Saturday, November 4, 2017

Issues Raised in 2017 Highland City General Election

Sound BitesSeveral issues were raised during the campaign that require more than sound bite responses. Here our what I think are the top four issues and my thoughts on them. Feel free to share your point of view.

I. Road Fee: 11 Years is Too Long

City Staff and council spent a lot of time over the course of a three-year period looking at the road issue. We paid for second road study to evaluate the condition of all of our roads and provide cost estimates to bring them into a maintainable state. The study showed that 45% of our roads needed some form of rehabilitation. IT recommended that the city spend $5.6M over 5 years to fix the roads. Our city engineer evaluated the plan and recommended that we add another $1.5M in funds to correct drainage and curb/gutter issues that were contributing to our roads’ demise. After multiple discussions between staff and city council the road repair timeframe was pushed to 7 years thus reducing the required annual increase from about $1.4M to $1M. Click here for more details on the process and plan.

A seven year maintenance and rehabilitation plan was produced and presented to residents at multiple open houses. Residents were asked for the their opinion on how to raise the funds to pay for the roads (or not). A property tax increase or a road fee were the only two viable options. Each had their own pro’s and con’s.

Property tax: Money goes into the general fund and can be used for anything. Residents who itemize their tax deductions can mitigate the increase. Residents with higher property values pay more. Property taxes cannot be implemented with a sunset clause.

Road Fee: Money can only be spent on roads. Residents who itemize their tax deductions cannot include the fee. All residents pay the same amount. Can be implemented with a sunset clause.

About 60% of those who attended the open houses expressed a preference for a fee. The council approved an $18.50 per month fee that ends after eleven years AND which is subject to an annual review.

Why have an eleven year fee when the rehabilitation project only takes seven? There were several reasons. After the roads are rehabilitated our maintenance costs will double. Inflation will increase this cost over time. There could be cost overruns. Where will the additional funds come from to pay for these increases? If we simply fix the bad roads and then go back to neglecting them we will end up with our roads in disrepair again. So why end the road fee at all? In eleven years our bonds will be paid off. This will remove a $1M per year cost from the general fund. This cost reduction will offset (possibly more than offset) the elimination of the road fee.

Is it possible that the road fee can be reduced after seven years? Absolutely. Do I know by how much? No. That is one of the reasons we implemented that annual fee review. Will future councils be tempted to keep the fee higher than needed? Possibly, but since the funds can only be used for roads that temptation should be limited.

Is this a conservative approach? Yes.

Could we have made it a seven year fee? Certainly. However, I didn’t want to saddle a future council with the problem of how to maintain our new repaired roads.

Was this my idea? Yes. Do I still think it was a good idea? Yes. I would rather we be in a position to reduce a fee than have to reinstitute one or raise property taxes.

II. Annexation: Highland Should Not Let Other Cities Encroach On Its Boundaries

Highland regularly annexes property into Highland. We have done that at least 4 times in the last 3 years (once from Alpine, the rest from the county). In 2014 Micron asked that property it owns on the NW corner of Highland Blvd and 11800 N be annexed into Lehi from the county instead of Highland as previously agreed. That is the only property that I am aware of that did not come into Highland from the county as planned.

Property owners who own property that borders two or more cities can request a boundary adjustment from one city to an adjoining one. If the request is denied by the city in which the property resides that decision can be appealed to a board established by the county. My understanding is that the property owners desires carries a lot of weight and that it would be unusual for such an appeal to be denied.

The premise that Highland can prevent a boundary adjustment simply by exerting its will is inaccurate and creates a false expectation. We can attempt to persuade or incentivize an owner to stay or entice an owner to move from another city but we cannot force a change. The question will always be what is in the best long-term interest of the city. Each case needs to be evaluated on its own merits. As far as I am aware Highland has always spent time reviewing each case. I don’t see that changing in the future. I really can’t judge prior decisions because I have not taken the time to review all of the related information.

III. Fire Department: IT is Falling Apart; Someone Needs To Do Something

Yes, there are personnel issues within the fire district. It is usually unproductive (and illegal) to discuss personnel issues in public so staff and board members are focusing on moving forward rather than fanning flames.

Here is what is happening:  The board is in the process of hiring a new chief. A national search was done and received a fair number of applications were received (16, I think). Six candidates were selected for an initial screening. Three were selected to move forward. One of the three dropped out so two will go through the final set of interviews which is planned for Nov 13th. Qualified full-time and part-time fire/ems personnel will soon be joining the district.

Note, a new chief will likely want to make organizational and procedural changes that improve the department. I expect that the board will be supportive of the new chief’s efforts.

It is interesting to note that the police department, which is overseen by largely the same board, is doing well from a personnel perspective.

IV. Reserves: Reserves Are Too High

Our enterprise fund reserves (culinary water, pressurized irrigation, sewer and storm sewer) are all moving in the right direction. Two years ago the council asked that a 15 year comprehensive analysis be done for these funds so that we could assess if our fees were too high or too low. The final analysis was presented to the council in May of 2016 (click here to read the report). We adjusted two fees last year to ensure that sufficient reserves would be in place for planned upgrades and projects.

With respect to the general fund our reserves have been growing modestly from year-to-year, as you can see below from the trend line (the average reserve balance is about 18%). Our cash balance varies greatly during the course of any given year due to uneven expenses and revenues. For example, during our 2015-2016 fiscal year our low balance was $173,262 and our high balance was $2,162,943. Click here to view the source data for the chart.

Reserves are meant to cover planned one-time expenses (e.g. upgrading a storage pond or replacing a pump) and unexpected costs, such as a flood washing out part of a road. Strong reserves protect the city against unforeseen events and are what help us avoid unnecessary bonding.


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