Columbus Day worksession

Columbus as conquering hero...
Columbus as conquering hero...

Columbus isn’t much of a hero any more and Columbus Day isn’t much of a holiday.  So, the Council will be at work (agenda and packet) discussing:

Business Park “brief update” – this project gives me indigestion and may give me nightmares.  I have not (yet) heard the EDA or the Council discuss the full range of possible costs to the city, what incentives to companies might be offered to entice them to locate here, an assessment of the transportation issues…I don’t expect to get any Useful information tomorrow night, just a happy presentation about the Master Planning committee and the great things ahead.

Utility Rate Study update: Although storm water, waste water and just plain water are mentioned, the bulk of the materials in the packet suggests that the bulk of the discussion will center on the proposed streetlight utility.  The streetlight utility has received the most media attention (Northfield News here, Locally Grown here) as well as (non-positive) responses from Carleton and St Olaf.

I’m in favor of the streetlight utility, but I’m less thrilled with how we’ve reached this point.  If I unpack this one (I’m trying not to say “shed some light on it”), I find:

  • Policy: Is it appropriate to shift funding of the streetlight network from the general fund to a utility?    Creating the utility would mean establishing a separate enterprise fund for for the maintenance  and upgrading of the network; the fund would receive the fee charged for street lighting which would appear on utility billing statements.    The criticism heard about creating a new fee is overrated.  Residents will be paying for streetlights regardless – shifting to utility billing means more transparency: you get to see what you’ll be paying on a monthly basis rather than having the cost rolled into the city’s tax levy.   The utility model gives the city one tool by which we can shift the extra burden on commercial taxpayers toward residential customers (although it is not clear that we will structure fees this way).  Finally, the utility would allow the city to spread the cost of street lighting over more users by allowing us to bill our property tax-exempt properties (hence the reaction from the colleges).  I will acknowledge the slippery slope problem: if we shift street lighting to utility billing, what will stop us from shifting, say, parks to this kind of funding?  Or other city services?  I’ll dodge that one for now.
  • Operational choices: how, in administrative and practical terms, would the change take place – this is a staff job.
  • Public relations: Even though, from the city’s perspective, a streetlight utility fee would be both more transparent and spread the cost over more customers, it should also be pretty obvious that itemizing the cost on utility bills will be a surprise to customers – it looks like a brand new fee as if the city is just starting to charge for street lighting.   It should be blindingly obvious our tax-exempt customers will find this an even bigger surprise and might even think the motivation for the fee is to find a way to extract money from the Colleges as a kind of punishment for not paying taxes.   For individual residents, the city should have been out in front of the Northfield News in explaining the shift – perhaps we need to issue press releases early on to avoid media surprises.  For the Colleges, we should have asked them to join the discussion early and often as we developed our policy.    I don’t think this means we allow Colleges to veto the policy if they don’t like it, but rather the city makes an intentional and deliberate effort to work with College representatives to discuss, inform, and get that buy-in we talk about so often.  I have yet to figure out how Council members can best help with this component – there are enough issues, that we tend to wait to be informed and that clearly isn’t sufficient.  All suggestions welcome.

More budget presentations: Liquor Operations, Motor Vehicles Fund, Finance Department, Debt Service Funds.

8 Replies to “Columbus Day worksession”

  1. “All suggestions welcome” … how could I possibly ignore that invitation?
    You know what a policy ‘wonk’ I am, and I am always criticizing past and present councils for NOT having the policy discussion as soon as the staff comes up with an idea.
    There’s nothing the matter with the staff coming up with ideas; that’s what their professional expertise should allow them to do. However, the next step is a council discussion of the policy implications.
    I know you get that, but it is painfully obvious that the entire council does not. Frankly, what did they think they were campaigning on, with all that ‘transparency’ talk? Was it just that we would strive to have a mayor and city administrator that got along famously, instead of an ongoing public power struggle?

    Yes, definitely YES, also to city issued press releases; how else given the questionable reporting, and often lack of accuracy to the point of misrepresentation in the newspaper, can the city avoid a mini-firestorm on this kind of issue. It is essential that the City’s rationale get out there in front of the suppositions that will be made.

