As we prepare our budget for the upcoming year and look at our public improvement project for 2013, it is very clear that we need to review how we fund public infrastructure. I will be making recommendations to the City Council in several areas to include storm sewers, streets, sanitary sewer and water. The future of our City requires us to consider the proper allocation of resources, yet at the same time limit the amount of resources we take from our residents.
The first public infrastructure that needs to be addressed is streets. This is the most costly part of a reconstruction project, but we don’t charge anything to the adjacent property owners. This is almost unheard of in cities in Minnesota. Most cities allocate a fairly large portion of reconstruction costs to the property owners. Most do it based upon the front feet you have adjacent to the road.
In some cases, cities also charge for maintenance like patching roads, overlays and seal-coating. We accomplish this in Morris with franchise money that is obtained through the utility and telecommunication companies. But even this resource ultimately comes from the customers, not the companies themselves. You will see the franchise fee on the utility, phone or cable bill you pay.
The City of Morris pays for the reconstruction of streets through a tax levy on the property tax payers of the City. At first glance, that may seem like a fair way of doing things, but remember that Morris has an extremely high portion of its property that is tax exempt. Those properties do not pay for the street improvement. A higher burden is then placed on those properties that do pay taxes. The other parts of the reconstruction projects are assessed to the property owners that derive a benefit from the project. We are allowed to assess all property including tax exempt. In some cases, like sidewalk, curb and gutter, the property owners pay 100%. In some cases, like water and sewer, the amount assessed is based upon the number of connections to the system and the number of living units in the project area. We call this a per-unit cost.
My recommendation to the City Council for future projects will be a more realistic approach for streets. There needs to be an assessment for the adjacent users based upon the front footage like sidewalks, curb and gutter. In the calculations, special consideration will be given to corner lots. We do this now for sidewalks, curb and gutter. This new assessment policy will result in the City’s ability to keep streets updated as they need it. General maintenance through patching, overlays and seal-coating will still be paid for through the franchise fees.
The only area that will need some discussion is the properties that have a house with several empty lots adjacent to it. The cost to run roads by these empty lots is not a cost the general city should pay. Property owners may want to consider freeing these lots up for construction to help share the costs. Also, individuals with much larger front footage will have to pay for the added cost of the road across that front. This again is an added cost that the general city should not pay.
Water and sewer will continue to be paid for as we do now. The per-unit or user process seems to take care of the costs in a reasonable manner, although it is still dependent to some extent on the number of users in a particular area. The actual cost to place pipe for water and sewer has nothing to do with the number of users. The length of the road is the driving factor for this cost, just like with streets, sidewalk, curb and gutter. This is a major factor we are considering for getting water and sewer out to the recently annexed properties that are not close to the nearest connection.
The final utility is the storm sewer utility. We assess for reconstruction based upon 50% of the cost spread to the properties that drain into that area based upon their square feet of property. Why 50%? I don’t know. There doesn’t appear to be a rhyme or reason for this allocation of cost. The other 50% is picked up by….yes, the general city. This again doesn’t include all the property, since not all the property owners pay taxes.
I recently looked at the possibility of having a storm sewer utility, but my problem with it as it started to shake out, is that it takes money for future projects. I have a real hard time taking money now for a future project. I would much rather do a larger assessment project that takes into consideration the property that benefits from the project, even if it is a large area. At least you know what you are getting. However, I also believe the allocation of the cost has to be at a higher percentage. Again, we can assess tax exempt property.
The bottom line is that the “General City” property tax payer doesn’t exist. When we say we won’t have the “Actual” property tax payer pay for the improvements that benefit their property, in lieu of having the “General City” pay for it, we are fooling ourselves. The assessment process allocates the costs to those property owners that benefit and that is the standard we should enforce. By doing that, the City can maintain its infrastructure at the appropriate level. Property owners have to understand that there is a cost to owning a home or business that has water, sewer, curb, gutter, sidewalks, storm sewer and streets. Somebody has to pay for them.