HomeMy Public PortalAbout2014.08.13 Special MinutesMINUTES
McCall City Council
Special Meeting
McCall Donnelly High School Commons
August 13, 2014
Agenda
Call to Order and Roll Call
Public Forum
Adjournment
CALL TO ORDER AND ROLL CALL
Mayor Aymon called the Special meeting of the McCall City Council to order at 6:05 p.m.
Mayor Aymon, Councilor Giles, Councilor Scott, Councilor Swanson, and Councilor Witte
answered roll call.
City staff members present were Gene Drabinski, City Manager; Michelle Groenevelt,
Community Development Director; Linda Stokes, City Treasurer; Dennis Coyle, Parks and
Recreation Director; and BessieJo Wagner, City Clerk.
PUBLIC FORUM
1
Infrastructure Information Presentation
Gene Drabinski, City Manager, explained how the Council arrived the decision to propose the
1 % Local Option Tax. Mr. Drabinski brought together a group from the community to analyze
the needs of the City and look at the budget. They came up with a proposal to take to Council
that later ended up as a draft ordinance.
Description of City Infrastructure. Mr. Drabinski described the City's infrastructure stating
that there are 42 miles of paved streets, 40 miles of sewer, 2 miles of pressure mains, 13 lift
stations, and different types of pipe used in the collection system (some old outdated types).
The problem. Mr. Drabinski outlined the problem that needed solving. He stated that the City
has critical infrastructure needs, which could not be reasonably addressed with the current
available revenue. He stated that infrastructure repairs have been put aside for many years and
underground infrastructure has been ignored and now much of the above -ground infrastructure is
deteriorating. Mr. Drabinski stated that streets are at the end of the remaining service life and a
pavement assessment showed some streets are returning to gravel and the average life is about
10-1/2 years. He also stated that the sewer has significant I&I (infiltration and inflow) issues
causing flooding.
How did this problem occur? Mr. Drabinski stated that this happened through a series of small
decisions over the last 50 years. He stated that degradation happened slowly and that repairs and
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maintenance were done as best as the budget would allow but streets and infrastructure were
never able to be completely replaced. Mr. Drabinski stated that there were periods of boom or
bust where boom served growth and bust left more infrastructure to maintain and fewer resources
to do it with.
Mr. Drabinski explained that after eight months of analysis by the Citizens Advisory Group, the
clear recommendation was to focus on the worst streets that get the greatest amount of traffic
first. He stated that the Ten -Year Operational Streets Plan was put online which showed that
streets were prioritized by the remaining service life and how much traffic they carry. Mr.
Drabinski went through the Operational Streets Plan as it pertained to individual streets. A11 of
the streets mentioned required rebuilding instead of chip sealing or resurfacing. At the same time
as a street would be dug up, the sewer infrastructure underneath would also be rebuilt.
Mr. Drabinski then introduced Cameron Ariel, Financial Advisor, who discussed the different
financing options that were presented to the Citizens Advisory Group.
1. General Obligation (GEO) Bond: Essentially a property tax levied on property. It has a
good rate of repayment (through taxes), so it has the best interest rates and terms, but
requires a majority (66-2/3%) of the vote to pass.
2. Local Improvement District: The properties within a certain geographical district assess a
tax on themselves. They all pay a prorated share of that assessment, which pays back the
bonds (sometimes known as a Business Improvement District).
3. Urban Renewal Tax Increment Finance: A geographical area is defined and a base value
is determined on the properties within that district. As property taxes come in and values
increase in that area, that incremental increase above the base goes directly to the Urban
Renewal Agency. That revenue can be leveraged to finance bigger projects.
4. Revenue Bonds: The City currently uses this with sewer and water. As revenue is
collected it is used to pay bonds or build facilities. Unlike normal credit, this has no
collateral. Because it is supported by revenue, there is a lower voter threshold, just 50%
majority, or it can be deemed "ordinary and necessary" by a judge without a vote.
5. Local Option Tax: Unique in Idaho, particularly to resort cities. Cities are authorized to
levy a sales tax to support the increased visitor traffic that burdens the infrastructure. No
collateral, credit is based on the revenue stream, has reserve requirements. With the
proposed 1% sales tax, it is estimated that 70% or $700K of the 1$ million would be paid
by visitors patronizing the businesses. Authorization of the tax would be a majority vote.
