[MissoulaGov] On SIDs

[Jim McGrath]

In order for the citizens of Missoula to raise their own taxes -assuming
we agree to that-state law would need to be changed. The city has
extremely limited taxing authority. Hence the shift to fees by
municipalities across the state.

 

________________________________

From: missoulagov-bounces at cmslists.com
[mailto:missoulagov-bounces at cmslists.com] On Behalf Of Jed Taylor
Sent: Sunday, February 15, 2009 1:57 AM
To: missoulagov at cmslists.com
Subject: [MissoulaGov] On SIDs

 

Reading the discussion on SIDs has been interesting.  Here are some
thoughts I have on them.

 

SIDs seem to really go to the question of what is the City of Missoula.
If the city is a single entity in which its residents share the expense
of its maintenance and improvement regardless of any individual
neighborhood's relative ability to contribute to the pot, and
maintenance and improvement is provided on the basis of need regardless
of that same relative ability, then SIDs in general seem to be about the
last way projects should be paid for.  People get the city they're
willing to pay for, and it's up to those who feel more money is needed
to convince a majority that taxes need to be raised, not necessarily so
their own street is nicer, but so the city in general is.

 

OTOH, if Missoula is really a confederation of neighborhoods where basic
services such as the police are paid for based on a city-wide basis, but
more localized projects such as rebuilding a park or putting in street
lights are undertaken only when enough residents of a neighborhood can
force everyone in that neighborhood to participate in a SID, then SIDs
seem a perfectly rational way of financing things.  It's not the model I
prefer, because it seems that this would tend to Balkanize the city, but
it would have the benefit of keeping the fundamental tax rate lower than
the alternative and letting specific areas decide what they want and
what they can live without (although living without is often not much of
a choice, but rather a necessity).

 

In either case, I do think it would be a good thing strategically for
the council to state which model they think is appropriate so Missoula
residents know where its government is coming from and so individual
project decisions don't seem ad hoc.

 

There's never going to be a perfect time or method to transition from
SIDs to city-wide funding.  Anyone who's already participated in a SID
has already decided how they're going to pay for it, even if they
haven't cut the check yet.  Should the council decide to stop using
'mandatory' SIDs (as opposed to using the mechanism to help a group
voluntarily donate something like a park rebuild to the city), I would
suggest that the council should adopt a 'that-was-then, this-is-now'
approach, declare a new strategic vision, and say something along the
lines of, "Starting in 2010, we 're one city and everyone in the city is
going to help each other pay for what's needed.  Therefore, we're no
longer going to use mandatory SIDs as a way of paying for projects."

 

Concerning sidewalks, it seems that the city could make them the
responsibility of each property owner to maintain his to a minimum
standard, much as it does requiring a property owner to keep his
sidewalk clear of snow and ice.  If a property owner wants to tear his
up once a year and lay a new one down, let him.  If his sidewalk falls
below minimum standards, order it repaired or have the city do it and
bill him.  And if he doesn't have a sidewalk, then the city pays for
putting one in and he enjoys the increase in property value while also
acquiring the responsibility to maintain it.

 

Regarding letting a property owner defer his SID payment until the sale
of his property, is the city charging interest on what amounts to a
loan?  What happens if there isn't enough money from the proceeds of the
sale to pay what he owes?

 

The cost of financing of the recent park rebuild SID seems to point to
marked benefits that could be made available to city residents if the
city created something along the lines of a municipal credit union to
help them finance local governmentally imposed financial obligations.

>From what I heard from the committee meeting during which the financing

of this park rebuild was discussed, only ~$250k of the cost is going to
outside contractors, who obviously won't want to wait to get paid.
Another ~$250k is actually budgeted items being provided by the city,
such as the use of a dump truck, that are being billed to the SID as if
the SID is renting them from the city (and that's as it should be given
the financial design of this project).  Surely, the city doesn't need to
paid right away for these items - it's paying for the dump truck
regardless.  Therefore, this project is incurring ~$65k of legal and
underwriting fees to produce ~$250k of revenue that's needed decently
soon.  Maybe this is indeed the absolutely only way to finance this
project, and maybe the SID members find this ratio of fees to revenue
acceptable in order to get the park rebuilt, but these kind of numbers
suggest that there's a very strong need to put in place a program for
the future that makes it possible to cover the cash flow before SID
income is available without spending money on lawyers and underwriters.

 

BTW - am I correct in assuming that the members of this SID are, in
effect, donating this park rebuild to the city?

 

Finally, because parks are really something for everyone, both within
and without the city, to enjoy, and because there's quite a business
function aspect to running the park system, it seems to me that a
separate Missoula Park District would be something well worth
consideration.  This District could be, by design, larger than the city
itself, and since it would be a separate taxing district, people could
more readily determine how much they're will to pay for their Park
District and whether they're getting what they're paying for.

 

 

 

 

________________________________

"Be the change you want to see in the world." - Mahatma Gandhi 

-------------- next part --------------
An HTML attachment was scrubbed...
URL: <http://www.cmslists.com/pipermail/missoulagov/attachments/20090215/b043e51f/attachment.htm>