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HomeMy WebLinkAbout18. Next Steps Special AssessmentsTO: Honorable Mayor and Members of the Common Council FROM: Mark A. Rohloff, City Manager DATE: July 21, 2020 RE: Next Steps on Alternatives to Special Assessments BACKGROUND At the June 23 council meeting, Council directed me to bring back for their consideration options to consider for next steps to replace special assessments. Staff has met over the past month to review staffs initial recommendation to the Council prior to the formation of the Ad Hoc Committee, the work of the Ad Hoc Committee, as well as other options in light of the League of Wisconsin Municipalities (LWM) report on the authority of cities to create a transportation utility fee. ANALYSIS A summary of options for Council to consider as next steps are as follows: 1. A Transportation Fee Based On Impervious Surface. (Staff's Original Recommendation from July 2019) The original staff recommendation that was ultimately rejected by Council in July 2019 called for a transportation utility fee that used impervious as a surrogate for trip generation. This method has been employed by the City of Neenah. While staff still believes that the fee itself remained defensible based on our home rule authority, the fee did not take into consideration large developments that may have significant impervious surface (such as storage facilities), but did not have significant traffic. Although there was a maximum fee cap on each parcel, the cap did not extend to multiple adjoining parcels with common ownership. One of the points raised by Council in rejecting the fee was that sidewalk assessments should not be included because some properties would be paying for sidewalks, while some areas of the city still lack sidewalks. The advantage that this fee (and other transportation fees) has is that properties that had been historically special assessed, generated traffic, but were tax exempt would still be subject to this fee. This seemed to fit the need to be equitable to all classes of property that used the road system. With that said, intensity of use was only measured by impervious surface, not by intensity of use either from a volume or weight standard. Lastly, this fee was ultimately deemed as placing too heavy a financial burden on the business community. Other Council members who were part of that deliberation may want to weigh in on perceptions they had when this fee was originally voted down. I have included the original staff report for Council to review. 2. A Flat Rate per Parcel Fee for both Residential and Non -Residential Properties (Recommendation from the Ad Hoc Committee in December 2019) After several months of discussion and debate, the Ad Hoc Committee held to the concept of a transportation fee to replace special assessments, but took a different approach from prior fees being considered. The committee supported a flat rate fee that had one rate for developed residential properties ($8/month; $96 per year) and another rate for developed non-residential properties ($50/parcel/month; $600 per year). The committee's support for this fee was its simplicity: The fee could be easily explained to the general public. The committee also proposed to use the larger fee to replace utility special assessments as well, thus eliminating costs for replacement utility laterals that were not included in the original staff recommendation. This would effectively eliminate annual special assessment hearings for most reconstruction projects. While the committee's recommendation was easily understandable, staff conducted a legal analysis of this fee and concluded that it failed on several tests used to determine the reasonableness of a fee. Treating every developed non-residential parcel the same regardless of intensity of use would give rise to legal challenges that would be indefensible from an equity standpoint. As a result of these limitations, this option was rejected. The report analyzing the committee's recommendation is attached to this memo. 3. Study The Feasibility And Rate Structure Of A Traffic -Based Transportation Utility In addition to the first two options, staff reviewed the report from the League of Wisconsin Municipalities regarding the authority of cities to establish a transportation utility. A city's authority to establish such a fee is well founded in state statutes, particularly our home rule authority as well as other sections of statute identified in the League's report. While some opponents to a transportation utility argue that the city does not have specific authorization from the state to establish such a utility, the authority in statute is broad for cities. With this broad authority, unless there is a specific prohibition against something such as a transportation utility, the courts have been have given cities leeway in their authority to create such entities. For example, the creation of stormwater utilities began much the same way in Wisconsin. After a while, the legislature decided to place some controls on stormwater utilities, but the authority for the utility to be created was well established by the time the controls were put in place. A study by the City of Milwaukee in 2008 had reached similar conclusions. A common component of both the League's June 2020 report and the Milwaukee 2008 report was that both reports indicated that the most effective and defensible basis for a transportation utility was traffic -based. Over the past 20 years, several communities have pursued transportation utilities in Wisconsin. However, their failure to follow through was based on political challenges, rather than any legal challenge that held up in court. The advantage of the traffic -based approach is that there is a clear nexus between the amount of traffic generated by a land -use and the cost of maintaining or improving a road. If Council believes that a traffic -based fee is something they wish to pursue, it may not be advisable to re -assemble the Ad Hoc Committee to simply review something that Council believes is our best option based on our legal authority to do so. I would recommend that Council support me engaging a consultant to study a transportation - based fee specifically to suit the needs of the City Of Oshkosh. Once that study is done, we can report back to Council and decide on next steps. We have requested a proposal from a firm that is well established in Wisconsin to study this type of fee. One component that I believe is absolutely essential is to follow the recommendation of the Ad Hoc Committee and engage in a substantial public information campaign to explain the fee and get feedback on the public's willingness to replace special assessments with this fee. To proceed on any option without additional public input will likely result in less public support for a solution that we will have to live with for many years. Staff will be available at Tuesday's meeting to discuss what next steps Council would like staff to pursue.