Workshop on Special Assessments. May 29 th, 2012

Transcription

1 Workshop on Special Assessments May 29 th, 2012

2 Key Issues Overview Oe e of Current Policy ocy Taxes vs. Special Assessments Life of Improvements Charge to Commercial Properties vs. Residential Billing Issues Combination of Individual Special Assessments Interest Rate Length of Repayment Hardship Cases

3 Survey of Communities Conducted 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 Claire State Wide resource rce provided information for 9 other smaller cities and villages

4 Current Policy City Special Assess Street and Utility Improvements Define Life of Improvement Streets; economic life of 3 25 years depending on improvement 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 Residential i 2/3 Other (Non Residential) 3/4 Doesn t always equal cost sharing proration

5 Current Policy (continued) Invoiced with Tax Bills Option to extend payment to 5, 10, or 15 years depending on the aggregate amount of special assessments Interest charged at 6% per annum Hardships Only reference to hardships is in Sec of code Option to defer payment, resolution by council Typically used for undevelopedpropertiesproperties Currently have 29 properties with deferred special assessments

6 Taxes vs. Special Assessments Taxes All tax payers contribute to public work improvements annually Justification; all citizens benefit from any public work project Only property subject to property taxes contribute Allprojectcosts costs arefunded through Debt/Tax Levy Communities that fund via Taxes Waukesha Pleasant Prairie Shorewood Suamico Waupun Eagle River Special Assessments Charges levied against property to defray costs of public work improvements which benefit such property Any property may be assessed E.g. Gov. and Non Profits Reduces debt constraint on the General Fund Municipality i uses a reasonable formula to allocate actual benefits Authorized by WI. Statues Communities that special assess: Green Bay Appleton Eau Claire La Crosse Neenah Fond du Lac

7 Policy issues Taxes vs. Special Assessments Consistency Over Time Equity Considerations Financial Implications City share is borrowed Impact on debt capacity For 2012, City would borrow $2.5 million more

8 Life of Improvements Established by City Code (Section 25 11) Sealcoats 3 Years Cold mixed Asphalt 5 Years Hot mixed Asphalt 12 Years Concrete Pavement 25 Years

9 Useful Life of Improvements City Seal Coat Cold mix Hot mix Concrete Oshkosh Appleton 1 N/A Neenah N/A N/A Green Bay N/A N/A Sheboygan N/A N/A Janesville 5 N/A 15 30

10 Special Assessment Rate Calculation of Assessment Rate Maximum Widths/Thickness Assessed R 1/R 2 R 3/R 4/R 5 Other % Max Width Max Thick % Max Width Max Thick % Max Width Grade & Gravel Asphalt 66 2/ / Asphalt w/ Curb 66 2/ / Concrete 66 2/ / Max Thick City Assumes Cost of Intersections

11 Residential Share vs. Commercial Share City Residential Share Commercial Share Oshkosh 66% 75% Neenah 66% 100% Sheboygan hb 50% 50% La Crosse 75% 75% Janesville 95% 95% Eau Claire 75% 75% Green Bay 33% 65%

12 Assessed Costs vs. Actual Costs Policy states City covers 1/3 or 1/4 of costs associated with street construction Due to deductions, credits, or limits, actual City share is higher 2012 Streets t CIP Special Assessed Amount $2,548,880 City Costs $4,120,600 (61%)

13 Examples of Credits/Limits Corner Lot Credits Double Frontage Credits Additional i Depth/Width h Intersections Use of Prior Year Rates Cap on Increase Over Prior Year Rates Churches/Schools at Residential Rate

14 Repayment Issues 1. Combination of Individual Special Assessments 2. Interest Rate 3. Length of Payment

15 Combination of Special Assessments on tax bll bill Previous interpretation of policy had individual assessments dictate length of py payment 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

16 Comparison of Interpretation Previous Interpretation Special Assessments Street Asmnt.* $2,925 Concrete Asmnt. $114 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 Current Interpretation Special Assessments Street Asmnt.* $2,925 Concrete Asmnt.* $114 Sidewalk Asmnt.* $450 Sanitary Asmnt. * $900 Storm Sewer Asmnt.* $300 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

17 Interest Rates Current policy payment plans currently accrue interest at 6% annually Historical Rates Prior to 9/26/ % From 9/26/1999 through 6/14/2009 8% Since 6/14/2009 6% Rates Other Wisconsin Communities Charge

18 Interest Rates Rates Used by Other Municipalities ii lii Municipality Interest Rate La Crosse 3% Sheboygan 3.62% Green Bay 4.5% Menasha 4.75% Oshkosh 6% Eau Claire 6% Fond du Lac 6% Janesville 6% Neenah 7.5% Appleton 9%

19 Considerations Interest Rates City is not a lending institution Alternative Financing; Lack of desire to compete with localfinancing institutions Cost of Borrowed Money 5 Year Average = 3.70% 10 Year Average = 4.00% Common Rule of Thumb Borrowing Rate Plus 2% Impactof Additional Borrowing on the City s Debt Capacity Difficulty to administer floating interest rates Timing of Project Certifications

20 Length of Payment Options Assessment Totals < $500 Paid in Full Assessment Totals > $500 to $999 5 or 10 Years Assessment Totals > $1, Years

21 Other Municipalities Installment Plans Municipality Menasha Fond du Lac La Crosse Green Bay Oshkosh Janesville Eau Claire Neenah Interest Rate $500 $2,499 5 Years $2, Years $500 $5,000 5 Years $5, Years 10 or 15 Years 5 Years 5 or 10 Years $1, Years 5 Years 10 Years 5 Years Appleton 5 Years Sheboygan $100 $4,999 5 Years $5, Years

22 Hardships Current Policy Section City 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

23 Other 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