SULLIVAN'S ISLAND - A property tax hike could be needed to help pay for a $4.1-million project that includes a new Town Hall and police station, Mayor Pro Tem Jerry Kaynard said Wednesday.

Town Council on Tuesday night approved a 12-year general-obligation bond to finance the new town headquarters, plus upgrades to Stith Park and water and sewer improvements.

Council is minimizing the amount of tax hike that would be needed by tapping other revenue sources that will become available in 2016, Kaynard said.

The tax hike would generate $120,000 annually to finance interest-only payments on the bond for 2014 and 2015, he said.

From 2016 to 2025, yearly payments would range from $355,000 to $470,000.

In 2016, Council will free up $120,000 annually because of reduced operating costs for Town Hall trailers and emergency dispatch. Another $200,000 per year will become available when a different general-obligation bond is paid off in 2018. Cash reserves and the planned sale of town-owned lots will provide more funds, he said.

Otherwise, the $4.1 million bond could require an 8-mill tax hike instead of the 2-mill hike currently envisioned. Now, the tax rate is 29-mills, he said.

"We really minimized the millage increase," Kaynard said.

If Town Council approves the increase, the property tax bill for the owner of a $600,000 home would rise by about $60, Kaynard said.

The financing package includes an annual option to pay off the bond in full, he said.

The bond will be advertised next week and the town will accept the low bidder on Feb. 4, said Town Administrator Andy Benke.

A 1-mill increase could be necesssary for the 2014 tax year, and the same increase could be needed for 2015, Benke said.

The millage increase will be shown as a debt-service retirement on the tax bill, he said.

"I must stress that the expenses are estimates at this time pending better detail on Town Hall construction expense and fire apparatus specifications and purchase cost," he said in an e-mail.

Stith Park improvements would include public restrooms, a small amphitheater and new pathways. The new two-story municipal building will be on town property next to the Fire Department. It will enable Sullivan's to better maintain essential services and protect town records during a storm, officials said.

Firms that have been listed as competing for the Town Hall project are Hill Construction; Meadors; NBM Construction Co. Inc.; Phillip W. Smith, general contractor; Thompson Turner Construction; and Trident Construction.

The long-time island Town Hall on Middle Street was vacated in 2011 because of worries about the health effects of rats, mold and bacteria in the 106-year-old building. Evidence of vermin could be seen on furniture and computers. Some Town Hall staff complained of not feeling well at work. Headaches, nausea, fatigue and burning nostrils were among the symptoms staff reported.

As an interim measure, Town Hall was moved to trailers on Middle Street.