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Key IssuesKey Issues
• Overview of Current PolicyO e e o Cu e t o cy• Taxes vs. Special Assessments• Life of ImprovementsLife of Improvements• Charge to Commercial Properties vs. Residential• Billing IssuesBilling Issues
– Combination of Individual Special Assessments– Interest Rate– Length of Repayment
• Hardship Cases
Survey of CommunitiesSurvey of Communities
• Conducted to supplement discussion and provideConducted to supplement discussion and provide examples of how other communities finance street projects
• Communities involved– Local Comps: Menasha, Neenah, Fond du Lac, Appleton, Green Bay
– City Comps: Sheboygan, La Crosse, Janesville, Eau ClaireState Wide reso rce pro ided information for 9 other– State Wide resource provided information for 9 other smaller cities and villages
Current PolicyCurrent Policy
• City Special Assess Street and Utility Improvementsy p y p• Define Life of Improvement
– Streets; economic life of 3 ‐ 25 years depending on iimprovement
– Work conducted after being specially assessed will be given credit for remaining life
• Charged to All Property Types– Charged at different rates based on use
R id i l 2/3• Residential ‐ 2/3• Other (Non‐Residential) – 3/4
– Doesn’t always equal cost sharing proration
Current Policy (continued)Current Policy (continued)
• Invoiced with Tax Bills– Option to extend payment to 5, 10, or 15 years depending on the aggregate amount of special assessmentsassessments
– Interest charged at 6% per annum • Hardships
– Only reference to hardships is in Sec. 25‐90 of code– Option to defer payment, resolution by councilTypically used for undeveloped properties– Typically used for undeveloped properties
• Currently have 29 properties with deferred special assessments
Taxes vs. lSpecial Assessments
Taxes Special Assessments• All tax payers contribute to public
work improvements annually• Justification; “…all citizens benefit
f bli k j t”
• Charges levied against property to defray costs of public work improvements which benefit such propertyA t b dfrom any public work project”
• Only property subject to property taxes contribute
• All project costs are funded
• Any property may be assessed• E.g.‐ Gov. and Non‐Profits
• Reduces debt constraint on the General FundM i i lit blAll project costs are funded
through Debt/Tax Levy• Communities that fund via Taxes
• Waukeshal
• Municipality uses a reasonable formula to allocate actual benefits
• Authorized by WI. Statues• Communities that special assess:
G B• Pleasant Prairie• Shorewood• Suamico• Waupun
• Green Bay• Appleton• Eau Claire• La CrosseWaupun
• Eagle River • Neenah• Fond du Lac
Taxes vs. lSpecial Assessments
• Policy issuesPolicy issues– Consistency Over Time – Equity Considerations
• Financial Implications• Financial Implications– City share is borrowed– Impact on debt capacity– For 2012, City would borrow $2.5 million more
Life of ImprovementsLife of Improvements
• Established by City Code (Section 25‐11)Established by City Code (Section 25 11)– Sealcoats – 3 YearsCold mixed Asphalt 5 Years– Cold‐mixed Asphalt – 5 Years
– Hot‐mixed Asphalt – 12 YearsC t P t 25 Y– Concrete Pavement – 25 Years
Useful Life of ImprovementsUseful Life of ImprovementsCity Seal Coat Cold‐mix Hot‐mix Concrete
Oshkosh 3 5 12 25
Appleton 1 N/A 15 30
Neenah N/A N/A 15 30Neenah N/A N/A 15 30
Green Bay N/A N/A 20 35
Sheboygan N/A N/A 15 30
Janesville 5 N/A 15 30
Special Assessment RateSpecial Assessment Rate
• Calculation of Assessment RateCalculation of Assessment Rate• Maximum Widths/Thickness Assessed
R 1/R 2 R 3/R 4/R 5 OthR‐1/R‐2 R‐3/R‐4/R‐5 Other
% Max Width Max Thick
% Max Width
Max Thick
% Max Width
Max Thick
Grade & Gravel 100 32’ ‐ 100 36’ ‐ 100 48’ ‐Grade & Gravel 100 32 ‐ 100 36 ‐ 100 48 ‐
Asphalt 66 2/3 32’ 1’’ 66 2/3 36’ 1’’ 75 48’ 1’’
Asphalt w/ Curb
66 2/3 32’ 3’’ 66 2/3 36’ 3’’ 75 48’ 5’’
Ci A C f I i
Concrete 66 2/3 32’ 7’’ 66 2/3 36’ 7’’ 75 48’ 8’’
• City Assumes Cost of Intersections
Residential Share vs. Commercial ShareCity Residential
ShareCommercial
Share
Residential Share vs. Commercial Share
Share Share
Oshkosh 66% 75%
Neenah 66% 100%
h bSheboygan 50% 50%
La Crosse 75% 75%
Janesville 95% 95%
Eau Claire 75% 75%
Green Bay 33% 65%
Assessed Costs vs. Actual CostsAssessed Costs vs. Actual Costs
• Policy states City covers 1/3 or 1/4 of costsPolicy states City covers 1/3 or 1/4 of costs associated with street construction