    I’d like to see a cost relationship between the utility fee route and the addition of this ‘tax’/fee to the property tax bill.
    Unfortunately, the position of “we’re not going to raise taxes this year, but here’s a new fee”, is too parallel with Gov. Pawlenty’s ‘escape mechanism’; it causes cynicism.

    Thanks for all the straight, and substantive, talk, Councilor Buckheit.

  2. Betsey,

    The Chamber has discussed this fee extensively. The main problem is that the proposal is a property tax and not a fee. The “fee” isn’t correlated to usage; it is based upon the square footage of property owned.

    Further, most businesses provide some or all of their own business lighting which they pay for on their utility bills. Lighting expenditures is a fee/tax that should fall almost exclusively upon the residential properties.

    For example, I understand that St. Olaf’s proposed streetlight expense will be $14,000 per year. But, how many street lights actually benefit St. Olaf? Why should they pay an outrageous amount for each street light while their residential neighbors will pay a fraction of that amount?

    I find it interesting that the City asked the colleges to join in the discussion, but it didn’t ask the Chamber. Both colleges are Chamber members. The Chamber represents 240 businesses who will be affected.

    Right now, the City should be less concerned about managing the public outcry and more concerned with making any fee/tax fair.

    David Ludescher

    1. Thanks, David – Although you are right, the streetlight fee would not be based on usage, most of the fees for other utilities is to cover fixed costs, not usage.

      The Council is discussing weighting the utility toward residential users, but not for the reasons you cite.

      The streetlight network, rather than the streetlights on particular property, is what we are aiming to fund here. So, as a residential customer, I’d be paying toward the system which has streetlights not only at the corner of Union Street where I live, but also downtown and across town. As someone who walks to Council meetings, walks dogs at night and bicycles as much as possible, I appreciate the system as a whole. Even driving at night is made much easier by the lighting at intersections. Analogously, businesses and their employees, vendors, etc. also benefit from the city wide network as they go to and from work.

      The rationale the Council is using for shifting costs toward residential customers is to use this to offset the heavier property tax burden on commercial property owners. It is a constant theme of our discussions that any tax levy increase will, because of tax class rates, fall more heavily on commercial/industrial property owners – we cannot quickly or easily change state tax policy (although we have mentioned we should step up our lobbying efforts), but can employ other tools like our utility rates to try to level the playing field. Fairness is at the root of our discussions.

      The city did not quite ask the colleges to join the discussion and this is quite a sore point between the colleges and city right now. The Chamber has invited us all to meet next Wednesday and perhaps that can be a first opportunity to consider this proposed policy shift together.

  3. Betsey:

    Thanks for your comments. An even better system would be to charge by the linear foot of frontage. I’m not sure I understand the network system. Are you proposing more lights? That doesn’t seem prudent if we can’t pay for the ones that we have.

    I am scheduled to be moderating the discussion on Wednesday. I hope you and the rest of the Council can attend.

    David

    1. In talking with Carleton College representatives, the standards you suggest – street frontage – was discussed as an alternative to the acreage model. The city has not yet established how the rate will be set yet – city staff identified acreage as one model which they felt would be easy to administer, but others are not off the table.

  4. Betsey:

    Considering businesses are almost always closed during streetlight hours, and have their own security lights, even the linear foot model isn’t quite fair.

    Perhaps the City could examine the acreage model for only residential properties. After all, it is the residents who benefit from the streetlights. If businesses don’t have enough lights, they will install them.

    David

  5. I believe this will be another area of general disgruntlement that no matter how the council resolves it will leave some segment feeling put upon unfairly.
    The council is not yet ‘good’ at explaining its own rationale for its actions, so it always appears to be staff influence or decision.

    I think this would have been handled far better, although I understand your rationale, Betsey, to increase the property tax to cover what people believe (street lighting) to be a component of living in a town, as opposed to rural property.
    How it is then handled with the colleges might have been an increase in their yearly donation to the city.

    I’m still interested in a cost comparison of what increase would have had to be made to have the 250K the council wants/needs from this to come from the property tax revenues.

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