Workshop on Special Assessments 

May 29th, 2012

Key IssuesKey Issues

• Overview of Current PolicyO e e o Cu e t o cy• Taxes vs. Special Assessments• Life of ImprovementsLife of Improvements• Charge to Commercial Properties vs. Residential• Billing IssuesBilling Issues

– Combination of Individual Special Assessments– Interest Rate– Length of Repayment

• Hardship Cases

Survey of CommunitiesSurvey of Communities

• Conducted to supplement discussion and provideConducted 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 ClaireState Wide reso rce pro ided information for 9 other– State Wide resource provided information for 9 other smaller cities and villages

Current PolicyCurrent Policy

• City Special Assess Street and Utility Improvementsy p y p• Define Life of Improvement

– Streets; economic life of 3 ‐ 25 years depending on iimprovement

– 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

R id i l 2/3• Residential ‐ 2/3• Other (Non‐Residential) – 3/4

– Doesn’t always equal cost sharing proration 

Current Policy (continued)Current Policy (continued)

• Invoiced with Tax Bills– Option to extend payment to 5, 10, or 15 years depending on the aggregate amount of special assessmentsassessments

– Interest charged at 6% per annum • Hardships

– Only reference to hardships is in Sec. 25‐90 of code– Option to defer payment, resolution by councilTypically used for undeveloped properties– Typically used for undeveloped properties

• Currently have 29 properties with deferred special assessments

Taxes vs. lSpecial Assessments

Taxes Special Assessments• All tax payers contribute to public 

work improvements annually• Justification; “…all citizens benefit 

f bli k j t”

• Charges levied against property to defray costs of public work improvements which benefit such propertyA t b dfrom any public work project”

• Only property subject to property taxes contribute

• All project costs are funded

• Any property may be assessed• E.g.‐ Gov. and Non‐Profits

• Reduces debt constraint on the General FundM i i lit blAll project costs are funded 

through Debt/Tax Levy• Communities that fund via Taxes

• Waukeshal

• Municipality uses a reasonable formula to allocate actual benefits

• Authorized by WI. Statues• Communities that special assess:

G B• Pleasant Prairie• Shorewood• Suamico• Waupun

• Green Bay• Appleton• Eau Claire• La CrosseWaupun

• Eagle River • Neenah• Fond du Lac

Taxes vs. lSpecial Assessments

• Policy issuesPolicy issues– Consistency Over Time – Equity Considerations

• Financial Implications• Financial Implications– City share is borrowed– Impact on debt capacity– For 2012, City would borrow $2.5 million more

Life of ImprovementsLife of Improvements

• Established by City Code (Section 25‐11)Established by City Code (Section 25 11)– Sealcoats – 3 YearsCold mixed Asphalt 5 Years– Cold‐mixed Asphalt – 5 Years

– Hot‐mixed Asphalt – 12 YearsC t P t 25 Y– Concrete Pavement – 25 Years

Useful Life of ImprovementsUseful Life of ImprovementsCity Seal Coat Cold‐mix Hot‐mix Concrete

Oshkosh 3 5 12 25

Appleton 1 N/A 15 30

Neenah N/A N/A 15 30Neenah N/A N/A 15 30

Green Bay N/A N/A 20 35

Sheboygan N/A N/A 15 30

Janesville 5 N/A 15 30

Special Assessment RateSpecial Assessment Rate

• Calculation of Assessment RateCalculation of Assessment Rate• Maximum Widths/Thickness Assessed

R 1/R 2 R 3/R 4/R 5 OthR‐1/R‐2 R‐3/R‐4/R‐5 Other

% Max Width Max Thick

% Max Width

Max Thick

% Max Width

Max Thick

Grade & Gravel 100 32’ ‐ 100 36’ ‐ 100 48’ ‐Grade & Gravel 100 32 ‐ 100 36 ‐ 100 48 ‐

Asphalt 66 2/3 32’ 1’’ 66 2/3 36’ 1’’ 75 48’ 1’’

Asphalt w/ Curb

66 2/3 32’ 3’’ 66 2/3 36’ 3’’ 75 48’ 5’’

Ci A C f I i

Concrete 66 2/3 32’ 7’’ 66 2/3 36’ 7’’ 75 48’ 8’’

