[MissoulaGov] MissoulaGov Digest, Vol 36, Issue 11

[Brent Campbell]

Taxation in proportion to benefit.  Finding the acceptable mix is the
trick.  The more tools we have, the greater the chances of achieving
success.

Brent Campbell, P.E.
President / CEO
WGM Group, Inc.
http://www.wgmgroup.com


-----Original Message-----
From: missoulagov-bounces at cmslists.com
[mailto:missoulagov-bounces at cmslists.com] On Behalf Of
missoulagov-request at cmslists.com
Sent: Monday, February 16, 2009 12:00 PM
To: missoulagov at cmslists.com
Subject: MissoulaGov Digest, Vol 36, Issue 11

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Today's Topics:

   1. Re: SID Deferrment (David Strohmaier)
   2. Re: SID Deferrment (John Torma)
   3. Re: On SIDs (Jed Taylor)
   4. Re: On SIDs (JON SALMONSON)
   5. Re: On SIDs (Ed Childers)
   6. Re: On SIDs (Jim McGrath)
   7. Re: On SIDs (Jed Taylor)
   8. Re: On SIDs (Jim McGrath)
   9. Re: On SIDs (Jed Taylor)
  10. Re: On SIDs (Ed Childers)
  11. Re: On SIDs (Jim McGrath)


----------------------------------------------------------------------

Message: 1
Date: Sun, 15 Feb 2009 13:05:48 -0700
From: "David Strohmaier" <dstrohmaier at msn.com>
Subject: Re: [MissoulaGov] SID Deferrment
To: "'Ed Childers'" <echilders at ci.missoula.mt.us>,	"'Jim McGrath'"
	<jmcgrath at missoulahousing.org>
Cc: 'Bob Jaffe' <bjaffe at ci.missoula.mt.us>, missoulagov at cmslists.com
Message-ID: <BLU144-DAV78C7CE97F1F34D1A75FCEA1B60 at phx.gbl>
Content-Type: text/plain; charset="us-ascii"

For clarification, what I was originally positing was a city-wide
"levy."

 

Dave Strohmaier

 

From: Ed Childers [mailto:echilders at ci.missoula.mt.us] 
Sent: Sunday, February 15, 2009 11:28 AM
To: Jim McGrath
Cc: David Strohmaier; Bob Jaffe; missoulagov at cmslists.com
Subject: Re: [MissoulaGov] SID Deferrment

 

Mea culpa, Jim.
A levy is a levy, referred to in my previous post as a "levy."
A bond issue is a bond issue, referred to in my previous post as a
"special
improvement district." (SID).

More accurately, "SID" is a generic term that can be either a levy or a
bond
issue.
Thus we have SIDs for park districts and a street cleaning ("flushing")
district and lighting districts that are levies.
We have SIDs for sewer installation and road installation and
underground
utilities and park improvements that are bond issues.

Better? :)
++
For clarity, I guess the discussion should distinguish between citywide
bond
issues and citywide levies. Right or wrong, that's the discussion I was
hearing.

A citywide levy would be assessed as a citywide SID. A citywide bond
would
probably be sold as a General Obligation Bond and assessed as such.

Back to your regular programming...

---ed




Ed Childers
echilders at ci.missoula.mt.us
 
406-728-3751
406-546-7681 (cell)
 
www.ci.missoula.mt.us
 



Jim McGrath wrote: 

Thanks for the clarification.

But it seems that Dave is discussing something different. 

"I think this is somewhat a matter of semantics, because for all intents
and
purposes a city-wide street, park (you name it) maintenance district is
very
much akin to a city-wide SID with the exception being that it would not
sunset after a specified period of time (e.g., 20 years) but would be
envisioned as a burden that the entire community would bear as long as
there
are streets and sidewalks and trails to maintain."

This is like the downtown street cleaning district which is assessed
each
year - your definition of levy, I guess. But how would a city-wide
district
levy be different than a city-wide tax levy? 

 

 

 

 

  _____  

From: Ed Childers [mailto:echilders at ci.missoula.mt.us] 
Sent: Saturday, February 14, 2009 10:05 AM
To: David Strohmaier
Cc: Jim McGrath; 'Bob Jaffe'; missoulagov at cmslists.com
Subject: Re: [MissoulaGov] SID Deferrment

 

My nickel's worth:
    A Special Improvement District: bonds are sold up front to finance
improvements; property owners in the defined District Area repay the
loan
(bonds) over a predetermined time period; they pay interest on the loan
(bonds) at a predetermined interest rate.
    A Levy: an annual charge to property owners in a defined area. The
amount is set periodically (in my experience, annually) based either on
some
anticipated benefit to the owners or on benefit already delivered.
    Some combination of the two is possible; for instance there was a
proposal to sell Bonds to finance improvements at the Fort Missoula
Park,
and charge an annual levy that would have repaid the loan (Bonds) and
provided ongoing maintenance.
    
    Not surprisingly, when we start discussing a proposal for citywide
financing of local projects such as sidewalks that have historically
been
financed locally, people who have already paid for their own local
improvements object to paying for other people's. By the same token,
when we
have a proposal for local financing of what appears to some to have been
financed citywide, people object.