• Due to deductions credits or limits actual• Due to deductions, credits, or limits, actual City share is higher
2012 St t CIP– 2012 Streets CIP • Special Assessed Amount $2,548,880• City Costs $4 120 600 (61%)• City Costs $4,120,600 (61%)
Examples of Credits/LimitsExamples of Credits/Limits
• Corner Lot CreditsCorner Lot Credits• Double Frontage Credits
ddi i l h/ id h• Additional Depth/Width• Intersections• Use of Prior Year Rates• Cap on Increase Over Prior Year RatesCap on Increase Over Prior Year Rates• Churches/Schools at Residential Rate
Repayment IssuesRepayment Issues
1 Combination of Individual Special Assessments1. Combination of Individual Special Assessments2. Interest Rate3 Length of Payment3. Length of Payment
Combination of Special Assessments b llon tax bill
– Previous interpretation of policy had individual assessments dictate length of paymentg p y
– In 2012 an interpretation was made to allow total aggregate special assessments to dictate payment length. This decision allows citizens to better manage special assessment costs
Comparison of Interpretation
• Previous Interpretation• Special Assessments
• Current Interpretation• Special Assessments• Special Assessments
• Street Asmnt.* $2,925• Concrete Asmnt. $114
$
• Special Assessments• Street Asmnt.* $2,925• Concrete Asmnt.* $114
* $• Sidewalk Asmnt. $450• Sanitary Asmnt.** $900• Storm Sewer Asmnt. $300
• Sidewalk Asmnt.* $450• Sanitary Asmnt. * $900• Storm Sewer Asmnt.* $300
• Amount Due Yr 1 $1,149• Principal Owed Yr 2 $285• Principal Owed Yr 3 $285
• Amount Due Yr 1 $312• Principal Owed Yr 2 $312• Principal Owed Yr 3 $312
*Assumes a 15 year payment plan** Assumes a 10 year payment plan
Interest RatesInterest Rates• Current policy ‐ payment plans currently accrue interest at 6% annuallyaccrue interest at 6% annually
• Historical Rates– Prior to 9/26/1999 – 10%– From 9/26/1999 through 6/14/2009 ‐ 8%– Since 6/14/2009 – 6%
• Rates Other Wisconsin Communities Charge• Rates Other Wisconsin Communities Charge
Interest Ratesd b h i i li iRates Used by Other Municipalities
Municipality Interest Ratep y
La Crosse 3%
Sheboygan 3.62%
Green Bay 4 5%Green Bay 4.5%
Menasha 4.75%
Oshkosh 6%
Eau Claire 6%
Fond du Lac 6%
Janesville 6%Janesville 6%
Neenah 7.5%
Appleton 9%
Interest Rates• Considerations
– City is not a lending institution– Alternative Financing; Lack of desire to compete with local financing institutionslocal financing institutions
– Cost of Borrowed Money • 5 Year Average = 3.70%• 10 Year Average = 4.00%• Common ‘Rule of Thumb’ – Borrowing Rate Plus 2%
– Impact of Additional Borrowing on the City’s Debt– Impact of Additional Borrowing on the City s Debt Capacity
– Difficulty to administer floating interest rates – Timing of Project Certifications
Length of Payment OptionsLength of Payment Options
• Assessment Totals < $500 – Paid in FullAssessment Totals < $500 Paid in Full• Assessment Totals > $500 to $999– 5 or 10 YearsYears
• Assessment Totals > $1,000 – 15 Years
Other Municipalities Installment PlansOther Municipalities Installment Plans
Municipality Interest Rate
Menasha $500‐$2,499 – 5 Years$2,500 + ‐10 Years
Fond du Lac $500‐$5,000 – 5 Years$5,001 + ‐10 Years
La Crosse 10 or 15 Years
Green Bay 5 Yearsy
Oshkosh 5 or 10 Years$1,000 + ‐ 15 Years
Janesville 5 Years
Eau Claire 10 Years
Neenah 5 Years
A l t 5 YAppleton 5 Years
Sheboygan $100‐$4,999 – 5 Years$5,000 + ‐10 Years
HardshipsHardships
• Current PolicyCurrent Policy– Section 25‐90
• City Council may direct City Treasurer to pay all/portion ofCity Council may direct City Treasurer to pay all/portion of special assessments for “worthy”, indigent persons
• Applications provided by Clerk, considered by “Board of Public Works” for recommendation
Other Options for HardshipsOther Options for Hardships• Extend the Length of Payment
– Janesville & Green Bay – Option of 10 years with proven hardships
– Eau Claire – option of 20 years• Petition to Council for Full/Partial Forgiveness
– Eau Claire – Persons in risk of losing homestead may petition council to pay a portion or full amount of special assessment
• Defer Payment– Eau Claire – Payment will be deferred until property is sold.
Accrues Interest at 6% Per Annum – Green Bay – Indigent persons may receive deferment of special
assessment charges. Persons are subject to periodical review by staff