Agenda - Charter Commission - 11/19/2013 - Joint with CC

Home

Following through with the direction provided at the January 24th work session: The purpose of the case tonight is to receive direction on implementation of the program. Specifically, Staff would like direction on the following items: Proposal to "phase out" reconstruction assessments Commercial vs residential franchise fee Retroactivity for previous assessments levied Street standards Charter amendment changes Consideration and Schedule for franchise fee implementation Phasing Out Assessments After the meeting on January 24th, Staff received additional comments from City Council members about the ability to "phase out" assessments for reconstruction activities. This can be accomplished in a number of ways. Similar to how we phased out sealcoating assessments we could incrementally increase the amount being funded by the franchise fee, identify other cost saving measures, identify future land sales proceeds from the COR, or incrementally increase the tax levy to accommodate the assessable amount. All of these options are possible and will continue to be evaluated in the future. The discussion and or decision to be made tonight is whether you want there to be a phasing out of the assessment or do you feel comfortable with a 50% reconstruction assessment policy. After much deliberation, Staff is recommending that initially we begin the franchise fee with a 50% reconstruction assessment, increasing the fee 5% each year for the first five years to ultimately get to an overall reconstruction assessment of 25 %. Commercial vs residential franchise fee The projected amount that would be generated from a franchise with the Council directed limit includes $7 per franchise per month for each residential customer and $14 per franchise per month for each commercial or industrial customer. The estimated amount generated with this rate structure would be $1.53 million ($1.36 million - residential, $165,144 - commercial /industrial) annually. There was discussion at the January 24th work session to look at the ramifications of charging each customer the same ($7 per customer). As you can see there would be a reduction of $82,572 of revenue to make the rate the same for commercial and residential. The rationale for making the change is that most of the major commercial and industrial customers are located on State, County and MSA roadways whereas residential lots are primarily located on the local roadways. Staff recommends that all customers pay the same rate of $7 per month per franchise. Retroactivity for previous assessments levied There has been much discussion about the policy of reimbursing properties that have been paid assessments over the last few years. The difficulty with paying back prior assessments for sealcoating and overlays is that there really is no way to draw a line. Property owners may either pay the assessment off without any interest or have the amount levied to their property taxes. When someone sells their house, the assessments are typically paid in full and therefore there may be a separate resident living in the house today than was there when the assessment was levied. If Council directs us to reimburse one year of back assessments, the resident that was billed 2 years ago will ask why not 2 years. Since there hasn't been any reconstruction assessments (except Dysprosium Street whose residents were charged an amount equivalent to an overlay because they lived on a State Aid road), there should not be any concern for setting a precedent for the reconstruction activities. Staff recommends that the City Council draw the line now and don't reimburse past assessments.