---ed




Ed Childers
echilders at ci.missoula.mt.us
 
406-728-3751
406-546-7681 (cell)
 
www.ci.missoula.mt.us
 



David Strohmaier wrote: 

I think this is somewhat a matter of semantics, because for all intents
and
purposes a city-wide street, park (you name it) maintenance district is
very
much akin to a city-wide SID with the exception being that it would not
sunset after a specified period of time (e.g., 20 years) but would be
envisioned as a burden that the entire community would bear as long as
there
are streets and sidewalks and trails to maintain.

 

Happy Valentine's Day

 

From: Jim McGrath [mailto:jmcgrath at missoulahousing.org] 
Sent: Friday, February 13, 2009 10:30 PM
To: David Strohmaier; Bob Jaffe; missoulagov at cmslists.com



 

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Message: 2
Date: Sun, 15 Feb 2009 12:44:48 -0800 (PST)
From: John Torma <johntorma at yahoo.com>
Subject: Re: [MissoulaGov] SID Deferrment
To: David Strohmaier <dstrohmaier at msn.com>,	Ed Childers
	<echilders at ci.missoula.mt.us>,	Jim McGrath
	<jmcgrath at missoulahousing.org>
Cc: Bob Jaffe <bjaffe at ci.missoula.mt.us>, missoulagov at cmslists.com
Message-ID: <312943.87184.qm at web65608.mail.ac4.yahoo.com>
Content-Type: text/plain; charset="windows-1252"

I am enjoying this discussion thread immensely.? While I acknowledge the
seriousness of the issue,? it certainly does exemplify how arcane some
of the things that the council has to deal with can be.? Don't get me
wrong -- I am very glad that those of you who have a facility for
thinking in these terms are willing to work this out for those like me
who would rather get a tooth pulled than work on a budget.

Thanks for this on-line discussion and for bringing a chuckle to my
Sunday afternoon.

John T




________________________________
From: David Strohmaier <dstrohmaier at msn.com>
To: Ed Childers <echilders at ci.missoula.mt.us>; Jim McGrath
<jmcgrath at missoulahousing.org>
Cc: Bob Jaffe <bjaffe at ci.missoula.mt.us>; missoulagov at cmslists.com
Sent: Sunday, February 15, 2009 1:05:48 PM
Subject: Re: [MissoulaGov] SID Deferrment


For clarification, what I was originally positing was a city-wide
?levy.?
?
Dave Strohmaier
?
From:Ed Childers [mailto:echilders at ci.missoula.mt.us] 
Sent: Sunday, February 15, 2009 11:28 AM
To: Jim McGrath
Cc: David Strohmaier; Bob Jaffe; missoulagov at cmslists.com
Subject: Re: [MissoulaGov] SID Deferrment
?
Mea culpa, Jim.
A levy is a levy, referred to in my previous post as a "levy."
A bond issue is a bond issue, referred to in my previous post as a
"special improvement district." (SID).

More accurately, "SID" is a generic term that can be either a levy or a
bond issue.
Thus we have SIDs for park districts and a street cleaning ("flushing")
district and lighting districts that are levies.
We have SIDs for sewer installation and road installation and
underground utilities and park improvements that are bond issues.

Better? :)
++
For clarity, I guess the discussion should distinguish between citywide
bond issues and citywide levies. Right or wrong, that's the discussion I
was hearing.

A citywide levy would be assessed as a citywide SID. A citywide bond
would probably be sold as a General Obligation Bond and assessed as
such.

Back to your regular programming...

---ed



Ed Childers
echilders at ci.missoula.mt.us
 ?
406-728-3751
406-546-7681 (cell)
 ?
www.ci.missoula.mt.us
 ?


Jim McGrath wrote: 
Thanks for the clarification.
But it seems that Dave is discussing something different. 
?I think this is somewhat a matter of semantics, because for all intents
and purposes a city-wide street, park (you name it) maintenance district
is very much akin to a city-wide SID with the exception being that it
would not sunset after a specified period of time (e.g., 20 years) but
would be envisioned as a burden that the entire community would bear as
long as there are streets and sidewalks and trails to maintain.?
This is like the downtown street cleaning district which is assessed
each year ? your definition of levy, I guess. But how would a city-wide
district levy be different than a city-wide tax levy? 
?
?
?
?

________________________________

From:Ed Childers [mailto:echilders at ci.missoula.mt.us] 
Sent: Saturday, February 14, 2009 10:05 AM
To: David Strohmaier
Cc: Jim McGrath; 'Bob Jaffe'; missoulagov at cmslists.com
Subject: Re: [MissoulaGov] SID Deferrment
?
My nickel's worth:
??? A Special Improvement District: bonds are sold up front to finance
improvements; property owners in the defined District Area repay the
loan (bonds) over a predetermined time period; they pay interest on the
loan (bonds) at a predetermined interest rate.
??? A Levy: an annual charge to property owners in a defined area. The
amount is set periodically (in my experience, annually) based either on
some anticipated benefit to the owners or on benefit already delivered.
??? Some combination of the two is possible; for instance there was a
proposal to sell Bonds to finance improvements at the Fort Missoula
Park, and charge an annual levy that would have repaid the loan (Bonds)
and provided ongoing maintenance.
??? 
??? Not surprisingly, when we start discussing a proposal for citywide
financing of local projects such as sidewalks that have historically
been financed locally, people who have already paid for their own local
improvements object to paying for other people's. By the same token,
when we have a proposal for local financing of what appears to some to
have been financed citywide, people object.

---ed



Ed Childers
echilders at ci.missoula.mt.us
?
406-728-3751
406-546-7681 (cell)
?
www.ci.missoula.mt.us
?


