City's Review of Funding Options to Offset Street Construction and Maintenance Costs
There have been recent and growing concerns around special assessments regarding assessment of sidewalk, assessment procedures and the amount of assessments to property owners. The Council has instructed staff to perform a review of the special assessment process and identify available funding options as a substitute for special assessments.
The current special assessment program is meant to collect revenue from property owners whom directly benefit from the improvements to the street. This revenue is used to offset street construction and maintenance costs being paid for from the general levy. The current special assessment revenues per year are approximately $350,000 for street related items. The street replacement and maintenance program is currently budgeted at roughly $1.5 million and $800,000, respectively. Although the direct costs to property owners through assessments is high (as represented as a one-time charge) AND $2.3 million road construction and maintenance budget is considerable - the impacts of those dollars only covers 30% of a sustainable program. With current budget amounts, a street built in 2020 may not be rebuilt until 2170, which is 100 years past its useful life. There are growing disparities between aging streets and the ability to keep up with the replacement need. This fact is an important point to consider as alternatives are reviewed.
The current special assessment program is meant to collect revenue from property owners whom directly benefit from the improvements to the street. This revenue is used to offset street construction and maintenance costs being paid for from the general levy. The current special assessment revenues per year are approximately $350,000 for street related items. The street replacement and maintenance program is currently budgeted at roughly $1.5 million and $800,000, respectively. Although the direct costs to property owners through assessments is high (as represented as a one-time charge) AND $2.3 million road construction and maintenance budget is considerable - the impacts of those dollars only covers 30% of a sustainable program. With current budget amounts, a street built in 2020 may not be rebuilt until 2170, which is 100 years past its useful life. There are growing disparities between aging streets and the ability to keep up with the replacement need. This fact is an important point to consider as alternatives are reviewed.
Current program
The cost to property owners are based on lineal feet of frontage along the improvement project and includes a variety of improvement types. Each of the improvements is assessed based upon cost percentages identified in the City’s ordinances and policies. Property owners are assessed: 0% of cost of replacement sanitary sewer main 0% of cost of replacement water man 20% of cost of pavement 66.6% of cost of curb and gutter 100% of cost of sidewalk 100% of cost of new or replacement sanitary leads and water services Revenue Approximately $350,000 per year. Pros
Cons
vehicle registration fee
State law permits any municipality or county to adopt an ordinance that imposes a flat, annual vehicle registration fee, or “wheel tax,” on automobiles and trucks of not more than 8,000 pounds customarily kept within that jurisdiction. Vehicles may be subject to both a municipal and a county fee. All vehicles exempt from the state fee are also exempt from local fees. There is no limit on the amount of the fee. The Wisconsin Department of Transportation (WI DOT) collects the fee when the annual state registration fee is paid. WI DOT retains 17 cents per registration for administrative costs. The rest of the fee is remitted to the jurisdiction imposing the fee. Revenues from the wheel tax must be used for transportation related purposes. See Wis. Stat. § 341.35(6r). Revenue According to the WI DOT’s website, there are 19,933 vehicles registered in the City of Wisconsin Rapids that are eligible for the registration fee. Revenue Potential:
Pros
transportation utility
Transportation Utility Fees (TUF) raise revenue through the creation of a transportation utility, similar to a public electric, sewer/water, or stormwater utility. Much like other public utilities, a transportation utility charges fees based on a customer’s relative use of the utility. In other words, under a TUF, residents, public organizations, and businesses would pay a fee based on the amount of traffic they generate within the municipality’s transportation/street system. Revenue A transportation utility presents an equitable way for the City to secure the needed funds from infrastructure users via fee-based methodology. Just as other utilities charge fees based on use, so would a transportation utility. The revenue collected through a transportation utility can be incremented through the annual budget process to either offset the current special assessment revenue OR increase funding to move toward a more sustainable street replacement program. Pros
Cons
general property tax increase
Special Assessments would cease under this alternative, and an increase in the general property taxes would occur to close the funding gap for street projects. All taxpayers would be contributing, but would not include tax-exempt properties from contributing toward road infrastructure improvements. In considering this option and the need to offset $350,000 in revenue from special assessments there would be a tax rate increase of about 0.00033 which would change the local mill rate from 0.01209 to 0.01242. As an example, to a residential property with a $100,000 home value, the property taxes would increase by $33 per year. In order to implement this option, a levy limit referendum with voter approval would be required to raise taxes by an equivalent amount currently obtained by special assessments. Revenue The revenue collected through a tax rate increase can be incremented to either offset the current special assessment revenue OR increase funding to move toward a more sustainable street replacement program. Pros
Cons
payment in lieu of taxes (pilot) for wastewater utility
The Waste Water Utility PILOT could provide additional revenues to the City to offset special assessment revenues to fairly spread costs of street improvements to all properties (including tax-exempt entities) and create a stable revenue stream with minimal effort. The City currently receives a PILOT from Water Works and Lighting Commission (WWLC). The cost of PILOT payments are an effect of higher rates to utility ratepayers. The governing body that owns the utility has discretion on the appropriate amount of PILOT. Revenue Although the assessed value of the Wastewater Treatment Facility is not readily available, it would likely be comparable to the Water Utility with an equivalent computed tax (or PILOT) around $800,000. Pros
Cons
local sales tax
A local sales tax was considered as a possible option to research. The initial research concluded that the City of Wisconsin Rapids cannot enact a local sales tax. A county or state can create a sales tax, and in some cases, cities and villages that have been designated as “premier resort areas,” such as the Wisconsin Dells. |
We want to hear from City residents! After reading about the options, we asked residents to provide feedback. Which option do you think is best? Why? SURVEY RESULTS are now available! You may also email your alderperson or Mayor Shane Blaser. |