16-May-2017: Funding Road Rehabilitation

Fifteen residents attended the meeting. Not many considering the nature of the conversation, the Road Fee.

APPEARANCES

• Mark Ward: Had concerns about ditch (owned by American Fork) that runs near his property. The neighborhood had cleaned part of the ditch and wanted city help with cleaning the remainder. The residents like the ditch because of the foliage the grows along it and are willing to purchase the water rights to keep the foliage alive. Water is run through the ditch every 7 to 10 days. Staff will look into ownership of the ditch and easement. Flooding is an issue for two homes near the end of the ditch.

• Dorraine Crump: She is one of the homeowners at risk of flooding if the ditch is not maintained. Is willing to clean the ditch to keep the foliage.

CONSENT

1. MOTION: Approval of Meeting Minutes for the City Council Regular Session – May 2, 2017. Click here to view the minutes. Approved unanimously with minor changes.

2. MOTION: Approval of an Interlocal Agreement with Alpine City – Widening of 4800 West at SR92 Project. Click here to view the minutes.. Approved unanimously.

ACTION ITEMS

3. PUBLIC HEARING/ORDINANCE: Road Rehabilitation, Reconstruction and Maintenance Fee. Click here to view background info from the agenda or click here to review the information staff presented.Staff reviewed with us existing road maintenance and rehabilitation costs:

   • $500,000 per year on maintenance
   • $5,623.000 in pavement repair
   • $1,517,510 to fix curb/gutter and drainage issues

   Our agreed upon strategy was to continue to spend ~$500,000 on asphalt maintenance plus spend an additional ~$1,000,000 per year over 7 years on  pavement repair, and fixing curb/gutter and drainage issues.
   
   The issue under discussion was how to fund the additional $1,000,000. The two basic choices are via property tax or a road fee. To offset the cost of the roads through local sales tax we would need to add 3 times as many businesses as we currently have in Highland. From my point of view we will continue to grow our business base over time, which can reduce the amount of extra money needed for roads over time, but this will won’t happen over night.
   
   45% of our roads in need of rehabilitation now. The rest need only seal coating every 5 to 7 years and periodic crack sealing (~$0.20 per sq. ft.). The cost of repairing those needing rehab range from $1.00 to $6.00 per sq. ft. Left untreated the roads costing $1.00 can need a more expensive treatment within 2 to 4 years. It was estimated that if we delay fixing the roads in need of rehabilitation by 2 to 4 years our costs would increase by over $4M.
   
   Property Tax
   
   A property tax would impact residents as indicated in the table below:
   

   Home Market Value	Monthly Property Tax Increase	Yearly Property Tax Increase
   $200,000	$8.70	$104.41
   $300,000	$13.05	$156.61
   $400,000	$17.40	$208.81
   *$466,000	$20.31	$243.74
   $500,000	$21.75	$261.02
   $600,000	$26.10	$313.22
   $700,000	$30.45	$365.42
   $800,000	$34.80	$417.63
   $900,000	$39.15	$469.83
   $1,000,000	$43.50	$522.03

   * average Highland home value.
   
   Features:
• Most of the money collected Nov-Jan, spring/summer projects can be bid in the winter.
• Tax deductible
• Not uniform
• Tax exempt properties not charged
• Monies go into the General Fund where they are not restricted
  

Road Fee
The fee can be implemented as a fixed $18.50 per utility connection or for non-residential building (commercial, schools, churches …) charged $18.50 per equivalent residential unit (ERU). A 10,000 sq. ft. commercial building is considered to have 1 ERU).

Features:
• Not tax deductible
• Uniform
• Monies must be used on roads
• Money collected month by month

Public Hearing
• Mark Ward: Thanked the council and staff for the work done to prepare for this decision.
• Audrey Wright: Asked if the funds could be used for something other than roads if a property tax was implemented. The answer was yes but a fee would have to be used for roads. She also asked if a time limit could be set. Property tax: No. Fee: Yes.
• Robert Strong: Favored a fee because it would require the city to use the money collected for roads.
• Devirl Barfuss: Commented that he was among the 64% who voted against the road fee in 2013. However, since that time he participated in the Transportation Advisory Committee which oversaw the updated road study and associated plan and now believes funding for the roads is needed and we have a plan to use the money effectively.
• Bruce Wing: Strongly opposed the fee and wondered why we would enact one when the residents had already rejected a tax increase and a fee in 2012 and 2013.

Council Discussion

One council member (Ed Dennis) was opposed to both a tax or a fee. His stated rationale was that he was concerned for those on a fixed income and that the city needs to do something different in order to not require residents to pay a tax or fee. What that something was, was not identified.

Brian Braithwaite argued that a property tax was the best vehicle we had to raise revenues on a proportional basis. Think of a fixed percentage of your earnings vs. a flat fee (tithing would be an example of a proportional tax). Tim Irwin, Dennis LeBaron and I favored a fee because everyone with a utility connection pays and all residents pay the same. A fee can also be enacted with a sunset clause whereas a tax cannot.

In the end we approved a $18.50 fee per connection, subject to an annual review, that will end June 20, 2028 (the same fiscal year our last two city bonds expire) on a 4 to 1 vote. Yes: Brian Braithwaite, Dennis LeBaron, Tim Irwin, Rod Mann; No. Ed Dennis.

There was a brief discussion on a 7 year sunset vs. a 10 year sunset. The rationale for the 7 year sunset was that our road plan was a 7 year road plan and therefore we should not collect any money past that date. My view was that once we fixed nearly half of our roads that our maintenance costs will nearly double.($500,000 per year will rise to $1,000,000 per year). In addition to needing another $500,000 for maintenance, inflation will erode the value of the fee over time. Our bonds will paid off in 11 years. It made sense to me to end the fee when our bond payments ended rather than terminate the fee without a source of funds to pick up the increased maintenance costs. The fee is also subject to an annual review.  If after a few years we don’t need as much to fund the roads the fees could be dropped. I see no reason why this wouldn’t happen as the funds collected can only be used for roads and if funds aren’t needed there is no reason to collect them.

City staff put an excellent summary of the road discussion. It includes links to maps that show which roads will be worked on and tables that show what type of treatment will be applied to each road.

MAYOR, CITY COUNCIL & STAFF COMMUNICATION ITEMS

• We had a short discussion regarding traffic and parking issues relative to The Point dance studio. Ed Dennis, Dennis LeBaron, and Mayor Thompson will talk with the owners about the issues.

• .Ed Dennis mentioned that he would be sending council members copies of the library by-laws to review.
  

Links:

• Council agenda with my rough notes
• Staff presentation
• Staff Transportation Fee overview.