David Strohmaier wrote: 
I think this is somewhat a matter of semantics, because for all intents
and purposes a city-wide street, park (you name it) maintenance district
is very much akin to a city-wide SID with the exception being that it
would not sunset after a specified period of time (e.g., 20 years) but
would be envisioned as a burden that the entire community would bear as
long as there are streets and sidewalks and trails to maintain.
?
Happy Valentine?s Day
?
From:Jim McGrath [mailto:jmcgrath at missoulahousing.org] 
Sent: Friday, February 13, 2009 10:30 PM
To: David Strohmaier; Bob Jaffe; missoulagov at cmslists.com


      
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Message: 3
Date: Sun, 15 Feb 2009 14:30:48 -0700
From: "Jed Taylor" <mcc at offthedial.com>
Subject: Re: [MissoulaGov] On SIDs
To: "'Jim McGrath'" <jmcgrath at missoulahousing.org>,
	<missoulagov at cmslists.com>
Message-ID: <E84FF708D4B34C0ABEA98A2A78F2718B at ryan>
Content-Type: text/plain; charset="us-ascii"

What's the difference between a tax and a fee in this case?  If you live
in
a taxing district, whether it's the City of Missoula or a SID, you're
making
a payment to government solely on the basis of owning property.
 
Perhaps the state law needs to be changed.  Under the current system,
the
city prepares its budget by accounting for things like COLA payroll
increases, rising health care insurance, more expensive fuel, etc., and
then
finds that it's hamstrung in collecting enough money to simply maintain
current operations, let alone undertake new projects like rebuilding a
park.
So, in order to get around the state law, it begins using the SID
mechanism
to accomplish what it can't do in an efficient and straightforward
manner.
 
To be sure, I see two advantages to using SIDs.  One, it allows subsets
of
the city to have higher tax rates to accomplish things the state law
currently prevents (assuming other programs aren't cut), and as has been
pointed out, this subset can equal the city itself.  Two, since 40% of a
SID
can block the SID, it requires more support than a simple majority, thus
implying only projects with substantial support are funded by the
mechanism.
 
OTOH, as demonstrated by the park rebuild financing and administrative
costs, a SID creates another layer of bureaucracy and expense.  Wouldn't
taxpayers get more bang for their buck under a system in which the
budget is
set and then the taxes required to pay for it are collected, and that's
it?
 
One other thing.  It seems to me that there's nothing preventing the
Council
from saying going forward that while state law forces the City to use
SIDs
to raise additional revenue, only city-wide SIDs will be used.  Thus,
the
park still gets rebuilt, but the entire city pays for what is an entire
city
asset.  Perhaps that would permit the SID to piggyback on the standard
property tax system instead of having to create an additional one for
the
SID.  Yes, I realize that in this example of the park rebuild, the city
would be taxing everyone $5 instead of 1,000 people $750, but if this
approach was used, and you didn't want to separately bill such a small
amount, a city-wide SID could cover a bundle of projects spread across
the
city, thus combining financial efficiency with broadly based political
support.
 
 

  _____  

From: missoulagov-bounces at cmslists.com
[mailto:missoulagov-bounces at cmslists.com] On Behalf Of Jim McGrath
Sent: Sunday, February 15, 2009 10:21
To: Jed Taylor; missoulagov at cmslists.com
Subject: Re: [MissoulaGov] On SIDs



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 

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Message: 4
Date: Sun, 15 Feb 2009 15:12:31 -0700
From: "JON SALMONSON" <jon-n-kay at msn.com>
Subject: Re: [MissoulaGov] On SIDs
To: "'Jim McGrath'" <jmcgrath at missoulahousing.org>,
	<missoulagov at cmslists.com>,	"Jed Taylor"
<mcc at offthedial.com>
Message-ID: <COL111-DS16875F3D7E462D24C1B8F4B3B60 at phx.gbl>
Content-Type: text/plain; charset="iso-8859-1"

In the case of curbs, gutters, and sidewalks, vehicles should pay
because vehicles create the need and they gain a great benefit.
Vehicles need a space to operate clear of obstacles, hazards, and guilt;
Put the non-vehicle (often a person)to the side - make a sidewalk.
Assess the cost of this need and benefit to the vehicle with the
license. This use or impact fee can form a state fund from which vehicle
related infrastructure needs can be granted to applicants from needy
jurisdictions - like Missoula.
  ----- Original Message ----- 
  From: Jed Taylor<mailto:mcc at offthedial.com> 
  To: 'Jim McGrath'<mailto:jmcgrath at missoulahousing.org> ;
missoulagov at cmslists.com<mailto:missoulagov at cmslists.com> 
  Sent: Sunday, February 15, 2009 2:30 PM
  Subject: Re: [MissoulaGov] On SIDs


  What's the difference between a tax and a fee in this case?  If you
live in a taxing district, whether it's the City of Missoula or a SID,
you're making a payment to government solely on the basis of owning
property.

  Perhaps the state law needs to be changed.  Under the current system,
the city prepares its budget by accounting for things like COLA payroll
increases, rising health care insurance, more expensive fuel, etc., and
then finds that it's hamstrung in collecting enough money to simply
maintain current operations, let alone undertake new projects like
rebuilding a park.  So, in order to get around the state law, it begins
using the SID mechanism to accomplish what it can't do in an efficient
and straightforward manner.