How the revenue would be used to fund projects: a) Pay -as- you -go type of approach. Do
projects one at a time as the revenue comes in. The pro to this approach is that there is no
interest expense. The con is that it is very difficult to fund larger projects. b) Bond against
the sales tax. Issue bonds through the Idaho Bond Bank Authority. The State "co-signs"
their credit to the City's bonds to get better terms and lower interest rates. Bonding
against 10 years of revenue would equate to about $7.25 million.
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6. Combinations of the above options. An example would be a GEO Bond pledge paid with
Local Option Tax revenue. This would require authorization through a two-thirds
majority vote but the tax is not levied.
Mr. Drabinski stated that the Citizens Advisory Group recommended a 1% Sales Tax Ordinance
to fund streets that would allow them to make project -by -project decisions about bonding, local
improvement districts, etc. Also they wanted to mandate that from now on the City would budget
annually, out of its General Fund, money to be put aside for improvements so that another sales
tax after this period would not be necessary again.
Mr. Drabinski then narrated the Draft Ordinance.
1. Items that are currently taxed at 6% will go to 7% for a period of 10 years.
2. The revenue collected from this ordinance would be used for the following:
a. Direct costs to collect and administer the tax. The State could do this at significant
cost, but the City can do it for less.
b. Street replacement and resurfacing.
c. Sidewalks along streets in commercial areas to comply with ADA standards.
d. Repair and replacement or new underground utility infrastructure including
addition of underground fiberoptic cable.
e. Pathways for safe pedestrian and bicycle activity along major north -south and
east -west streets.
3. The money can be used as matching funds for leveraged grant funding and/or revenue or
General Obligation Bonds as approved by the electoral vote.
Mr. Drabinski addressed how the City would decide what streets to rebuild. He stated that the
City would appoint seven independent members as volunteers to a Capital Infrastructure
Advisory Committee. The members would review the City's Streets Master Plan, updated
annually, and use that plan to make recommendations to the City Council for the scheduling of
specific projects that satisfy the criteria for spending revenue.
Mr. Drabinski directed the audience to the City's web site for the Ten -Year Streets Plan
Interactive Map, the draft ordinance, a review of the community survey responses, and
frequently asked questions.
Mr. Drabinski then asked for clarification or informational questions about the draft ordinance.
Mr. Drabinski replied to a question from the audience stating that the committee volunteers
would be chosen from a pool and the Council would determine who would be on the committee.
Mr. Drabinski, in response to a question from the audience, affirmed that there had been about
$500K a year in capital expenditures in the City's Budget. He stated that the streets easily get
about 50% of that or more, primarily for crack sealing and chip sealing and maintenance of
existing streets.
Mr. Drabinski replied to a question from the audience stating that sewer is an Enterprise Fund.
He further explained that in the current budget sewer is run from revenue from sewer bills and
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water from water bills. He stated that over the years the City neglected to fix problems that
became old and were decaying. He stated that revenue from the 1% would go only to the street
projects identified already as prioritized by what the Citizens Advisory Group and the City
Council. He stated that while the streets are dug up, and where necessary, the City would replace
sewer collection and water distribution lines. He stated that the ongoing maintenance of the
sewer system is already paid for by sewer and water bills. Otherwise the money would probably
come from a Quick Bond that would possibly be a judicial confirmation of a health and safety
issue that needed to be fixed.
Peter Borner, Public Works Director, commented that the City's current rate structure did not
support the continued long-term maintenance of its water and sewer infrastructure. The money
from the 1% Sales Tax would be strictly for repairing and reconstructing streets and
infrastructure.
Mr. Drabinski affirmed the question could be answered on a street -by -street basis. The web site
has the streets plan for the public to see how much would go to the street, how much would go to
the water and sewer infrastructure, and what would go to curbs, gutters, and sidewalks.
Mr. Drabinski stated that he wanted to make sure that the public had a common set of
information. He then turned the discussion over to Mayor Aymon and the Council.
Public Comments
Mayor Aymon thanked the public for coming and introduced the Council. Public comments
followed.
Thea Belecz stated she was concerned about the tax on food and would like food to be exempt
from the sales tax. She suggested keeping the bed tax and adding a tax on alcohol.
Alana Shoemaker commented that a tax on food and drugs was already a hardship on the people
that live in McCall, and increasing that tax would not be fair. She also suggested starting with a
shorter timeframe like five years.
Wayne Dolik commented on national wages going down and agreed that food should not be
taxed.
