes from 3 percent to 4 percent, which when combined with state and county sales taxes would boost the overall sales tax in Hoover to 9 percent in Shelby County and 10 percent in Jefferson County.

He proposed a similar increase in the lease and rental tax, from 3 percent to 4 percent. Those tax increases should bring in an estimated $20 million more per year, City Administrator Allan Rice said.

Brocato also wants to raise Hoover’s lodging tax from 3 percent to 6 percent, which City Treasurer Robert Yeager said would bring in about $2 million more a year. Former Mayor Gary Ivey also proposed such a lodging tax increase, but the City Council never passed it after strong opposition arose from the lodging industry.

Brocato said he has always been a fiscal conservative and has worked hard over the past 18 months to make cuts in the city’s budget to bring expenses in line with revenues.

But in order to provide the city services that Hoover residents expect and invest in the city, its schools and future quality of life, more revenue is needed, Brocato said.

The tax increases he proposed also would bring Hoover in line with most of its neighboring cities, he said.

The mayor outlined how he proposes to spend the additional revenue:

• $11 million per year would go to eliminate future deficits, generate funds for routine capital improvements, and attract and retain quality employees.
• $4 million per year would go to Hoover schools, boosting total city contributions to the school system to $11.1 million per year, including $9 million cash and $2.1 million to pay for school resource officers. The additional money should cover $36.4 million in school capital projects, including classroom additions at Berry Middle School, Riverchase Elementary, Bluff Park Elementary and Gwin Elementary, demolition of parts of the old Bluff Park Elementary and renovation of other parts, plus $15 million in paving and roofing projects, Brocato said. The school system also could use the money to help cover operating costs, he said.
• $22 million would cover the city’s match needed to obtain $110 million in federal money to build a new interchange near South Shades Crest Road along Interstate 459 and improve the exit at John Hawkins Parkway.
• $22.3 million would go to build a new fine and performing arts center, and $1 million a year would go toward the center’s operating costs.
• $20 million would be spent to provide land, building site preparation, utilities, construction and traffic improvements for a $300 million project that will bring more than 1,000 jobs to Hoover. Brocato said confidentiality agreements prevent him from disclosing the company right now, but it is not a retail company. An announcement about the development should come in 30 to 60 days, he said. "It's something that will fundamentally change Hoover for the better. We can't afford to miss out on this opportunity."
• $1.7 million would be used to build a Hoover Public Library branch in eastern Hoover, and $700,000 per year would go toward the branch’s operating costs.
• $500,000 per year would go to developing the city’s bicycle and pedestrian paths
• $450,000 per year would provide a tourism and cultural program to secure the future of Aldridge Gardens and assist with attracting major events to Hoover

Brocato also said the city is in talks with the owner of the Riverchase Galleria about redevelopment plans to make it more of a city center. There is a possibility the city’s performing arts center could be located on the Galleria campus, he said.

Property tax increase?

The mayor said he considered creating an occupational tax in Hoover but believes it would harm the city’s business climate. He also considered raising property taxes, but property taxes are the primary source of funding for schools in Alabama and any future increases in property taxes should go to Hoover schools, he said.

Brocato said he would be willing to work with the school system to ask the Legislature to let Hoover go above the statewide cap of 75 mills of property taxes, if and when the school board thinks it needs to do so. Hoover residents currently pay 72.6 mills of property taxes. The school board and City Council would need to ask the Legislature to approve a public vote on the matter across Jefferson and Shelby counties.

The mayor said he plans to have proposed ordinances concerning the sales and use, lease and rental, and lodging tax increases drawn up for a first reading at the June 18 City Council meeting, and he would like the council to vote on them at the July 2 meeting.

Council responses

Council President Gene Smith told the mayor his presentation was excellent. The council still has some studying to do and will have to do its own due diligence in its review of the proposal, Smith said. Time will tell if the council is ready to vote on it by July 2, he said.

Councilman Mike Shaw said it was good to see the mayor provide more detail about where money from a tax increase would go.

However, “I’m a little concerned about how the message has radically changed from where we’re basically out of revenue to now we want to spend tens of millions of dollars,” Shaw said. “That’s something I’m going to have to get my hands around to reconcile because … it’s a radical change from what we’ve been talking about the last couple of months.”

Shaw said he also is concerned that the mayor wants to move forward with this before the city’s comprehensive plan has been completed and adopted. The city has started the process to develop a comprehensive plan and held public input meetings, but the plan has yet to be drafted and presented back to the public for further review.

Brocato said he needs the council to go ahead and vote on his proposal because he’s trying to get a budget ready for fiscal 2019, which starts Oct. 1. “We’ve talked about this long enough,” he said. “Let’s take action.”

The mayor said he realizes that the extra 1 percent in sales tax revenue doesn’t allow city officials to “go crazy on a spending spree.” The projects he has proposed are projects that residents have repeatedly said in town hall meetings and surveys that they want their city government to do, he said.

"This city's been built to a level of excellence over 50 years by listening to our citizens and meeting their needs and their expectations," Brocato said. "We can't continue to have a great city unless we are willing to pay for the great things we have and the great things we aspire to have."

Other cities like Mountain Brook, Homewood and Vestavia Hills didn't hesitate to invest in themselves, Brocato said.

"Nobody moved to Hoover to be average or to see us fall behind," he said. "We've got a wonderful city. We need to continue to build on our past. Gentlemen, we are truly at a crossroads, and it's time to decide our future."

Councilman Curt Posey said he was glad to see the mayor incorporate the feedback from the Future Hoover town hall meetings into the financial presentation. It helps paint a picture for what Hoover can look like in the future, he said.

He grew up in Hoover in the 1980s when the city was exploding with growth and the construction of the Riverchase Galleria, he said. “I think that a lot of people who have moved back here who are my age are looking to recapture some of that magic,” Posey said.

People want to take Hoover to the next level, he said.

The council has a tough decision to make and a lot of numbers to consider and some negotiating to do, he said. “I think the final product may look a little different,” he said.

He, for one, wants to make sure the lodging industry fully understands the impact the tax increase would have on them, as well as how money raised from such a tax increase might be used to draw more people into Hoover’s hotels, he said. He also wants to see more details about how the city would pay for various projects on a year-by-year basis, he said.

Former Hoover Councilman Jody Patterson told the council he doesn’t think raising taxes is the answer to the city’s financial situation. He especially doesn’t think the school system needs more money, he said. “They’ll suck us dry if you let ‘em,” he said.