  To be sure, I see two advantages to using SIDs.  One, it allows
subsets of the city to have higher tax rates to accomplish things the
state law currently prevents (assuming other programs aren't cut), and
as has been pointed out, this subset can equal the city itself.  Two,
since 40% of a SID can block the SID, it requires more support than a
simple majority, thus implying only projects with substantial support
are funded by the mechanism.

  OTOH, as demonstrated by the park rebuild financing and administrative
costs, a SID creates another layer of bureaucracy and expense.  Wouldn't
taxpayers get more bang for their buck under a system in which the
budget is set and then the taxes required to pay for it are collected,
and that's it?

  One other thing.  It seems to me that there's nothing preventing the
Council from saying going forward that while state law forces the City
to use SIDs to raise additional revenue, only city-wide SIDs will be
used.  Thus, the park still gets rebuilt, but the entire city pays for
what is an entire city asset.  Perhaps that would permit the SID to
piggyback on the standard property tax system instead of having to
create an additional one for the SID.  Yes, I realize that in this
example of the park rebuild, the city would be taxing everyone $5
instead of 1,000 people $750, but if this approach was used, and you
didn't want to separately bill such a small amount, a city-wide SID
could cover a bundle of projects spread across the city, thus combining
financial efficiency with broadly based political support.





------------------------------------------------------------------------
------
  From: missoulagov-bounces at cmslists.com
[mailto:missoulagov-bounces at cmslists.com] On Behalf Of Jim McGrath
  Sent: Sunday, February 15, 2009 10:21
  To: Jed Taylor; missoulagov at cmslists.com
  Subject: Re: [MissoulaGov] On SIDs


  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.

   

   

   

   


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------

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Message: 5
Date: Sun, 15 Feb 2009 16:14:40 -0700
From: Ed Childers <echilders at ci.missoula.mt.us>
Subject: Re: [MissoulaGov] On SIDs
To: Jed Taylor <mcc at offthedial.com>
Cc: MissoulaGov <missoulagov at cmslists.com>
Message-ID: <4998A1E0.1060601 at ci.missoula.mt.us>
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Message: 6
Date: Sun, 15 Feb 2009 18:27:18 -0700
From: "Jim McGrath" <jmcgrath at missoulahousing.org>
Subject: Re: [MissoulaGov] On SIDs
To: "Jed Taylor" <mcc at offthedial.com>,	<missoulagov at cmslists.com>
Message-ID: <92B4830B2B5E6E43B04109A6DFB96F96A5B5EB at mha1.MHA.local>
Content-Type: text/plain; charset="iso-8859-1"

Plain in spain! By George!
I don't know what the supreme court would say to a city-wide SID.

I am happy to not be on council because these are challenging
philosophical and practical questions.


-----Original Message-----
From: Jed Taylor [mailto:mcc at offthedial.com]
Sent: Sun 2/15/2009 2:30 PM
To: Jim McGrath; missoulagov at cmslists.com
Subject: RE: [MissoulaGov] On SIDs
 
What's the difference between a tax and a fee in this case?  If you live
in
a taxing district, whether it's the City of Missoula or a SID, you're
making
a payment to government solely on the basis of owning property.
 
Perhaps the state law needs to be changed.  Under the current system,
the
city prepares its budget by accounting for things like COLA payroll
increases, rising health care insurance, more expensive fuel, etc., and
then
finds that it's hamstrung in collecting enough money to simply maintain
current operations, let alone undertake new projects like rebuilding a
park.
So, in order to get around the state law, it begins using the SID
mechanism
to accomplish what it can't do in an efficient and straightforward
manner.
 
To be sure, I see two advantages to using SIDs.  One, it allows subsets
of
the city to have higher tax rates to accomplish things the state law
currently prevents (assuming other programs aren't cut), and as has been
pointed out, this subset can equal the city itself.  Two, since 40% of a
SID
can block the SID, it requires more support than a simple majority, thus
implying only projects with substantial support are funded by the
mechanism.
 
OTOH, as demonstrated by the park rebuild financing and administrative
costs, a SID creates another layer of bureaucracy and expense.  Wouldn't
taxpayers get more bang for their buck under a system in which the
budget is
set and then the taxes required to pay for it are collected, and that's
it?
 
One other thing.  It seems to me that there's nothing preventing the
Council
from saying going forward that while state law forces the City to use
SIDs
to raise additional revenue, only city-wide SIDs will be used.  Thus,
the
park still gets rebuilt, but the entire city pays for what is an entire
city
asset.  Perhaps that would permit the SID to piggyback on the standard
property tax system instead of having to create an additional one for
the
SID.  Yes, I realize that in this example of the park rebuild, the city
would be taxing everyone $5 instead of 1,000 people $750, but if this
approach was used, and you didn't want to separately bill such a small
amount, a city-wide SID could cover a bundle of projects spread across
the
city, thus combining financial efficiency with broadly based political
support.
 