Don Bailey strongly supported the proposal. He was concerned about the comments made by the
paper. Mr. Bailey thought the Council should consider the oldest streets first. He named some
streets that are the oldest and that had been promised by councils in the past to be paved. He also
urged the Council to consider LIDs as a funding option.
Jean Odmark agreed that there should be a local tax, but wondered if it were possible to avoid
having the residents pay the additional tax.
Sadie Noah commented in favor of the tax.
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Charlie (last name not captured) commented that he felt the sales tax was unfair as 70% of those
that would pay the tax do not have a vote and the other 30% that would have to pay the tax
would not vote. He referred to the tax as regressive and unfair and stated his opposition.
Thea Belecz agreed that the sales tax is a regressive tax and she suggested letting some streets go
back to gravel, even though that may not be a popular decision. She also wondered if there were
other alternatives that have yet to be considered.
Rory Veal explained that he was on the Citizens Advisory Committee. He stated that he did not
feel the sales tax was regressive at all. He wondered if there was a way that food purchased with
food stamps would be exempt from being taxed.
Marlene Bailey stated that the Food Bank was very supportive of those with low income. She
added that if the City wanted to attract more businesses and tourism then good streets and
infrastructure were needed.
Ken (last name not captured) agreed that imposing an additional sales tax would make it difficult
for low income families. He recognized that it is more difficult to find ways to fund the City's
needs. He was not opposed this time as he had been in the past and he felt the issues needed to be
addressed. He voiced his appreciation for the Council and the difficult decisions they have to
make. He urged them to learn from the mistakes of the past and have a plan in place to prevent
the same issues from recurring.
Mike Anderson acknowledged that he also was a member of the committee. He noted that the
City has more repair issues than it can afford as an unintended consequence of not taking care of
problems immediately. He pointed out that 20 years from now the City will be in the same
position if they do not put money into street maintenance.
Councilor Swanson recognized that it is a difficult decision. He agreed that sales tax is a
regressive tax as it affects everyone equally. An unofficial estimate would seem like the tax on
food would generate about 40% of the overall revenue generated from the tax. So, in order to
accomplish the revenue goals, it would take another five to six years to reach that revenue goal.
He stated that there were other sales tax options, such as luxury goods. Regardless of how the tax
would be applied, Councilor Swanson felt that the tax is an absolute necessity. He pointed out
that the mean reason the Council wanted a sales tax was because it shifts some of the burden off
of the property owners that lives in the City Limits. He explained that a large portion of the
population does not live within the City but uses the streets and water and sewer every day.
Councilor Swanson thought it would not be fair to burden the property taxpayer any more as the
City sees so many visitors and it seems logical to capture that revenue from the visitors.
Wayne (last name not captured) asked if it would be possible to increase the tax by only a half of
a percent. Councilor Swanson replied that it was an option that was discussed briefly, but the
Council was advised by the Citizens Group that a full 1% was needed to raise enough money
without having to go into debt. The Council wanted to raise enough revenue to get ahead of the
problems instead of just trying to keep up.
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Mark Sabin, who was also on the Advisory Committee, agreed that the 1% tax was the most
simple way to raise revenue — simple to collect and simple to enforce — and does not create an
undue burden on the property taxpayer.
Councilor Witte stated the City did examine the possibility of taxing alcohol by the drink. This
was discussed when they were considering the LOT tax for lodging and when it was proposed at
the time and there was very strong opposition to taxing alcohol by the drink.
Mayor Aymon delivered closing comments. She mentioned that the State will not be able to offer
much help in paying for streets over the coming years. Also, Federal money is not coming in as
fast as it did in the past. She stated that some grant money is available, but the City needs funds
to leverage along with the grants. Mayor Aymon pointed out that bad roads and bad
infrastructure will become even more expensive to fix as time goes by. She stated that it is the
Community's responsibility to fix the streets because it is not only a matter of public health and
safety but also a matter of economic development. She stated that so much of the City's
economy depends on tourists and the tourism industry, which puts a lot of stress on the
infrastructure. If a property tax were to be levied on the property owners it would only raise
about $142K, which is simply not enough to help. Mayor Aymon emphasized the need for the
Community to fix its own problems by approving this tax and not relying on other sources to
provide the money.
ADJOURNMENT
Without further business, Mayor Aymon adjourned the meeting at 8:30 p.m.
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