Council approves $33.35 million bond issue

Cannon Beach’s city council approved a $33.35 million bond issue to support the construction of a new police station and city hall, and the renovation of Cannon Beach Elementary School at their meeting on April 16.

The new bond issue will support the city hall and police station projects in full, while the Necus Park project at the elementary school had already been partially funded by a $4.6 million bond issue in 2022.

Funding for a new city hall, to be constructed in downtown Cannon Beach on the site of the existing city hall, will account for the largest portion of the bond, receiving $15.3 million. A new police station that will be built at the south end of the city off Highway 101 will be allocated $10.25 million of the funding.

The remaining $7.8 million from the bond will go towards the renovation of the disused Cannon Beach Elementary School into a cultural center focused on promoting the culture of the Clatsop-Nehalem tribe, which formerly had a village at the site. The funding from this bond will be combined with a $4.6 million bond issue to pay for the project’s entire $12.4-million budget.

Documents included in the council packet showed that the project team expects the bond to be issued with an interest rate of 4.58%, leaving the city with just over $2 million in annual debt service for the bond’s 30-year term. When added to the $248,000 already obligated in the 2022 bond, the city will pay $2,266,558 annually to service debt for the projects.

Funding for the $720,000 in annual debt service for the Necus Park project will come entirely from transient room tax (TRT) revenues. Council approved a 1.5% increase in the city’s TRT revenues last spring, which will generate $721,875 annually that must be used for tourism-related projects.

Debt service for the police station and school projects will come in at $1,546,264 annually and be funded from a variety of sources. The largest contribution will come from the city’s food tax, half of which will be dedicated to servicing the project’s debt at an amount of $892,500 annually. Another sizable chunk will come from the 30% of the increased TRT that can be used for non-tourism-related expenses, totaling $309,375. The balance of funding for the projects’ debt service will come from transfers from the RV park reserve fund and city’s general fund reserve.

At the meeting, several members of the public voiced their concerns about the park project’s budget and the financial burden that it would put on future residents of Cannon Beach. Other commenters spoke in favor of moving the projects forward and thanked the city council for taking the initiative to see them over the line.

Councilors unanimously approved the bond issue.