 

  _____  

From: missoulagov-bounces at cmslists.com
[mailto:missoulagov-bounces at cmslists.com] On Behalf Of Jim McGrath
Sent: Sunday, February 15, 2009 10:21
To: Jed Taylor; missoulagov at cmslists.com
Subject: Re: [MissoulaGov] On SIDs



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 


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Message: 7
Date: Sun, 15 Feb 2009 18:33:00 -0700
From: "Jed Taylor" <mcc at offthedial.com>
Subject: Re: [MissoulaGov] On SIDs
To: "'Ed Childers'" <echilders at ci.missoula.mt.us>
Cc: 'MissoulaGov' <missoulagov at cmslists.com>
Message-ID: <41456F09BC5A47949E09652D65350243 at ryan>
Content-Type: text/plain; charset="us-ascii"

1.  To me, a tax is what the government collects because I exist.  If I
own
a house in the Rattlesnake near Pineview Park, I get my annual property
tax
bill, which bills me based on what my house is worth, not the value of
the
services I use.  If I don't have any kids consuming the services of the
public education system, I still have to pay to support it.  Then,
because
I'm in the Pineview Park SID, I get another bill from the city demanding
money based on the value of my property to help pay to rebuild the park,
regardless of whether I use the park or not.  In both cases, it's a tax.
It
doesn't matter how my required payment is structured.  The discussion
between you and Dave, as I read it, was about drawing the distinction
between a levy (a tax that covers the cash flow needed before the
expense is
incurred) and a bond issue (the taxing authority borrowing the money
needed
for the cash flow with the expectation that the taxing authority will
recoup
the money required to pay the principal and interest from those it
taxes).
 
The Pineview Park SID chose to finance the project using bonds, thus
allowing its members to defer paying the costs of the project, but
incurring
the additional expenses of underwriting and interest.  It could have
chosen
to levy its members in full before the project commenced.  In either
case,
its members have been taxed; they are not paying a fee.
 
OTOH,  if I decide to rent a softball field for a tournament I'm
holding,
I'm paying a fee because I'm choosing to buy a specific service from
P&R,
and what I pay is based (roughly) on what it costs P&R to provide that
field
for me.  I could go someplace else if I chose to.  I could host it in my
back yard.  I don't have to use a P&R softball field for my tournament,
but
it's nice that the option is available.  That's a fee, and its amount
has a
rather well-defined relationship to the value of what I'm consuming.  It
doesn't matter how P&R is providing the softball field I"m renting;
maybe
their share of the revenue from property taxes is already in the bank
and is
sufficient to cover the cost of preparing it for me until I write them a
check.  Maybe they've issued revenue bonds to cover their cash flow that
will be paid back by my rental.  It doesn't matter.  Either way, it's a
fee.
 
 
2.  By 'get around' I mean that the because the city is limited as to
how
much it can increase property taxes each year, it has to either say no
to
projects like Pineview Park or it has to find another way to pay for
them.
Perhaps 'get around' isn't the most elegant way to describe this, but if
there were no limitation to increasing the property tax, the city could
simply add Pineview Park to the budget and increase its property tax by
an
amount sufficient to pay for it.  It wouldn't need to go thru the hassle
of
creating a SID.  I'm not suggesting that SIDs are illegal; but rather
that
they are an alternative way of taxing property owners.
 
 
3.  Again, what I mean by this is that without SIDs, and the current
limitation on how much the city can raise property taxes, there would be
no
way to rebuild Pineview Park without cutting out something else from the
budget.  I'm simply contrasting a single, straightforward property tax
system with the current combination of property tax and SIDs.  It may
well
be that even without the property tax increase limitation imposed by the
state, we'd still have SIDs, (and that gets back to my original question
of
whether the City is one entity or a confederation of neighborhoods), but
it
would be cheaper and more efficient to do projects via the budget than
via
SIDs.
 
 
4.  Simply don't borrow the money.  As I mentioned before, the Pineview
Park
SID could have required an upfront payment sufficient to pay outside
contractors before work began and the City could have covered the
in-house
expenses it's going to pay anyway, in effect loaning these services to
the
SID until payment for them was collected, but doing so without interest,
and
there would have been no need to pay $65k to lawyers and underwriters to
create and market the bonds that are generating the funds to cover the
cash
flow for this project.  I've worked as a systems analyst for two
different
muni bond houses (at least one of which I'm pretty sure Missoula's dealt
with), so I'm not questioning that if one chooses to borrow money
there's
going to be legal and underwriting fees.  My question is whether there's
a
way for the taxpayers to get more for their money by not borrowing in
the
first place.  I believe there is.
 
 
5.  I'm sure the park rebuild is well worth the money, even if it's a
dime a
day for forever.  But if the City could have rolled it into the budget
instead of having to create a SID and issue bonds, it would have cost a
nickel a day instead.
 
 
 

  _____  

From: missoulagov-bounces at cmslists.com
[mailto:missoulagov-bounces at cmslists.com] On Behalf Of Ed Childers
Sent: Sunday, February 15, 2009 16:15
To: Jed Taylor
Cc: MissoulaGov
Subject: Re: [MissoulaGov] On SIDs


Hi, Jed. You've been writing a lot, you deserve a response.
Here's some more to think about. Numbers refer to numbers below.
1. "tax" vs "fee." You need to explain how you would structure both the
tax
and the fee (and are you using "tax" as a synonym for Special
Improvement
District?) to make them equal. I don't know of a scenario in which they
would be equal, or why they'd need to be.
2. a) "get around state law?" b) "using the SID... to accomplish" etc.
Would you mind explaining how using SIDs gets around state law? And SIDs
have been used by cities and counties for, well, at least 50 years and
doubtless many more.
3. Jed, once again you need to explain how using SIDs, which are
explicitly
allowed by state law, would be used "to accomplish things the state law
currently prevents."
4. It costs money to borrow money. I've never worked in a bank, but as I
understand it banks charge money when you borrow money from them. I'd be
glad to hear of a way to get around paying interest and fees to borrow
money, whether from taxpayers or from bankers.
5. "state law forces the city to use sids?" Nope. See above.
For what it's worth, I think the cost to individual property owners
paying
for Pineview Park was: not much (in the neighborhood of a dime a day).