• City Assumes Cost of Intersections

Residential Share vs. Commercial ShareCity  Residential 

ShareCommercial

Share

Residential Share vs. Commercial Share

Share Share

Oshkosh 66% 75%

Neenah 66% 100%

h bSheboygan 50% 50%

La Crosse 75% 75%

Janesville 95% 95%

Eau Claire 75% 75%

Green Bay 33% 65%

Assessed Costs vs. Actual CostsAssessed Costs vs. Actual Costs

• Policy states City covers 1/3 or 1/4 of costsPolicy states City covers 1/3 or 1/4 of costs associated with street construction

• Due to deductions credits or limits actual• Due to deductions, credits, or limits, actual City share is higher

2012 St t CIP– 2012 Streets CIP  • Special Assessed Amount  $2,548,880• City Costs $4 120 600 (61%)• City Costs $4,120,600 (61%)

Examples of Credits/LimitsExamples of Credits/Limits

• Corner Lot CreditsCorner Lot Credits• Double Frontage Credits

ddi i l h/ id h• Additional Depth/Width• Intersections• Use of Prior Year Rates• Cap on Increase Over Prior Year RatesCap on Increase Over Prior Year Rates• Churches/Schools at Residential Rate

Repayment IssuesRepayment Issues

1 Combination of Individual Special Assessments1. Combination of Individual Special Assessments2. Interest Rate3 Length of Payment3. Length of Payment

Combination of Special Assessments b llon tax bill 

– Previous interpretation of policy had individual assessments dictate length of paymentg p y

– 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

Comparison of Interpretation

• Previous Interpretation• Special Assessments

• Current Interpretation• Special Assessments• Special Assessments

• Street Asmnt.*                        $2,925• Concrete Asmnt. $114

$

• Special Assessments• Street Asmnt.*                      $2,925• Concrete Asmnt.* $114

* $• Sidewalk Asmnt. $450• Sanitary Asmnt.**                     $900• Storm Sewer Asmnt.                 $300

• 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

• 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

Interest RatesInterest Rates• Current policy ‐ payment plans currently accrue interest at 6% annuallyaccrue interest at 6% annually

• Historical Rates– Prior to 9/26/1999 – 10%– From 9/26/1999 through 6/14/2009 ‐ 8%– Since 6/14/2009 – 6%

• Rates Other Wisconsin Communities Charge• Rates Other Wisconsin Communities Charge

Interest Ratesd b h i i li iRates Used by Other Municipalities

Municipality Interest Ratep y

La Crosse 3%

Sheboygan 3.62%

Green Bay 4 5%Green Bay 4.5%

Menasha 4.75%

Oshkosh 6%

Eau Claire 6%

Fond du Lac 6%

Janesville 6%Janesville 6%

Neenah 7.5%

Appleton 9%

Interest Rates• Considerations

– City is not a lending institution– Alternative Financing; Lack of desire to compete with local financing institutionslocal financing institutions

– Cost of Borrowed Money • 5 Year Average = 3.70%• 10 Year Average = 4.00%• Common ‘Rule of Thumb’ – Borrowing Rate Plus 2%

– Impact of Additional Borrowing on the City’s Debt– Impact of Additional Borrowing on the City s Debt Capacity

– Difficulty to administer floating interest rates – Timing of Project Certifications

Length of Payment OptionsLength of Payment Options

• Assessment Totals < $500 – Paid in FullAssessment Totals < $500  Paid in Full• Assessment Totals > $500 to $999– 5 or 10 YearsYears

• Assessment Totals > $1,000 – 15 Years

Other Municipalities Installment PlansOther Municipalities Installment Plans

Municipality Interest Rate

Menasha $500‐$2,499 – 5 Years$2,500 + ‐10 Years

Fond du Lac $500‐$5,000 – 5 Years$5,001 + ‐10 Years

La Crosse 10 or 15 Years

Green Bay 5 Yearsy

Oshkosh 5 or 10 Years$1,000 + ‐ 15 Years

Janesville 5 Years

Eau Claire 10 Years

Neenah 5 Years

A l t 5 YAppleton 5 Years

Sheboygan $100‐$4,999 – 5 Years$5,000 + ‐10 Years

HardshipsHardships

• Current PolicyCurrent Policy– Section 25‐90

• City Council may direct City Treasurer to pay all/portion ofCity 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

Other Options for HardshipsOther 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