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Housing investments, $15 minimum wage, employee pay bump proposed in Savannah 2022 budget

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The City of Savannah is set to make a historic investment to address affordable housing and homelessness in the coming year. The proposed budget, released Nov. 16 in a budget retreat, includes $7 million for the Savannah Affordable Housing Fund (SAHF) and another $12 million for initiatives geared toward affordable rentals and home buying assistance for lower-income, elderly and disabled residents.

In total, the city’s Housing Savannah investments and workplan includes a record $19.1 million for housing.

More from the budget retreat: Here’s how Savannah could spend its $55 million in American Rescue Plan funding

The housing investment was one of many budgetary measures outlined on first day of the city’s two day FY22 budget retreat held at the Savannah Civic Center. Council and city staff will meet again on Nov. 30.

“I’ve been with the city for 21 years, and I’ve never seen a budget proposal for $19.1 million for housing from the local government. Absolutely phenomenal,” said Martin Fretty, director of Housing and Neighborhood Services for the City of Savannah.

Residents will have an opportunity to offer public comment on the proposed budget at Nov. 23 city council meeting and again during council’s Dec. 9 meeting. Both meetings begin at 2 p.m. and will be held in council chambers at Savannah City Hall.

Savannah City Manager Jay Melder.

Along with initiatives to address affordable housing and homelessness, the city is also set to increase minimum wage for employees to $15 per hour starting Jan. 1; allocate about $23 million between various public safety measures, mobility enhancements and recreation projects; and create nearly 40 new employee positions.

City Manager Jay Melder said the FY22 budget reflects significant investments across a variety of sectors including health, safety, vitality and future success of the city and residents.

While economic uncertainty remains, Savannah has a clear financial path forward and has come through the many challenges of the past year in as good or better shape as any city in America, he said.

For subscribers: Salary database: Here’s how much City of Savannah employees make

“This budget achieves these critical, unprecedented and equity-focused investments while maintaining the strong fiscal controls and prudent budget policies that have kept the City of Savannah in a strong financial position before and throughout the pandemic and which will keep us strong in the future,” he said during Tuesday’s retreat.

Many of the investments and proposed projects will be made possible through $55 million in federal funding received as part of the American Rescue Plan Act (ARPA).

“We’ve been able to weave it through our programs and enhancements so ARPA really is the backbone of this budget,” Melder said.

Housing investments

Many of the investments and proposed projects, including a large portion of the funding allocated for housing and homelessness initiatives, will be made possible through ARPA, a federal COVID-19 relief package.

The $7 million in ARPA funding earmarked for the Savannah Affordable Housing Fund, or SAHF, will be used over a four-year period as outlined in the Housing Savannah Action Plan. The city first created the SAHF in 2011.

More: Housing Savannah Task Force aims to help 15,000 households by 2032. Here’s what comes next.

“In the first 10 years of that fund the city’s contributed $2.25 million, so $7 million bucks coming into the fund next year … That will cover a four-year period, but that still is huge,” Fretty said.

Another $3.1 million in ARPA will be supplemented with $1.2 million through the federal Community Development Block Grant CARES Act to help provide housing for homeless residents and to produce affordable rental housing. An additional million $1.5 in ARPA and grant money will be applied to help elderly, disabled and lower-income residents improve or purchase their first home.

More: Developer: New vision for fairgrounds to be a boost for all of Savannah

Lastly the proposed budget includes about $5.3 million in special-purpose local option sales tax (SPLOST) funds for housing development infrastructure and $1 million in underutilized city property that, with council approval, can be used for housing.

The property includes sites on Dundee Street, Martin Luther King Jr. Boulevard, Drayton Street and the former Coastal Empire Fairgrounds. The developments could include affordable, workforce and mixed-income housing.

“Our properties, we think that they can help reduce the cost of housing development by the value of the land that they bring to the table,” Fretty said.

“And they can be used to help provide housing for people experiencing homelessness, people needing affordable rental housing and for people seeking to go from renting to owning housing.”

FY21 and FY22 details

Looking ahead into the next year the millage rate of 12.739 is proposed to remain the same. Residents could see a 4% increase – about $21 per year – to their utility rate.

The city’s general fund is balanced at $251 million with no tax increase or planned draw from reserves and the five-year general fund forecast doesn’t predict a deficit. Additionally, the FY22 capital budget includes about $84 million in planned spending.

The top revenue sources expected in FY22 are property, sales and other taxes, which are expected to account for about $208 million; user fees for city specific services, $134 million; interfund revenues, $61 million; and ARPA funds at $27.7 million. In total, 2022 revenue is expected to be $479 million.

More: Divided Savannah council votes to maintain millage rate

“The bottom line for our FY 2022 finances is that we are in the position to balance our budget to make historic investments in affordable housing, get back to the basics by upsizing fundamental government services, improve our neighborhoods and rejuvenate our workforce,” Melder said.

“These investments are possible because of the strength and resilience of our local economy, prudent budgeting and with the use of American Rescue Plan Act dollars.”

While the city will start the next fiscal year on a positive note, it will also end on one. Sales and property tax revenue coupled with the savings of general fund expenditures because of COVID-related closures and service modifications have resulted in a revenue surplus for FY21.

More: City of Savannah, neighborhood leaders break ground for Hudson Hill Community Center

Initially the FY21 budget was projected to have about an $11 million deficit. Instead the city will end the year about $17 million ahead.

“We began the year anticipating we would need to borrow from our reserves to provide our standard level of service to residents. We now expect to end with sound reserves in fiscal year 2021,” Melder said.

Following the two public hearings, council plans to adopt the budget at their Dec. 9 meeting.

If you go

What: City of Savannah fiscal year 2022 budget hearing

When: Nov. 23 or Dec. 9 at 2 p.m.

Where: Savannah City Hall, 2 east Bay St.

Katie Nussbaum is the city and county government reporter for the Savannah Morning News. Contact her at knussbaum@savannahnow.com. Twitter: KnussSMN

This article originally appeared on Savannah Morning News: Savannah’s 2022 budget: Historic housing investments, pay raises