Ed Childers
Jed Taylor wrote: 

1.


What's the difference between a tax and a fee in this case?  If you live
in
a taxing district, whether it's the City of Missoula or a SID, you're
making
a payment to government solely on the basis of owning property.
 

2.


Perhaps the state law needs to be changed.  Under the current system,
the
city prepares its budget by accounting for things like COLA payroll
increases, rising health care insurance, more expensive fuel, etc., and
then
finds that it's hamstrung in collecting enough money to simply maintain
current operations, let alone undertake new projects like rebuilding a
park.
So, in order to get around the state law, it begins using the SID
mechanism
to accomplish what it can't do in an efficient and straightforward
manner.
 

3.


To be sure, I see two advantages to using SIDs.  One, it allows subsets
of
the city to have higher tax rates to accomplish things the state law
currently prevents (assuming other programs aren't cut), and as has been
pointed out, this subset can equal the city itself.  Two, since 40% of a
SID
can block the SID, it requires more support than a simple majority, thus
implying only projects with substantial support are funded by the
mechanism.
 

4.


OTOH, as demonstrated by the park rebuild financing and administrative
costs, a SID creates another layer of bureaucracy and expense.  Wouldn't
taxpayers get more bang for their buck under a system in which the
budget is
set and then the taxes required to pay for it are collected, and that's
it?
 

5.


One other thing.  It seems to me that there's nothing preventing the
Council
from saying going forward that while state law forces the City to use
SIDs
to raise additional revenue, only city-wide SIDs will be used.  Thus,
the
park still gets rebuilt, but the entire city pays for what is an entire
city
asset.  Perhaps that would permit the SID to piggyback on the standard
property tax system instead of having to create an additional one for
the
SID.  Yes, I realize that in this example of the park rebuild, the city
would be taxing everyone $5 instead of 1,000 people $750, but if this
approach was used, and you didn't want to separately bill such a small
amount, a city-wide SID could cover a bundle of projects spread across
the
city, thus combining financial efficiency with broadly based political
support.
 
 

  _____  

From: missoulagov-bounces at cmslists.com
[mailto:missoulagov-bounces at cmslists.com] On Behalf Of Jim McGrath
Sent: Sunday, February 15, 2009 10:21
To: Jed Taylor; missoulagov at cmslists.com
Subject: Re: [MissoulaGov] On SIDs



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 



  _____  


_______________________________________________

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Message: 8
Date: Sun, 15 Feb 2009 18:46:42 -0700
From: "Jim McGrath" <jmcgrath at missoulahousing.org>
Subject: Re: [MissoulaGov] On SIDs
To: "Ed Childers" <echilders at ci.missoula.mt.us>,	"Jed Taylor"
	<mcc at offthedial.com>
Cc: MissoulaGov <missoulagov at cmslists.com>
Message-ID: <92B4830B2B5E6E43B04109A6DFB96F96A5B5EC at mha1.MHA.local>
Content-Type: text/plain; charset="iso-8859-1"

Ed,

At the risk of speaking for Jed-- which I will not do-- I may own some
responsibility for the "getting around state law idea" -- sorry. 
MY question (not to be attributed to Jed) has to do with the fact that
city's are limited in how much taxes they can increase, but not fees;
but if a specific limited tool like an SID is stretched to the apply to
the entire city, is it not an end around? 
Ask yourself (you don't need to answer) -- if the city could simply
raise taxes would it assess these?

Again -- I'm not making these decisions, and I like paying local taxes.
It makes sense to me. 


-----Original Message-----
From: Ed Childers [mailto:echilders at ci.missoula.mt.us]
Sent: Sun 2/15/2009 4:14 PM
To: Jed Taylor
Cc: Jim McGrath; MissoulaGov
Subject: Re: [MissoulaGov] On SIDs
 
Hi, Jed. You've been writing a lot, you deserve a response.
Here's some more to think about. Numbers refer to numbers below.
1. "tax" vs "fee." You need to explain how you would structure both the
tax and the fee (and are you using "tax" as a synonym for Special
Improvement District?) to make them equal. I don't know of a scenario in
which they would be equal, or why they'd need to be.
2. a) "get around state law?" b) "using the SID... to accomplish" etc.
Would you mind explaining how using SIDs gets around state law? And SIDs
have been used by cities and counties for, well, at least 50 years and
doubtless many more.
3. Jed, once again you need to explain how using SIDs, which are
explicitly allowed by state law, would be used "to accomplish things the
state law currently prevents."
4. It costs money to borrow money. I've never worked in a bank, but as I
understand it banks charge money when you borrow money from them. I'd be
glad to hear of a way to get around paying interest and fees to borrow
money, whether from taxpayers or from bankers.
5. "state law forces the city to use sids?" Nope. See above.
For what it's worth, I think the cost to individual property owners
paying for Pineview Park was: not much (in the neighborhood of a dime a
day).






Ed Childers
Jed Taylor wrote: 

1.


	What's the difference between a tax and a fee in this case?  If
you live in a taxing district, whether it's the City of Missoula or a
SID, you're making a payment to government solely on the basis of owning
property.
	 

2.


	Perhaps the state law needs to be changed.  Under the current
system, the city prepares its budget by accounting for things like COLA
payroll increases, rising health care insurance, more expensive fuel,
etc., and then finds that it's hamstrung in collecting enough money to
simply maintain current operations, let alone undertake new projects
like rebuilding a park.  So, in order to get around the state law, it
begins using the SID mechanism to accomplish what it can't do in an
efficient and straightforward manner.
	 

3.


	To be sure, I see two advantages to using SIDs.  One, it allows
subsets of the city to have higher tax rates to accomplish things the
state law currently prevents (assuming other programs aren't cut), and
as has been pointed out, this subset can equal the city itself.  Two,
since 40% of a SID can block the SID, it requires more support than a
simple majority, thus implying only projects with substantial support
are funded by the mechanism.
	 

4.


	OTOH, as demonstrated by the park rebuild financing and
administrative costs, a SID creates another layer of bureaucracy and
expense.  Wouldn't taxpayers get more bang for their buck under a system
in which the budget is set and then the taxes required to pay for it are
collected, and that's it?
	 

5.


	One other thing.  It seems to me that there's nothing preventing
the Council from saying going forward that while state law forces the
City to use SIDs to raise additional revenue, only city-wide SIDs will
be used.  Thus, the park still gets rebuilt, but the entire city pays
for what is an entire city asset.  Perhaps that would permit the SID to
piggyback on the standard property tax system instead of having to
create an additional one for the SID.  Yes, I realize that in this
example of the park rebuild, the city would be taxing everyone $5
instead of 1,000 people $750, but if this approach was used, and you
didn't want to separately bill such a small amount, a city-wide SID
could cover a bundle of projects spread across the city, thus combining
financial efficiency with broadly based political support.
	 
	 

________________________________

	From: missoulagov-bounces at cmslists.com
[mailto:missoulagov-bounces at cmslists.com] On Behalf Of Jim McGrath
	Sent: Sunday, February 15, 2009 10:21
	To: Jed Taylor; missoulagov at cmslists.com
	Subject: Re: [MissoulaGov] On SIDs
	
	

	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 

	
	
________________________________


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Message: 9
Date: Sun, 15 Feb 2009 18:55:33 -0700
From: "Jed Taylor" <mcc at offthedial.com>
Subject: Re: [MissoulaGov] On SIDs
To: "'Ed Childers'" <echilders at ci.missoula.mt.us>
Cc: 'MissoulaGov' <missoulagov at cmslists.com>
Message-ID: <118E91186DC94363893595739FC11D8E at ryan>
Content-Type: text/plain; charset="us-ascii"

As a follow-up, here's a scenario.  You and I live on a cul-de-sac,
behind
which is undeveloped city property.  We're the only two landowners
around.
My lot is 9,000 sf and yours is 1,000.  I propose that the city build
the Ed
Childers Memorial Park.  Because we're clairvoyant, we know when it's
all
said and done, this park will cost $10k.  The city says that as much as
they'd like nothing more than to build a park on this land in your
honor,
there's no money in the budget to do so.  It will, however, agree to the
creation of SID to be comprised of mine and your property as long as the
SID
pays all costs.
 
1)  You object to the creation of this SID.
        a.  Too bad.  The size of your lot means you only have a 10%
say,
and you need 40% to block it.
        b.  You're one of two property owners, and your 50% is enough to
block it.
 
2)  The park has been built and now it's time to pay up.  I'm going to
use
the park every day.  You're never going to set foot in it.
        a.  My share is $9,000 and yours is $1,000.
        b.  We both owe $5,000.
        c.  I owe the entire $10k and you don't owe a thing.
 
 

  _____  

From: missoulagov-bounces at cmslists.com
[mailto:missoulagov-bounces at cmslists.com] On Behalf Of Ed Childers
Sent: Sunday, February 15, 2009 16:15
To: Jed Taylor
Cc: MissoulaGov
Subject: Re: [MissoulaGov] On SIDs


Hi, Jed. You've been writing a lot, you deserve a response.
Here's some more to think about. Numbers refer to numbers below.
1. "tax" vs "fee." You need to explain how you would structure both the
tax
and the fee (and are you using "tax" as a synonym for Special
Improvement
District?) to make them equal. I don't know of a scenario in which they
would be equal, or why they'd need to be.
2. a) "get around state law?" b) "using the SID... to accomplish" etc.
Would you mind explaining how using SIDs gets around state law? And SIDs
have been used by cities and counties for, well, at least 50 years and
doubtless many more.
3. Jed, once again you need to explain how using SIDs, which are
explicitly
allowed by state law, would be used "to accomplish things the state law
currently prevents."
4. It costs money to borrow money. I've never worked in a bank, but as I
understand it banks charge money when you borrow money from them. I'd be
glad to hear of a way to get around paying interest and fees to borrow
money, whether from taxpayers or from bankers.
5. "state law forces the city to use sids?" Nope. See above.
For what it's worth, I think the cost to individual property owners
paying
for Pineview Park was: not much (in the neighborhood of a dime a day).






Ed Childers
Jed Taylor wrote: 

1.


What's the difference between a tax and a fee in this case?  If you live
in
a taxing district, whether it's the City of Missoula or a SID, you're
making
a payment to government solely on the basis of owning property.
 

2.


Perhaps the state law needs to be changed.  Under the current system,
the
city prepares its budget by accounting for things like COLA payroll
increases, rising health care insurance, more expensive fuel, etc., and
then
finds that it's hamstrung in collecting enough money to simply maintain
current operations, let alone undertake new projects like rebuilding a
park.
So, in order to get around the state law, it begins using the SID
mechanism
to accomplish what it can't do in an efficient and straightforward
manner.
 

3.


To be sure, I see two advantages to using SIDs.  One, it allows subsets
of
the city to have higher tax rates to accomplish things the state law
currently prevents (assuming other programs aren't cut), and as has been
pointed out, this subset can equal the city itself.  Two, since 40% of a
SID
can block the SID, it requires more support than a simple majority, thus
implying only projects with substantial support are funded by the
mechanism.
 

4.


OTOH, as demonstrated by the park rebuild financing and administrative
costs, a SID creates another layer of bureaucracy and expense.  Wouldn't
taxpayers get more bang for their buck under a system in which the
budget is
set and then the taxes required to pay for it are collected, and that's
it?
 

5.


One other thing.  It seems to me that there's nothing preventing the
Council
from saying going forward that while state law forces the City to use
SIDs
to raise additional revenue, only city-wide SIDs will be used.  Thus,
the
park still gets rebuilt, but the entire city pays for what is an entire
city
asset.  Perhaps that would permit the SID to piggyback on the standard
property tax system instead of having to create an additional one for
the
SID.  Yes, I realize that in this example of the park rebuild, the city
would be taxing everyone $5 instead of 1,000 people $750, but if this
approach was used, and you didn't want to separately bill such a small
amount, a city-wide SID could cover a bundle of projects spread across
the
city, thus combining financial efficiency with broadly based political
support.
 
 

  _____  

From: missoulagov-bounces at cmslists.com
[mailto:missoulagov-bounces at cmslists.com] On Behalf Of Jim McGrath
Sent: Sunday, February 15, 2009 10:21
To: Jed Taylor; missoulagov at cmslists.com
Subject: Re: [MissoulaGov] On SIDs



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 



  _____  


_______________________________________________

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Message: 10
Date: Sun, 15 Feb 2009 19:33:07 -0700
From: Ed Childers <echilders at ci.missoula.mt.us>
Subject: Re: [MissoulaGov] On SIDs
To: Jim McGrath <jmcgrath at missoulahousing.org>
Cc: Jed Taylor <mcc at offthedial.com>, MissoulaGov
	<missoulagov at cmslists.com>
Message-ID: <4998D063.2020605 at ci.missoula.mt.us>
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Message: 11
Date: Mon, 16 Feb 2009 00:22:44 -0700
From: "Jim McGrath" <jmcgrath at missoulahousing.org>
Subject: Re: [MissoulaGov] On SIDs
To: "Ed Childers" <echilders at ci.missoula.mt.us>
Cc: Jed Taylor <mcc at offthedial.com>, MissoulaGov
	<missoulagov at cmslists.com>
Message-ID: <92B4830B2B5E6E43B04109A6DFB96F96A5B5EE at mha1.MHA.local>
Content-Type: text/plain; charset="iso-8859-1"

Ed has succinctly hit on the why of where we are at. There is no perfect
or even obviously best solution. what historically has been done by the
city has been done in order to make desired projects happen, even though
not everyone is thrilled by the technique. Conceive of a better tool if
you can; push for more equitable legislation, if you can concoct it.
good luck and good night. 


-----Original Message-----
From: Ed Childers [mailto:echilders at ci.missoula.mt.us]
Sent: Sun 2/15/2009 7:33 PM
To: Jim McGrath
Cc: Jed Taylor; MissoulaGov
Subject: Re: [MissoulaGov] On SIDs
 
Hello all.
    I see The Moderator (BJaffe) fears a loss of readership so I'll keep
it short.
    As near as I can tell, the tax cap has had no influence on local,
limited-area SIDs.
    I'm told that other cities already had general levies when the tax
cap was passed.
    In Missoula, fees have been increased and added to keep revenues in
line with cost of services.
    If Missoula could have kept general revenues (unfortunately property
tax based) in line with cost of services I doubt that Missoula would
have gone in for fees the way we did. We might not be looking at a
citywide general levy for street maintenance, but on the other hand we
very well might, because funding for street maintenance comes largely
from gas taxes which have not changed since 1993.
    I, too, like paying taxes, because I know I'm helping pay for things
people need.

Ed Childers

Jim McGrath wrote: 

	Ed,
	
	At the risk of speaking for Jed-- which I will not do-- I may
own some responsibility for the "getting around state law idea" --
sorry.
	MY question (not to be attributed to Jed) has to do with the
fact that city's are limited in how much taxes they can increase, but
not fees; but if a specific limited tool like an SID is stretched to the
apply to the entire city, is it not an end around?
	Ask yourself (you don't need to answer) -- if the city could
simply raise taxes would it assess these?
	
	Again -- I'm not making these decisions, and I like paying local
taxes. It makes sense to me.
	
	
	-----Original Message-----
	From: Ed Childers [mailto:echilders at ci.missoula.mt.us]
	Sent: Sun 2/15/2009 4:14 PM
	To: Jed Taylor
	



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End of MissoulaGov Digest, Vol 36, Issue 11
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