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<DIV dir=ltr align=left><FONT face=Arial color=#0000ff size=2><SPAN
class=079504420-15022009>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.</SPAN></FONT></DIV>
<DIV dir=ltr align=left><FONT face=Arial color=#0000ff size=2><SPAN
class=079504420-15022009></SPAN></FONT> </DIV>
<DIV dir=ltr align=left><FONT face=Arial color=#0000ff size=2><SPAN
class=079504420-15022009>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.</SPAN></FONT></DIV>
<DIV dir=ltr align=left><FONT face=Arial color=#0000ff size=2><SPAN
class=079504420-15022009></SPAN></FONT> </DIV>
<DIV dir=ltr align=left><FONT face=Arial color=#0000ff size=2><SPAN
class=079504420-15022009>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.</SPAN></FONT></DIV>
<DIV dir=ltr align=left><FONT face=Arial color=#0000ff size=2><SPAN
class=079504420-15022009></SPAN></FONT> </DIV>
<DIV dir=ltr align=left><FONT face=Arial color=#0000ff size=2><SPAN
class=079504420-15022009>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?</SPAN></FONT></DIV>
<DIV dir=ltr align=left><FONT face=Arial color=#0000ff size=2><SPAN
class=079504420-15022009></SPAN></FONT> </DIV>
<DIV dir=ltr align=left><FONT face=Arial color=#0000ff size=2><SPAN
class=079504420-15022009>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.</SPAN></FONT></DIV>
<DIV dir=ltr align=left><FONT face=Arial color=#0000ff size=2><SPAN
class=079504420-15022009></SPAN></FONT> </DIV>
<DIV dir=ltr align=left><FONT face=Arial color=#0000ff
size=2></FONT> </DIV><BR>
<DIV class=OutlookMessageHeader lang=en-us dir=ltr align=left>
<HR tabIndex=-1>
<FONT face=Tahoma size=2><B>From:</B> missoulagov-bounces@cmslists.com
[mailto:missoulagov-bounces@cmslists.com] <B>On Behalf Of </B>Jim
McGrath<BR><B>Sent:</B> Sunday, February 15, 2009 10:21<BR><B>To:</B> Jed
Taylor; missoulagov@cmslists.com<BR><B>Subject:</B> Re: [MissoulaGov] On
SIDs<BR></FONT><BR></DIV>
<DIV></DIV>
<DIV class=Section1>
<P class=MsoNormal><FONT face=Arial color=navy size=2><SPAN
style="FONT-SIZE: 10pt; COLOR: navy; FONT-FAMILY: Arial">In order for the
citizens of <st1:City w:st="on"><st1:place
w:st="on">Missoula</st1:place></st1:City> 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.<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT face=Arial color=navy size=2><SPAN
style="FONT-SIZE: 10pt; COLOR: navy; FONT-FAMILY: Arial"><o:p> </o:p></SPAN></FONT></P>
<DIV>
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face="Times New Roman" size=3><SPAN style="FONT-SIZE: 12pt">
<HR tabIndex=-1 align=center width="100%" SIZE=2>
</SPAN></FONT></DIV>
<P class=MsoNormal><B><FONT face=Tahoma size=2><SPAN
style="FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Tahoma">From:</SPAN></FONT></B><FONT
face=Tahoma size=2><SPAN style="FONT-SIZE: 10pt; FONT-FAMILY: Tahoma">
missoulagov-bounces@cmslists.com [mailto:missoulagov-bounces@cmslists.com]
<B><SPAN style="FONT-WEIGHT: bold">On Behalf Of </SPAN></B>Jed
Taylor<BR><B><SPAN style="FONT-WEIGHT: bold">Sent:</SPAN></B> Sunday, February
15, 2009 1:57 AM<BR><B><SPAN style="FONT-WEIGHT: bold">To:</SPAN></B>
missoulagov@cmslists.com<BR><B><SPAN
style="FONT-WEIGHT: bold">Subject:</SPAN></B> [MissoulaGov] On
SIDs</SPAN></FONT><o:p></o:p></P></DIV>
<P class=MsoNormal><FONT face="Times New Roman" size=3><SPAN
style="FONT-SIZE: 12pt"><o:p> </o:p></SPAN></FONT></P>
<DIV>
<P class=MsoNormal><FONT face=Verdana color=navy size=2><SPAN
style="FONT-SIZE: 10pt; COLOR: navy; FONT-FAMILY: Verdana">Reading the
discussion on SIDs has been interesting. Here are some thoughts I have on
them.</SPAN></FONT><o:p></o:p></P></DIV>
<DIV>
<P class=MsoNormal><FONT face="Times New Roman" size=3><SPAN
style="FONT-SIZE: 12pt"> <o:p></o:p></SPAN></FONT></P></DIV>
<DIV>
<P class=MsoNormal><FONT face=Verdana color=navy size=2><SPAN
style="FONT-SIZE: 10pt; COLOR: navy; FONT-FAMILY: Verdana">SIDs seem to really
go to the question of what is the City of <st1:City w:st="on"><st1:place
w:st="on">Missoula</st1:place></st1:City>. 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.</SPAN></FONT><o:p></o:p></P></DIV>
<DIV>
<P class=MsoNormal><FONT face="Times New Roman" size=3><SPAN
style="FONT-SIZE: 12pt"> <o:p></o:p></SPAN></FONT></P></DIV>
<DIV>
<P class=MsoNormal><FONT face=Verdana color=navy size=2><SPAN
style="FONT-SIZE: 10pt; COLOR: navy; FONT-FAMILY: Verdana">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).</SPAN></FONT><o:p></o:p></P></DIV>
<DIV>
<P class=MsoNormal><FONT face="Times New Roman" size=3><SPAN
style="FONT-SIZE: 12pt"> <o:p></o:p></SPAN></FONT></P></DIV>
<DIV>
<P class=MsoNormal><FONT face=Verdana color=navy size=2><SPAN
style="FONT-SIZE: 10pt; COLOR: navy; FONT-FAMILY: Verdana">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 <st1:City w:st="on"><st1:place
w:st="on">Missoula</st1:place></st1:City> residents know where its government is
coming from and so individual project decisions don't seem ad
hoc.</SPAN></FONT><o:p></o:p></P></DIV>
<DIV>
<P class=MsoNormal><FONT face="Times New Roman" size=3><SPAN
style="FONT-SIZE: 12pt"> <o:p></o:p></SPAN></FONT></P></DIV>
<DIV>
<P class=MsoNormal><FONT face=Verdana color=navy size=2><SPAN
style="FONT-SIZE: 10pt; COLOR: navy; FONT-FAMILY: Verdana">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."</SPAN></FONT><o:p></o:p></P></DIV>
<DIV>
<P class=MsoNormal><FONT face="Times New Roman" size=3><SPAN
style="FONT-SIZE: 12pt"> <o:p></o:p></SPAN></FONT></P></DIV>
<DIV>
<P class=MsoNormal><FONT face=Verdana color=navy size=2><SPAN
style="FONT-SIZE: 10pt; COLOR: navy; FONT-FAMILY: Verdana">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.</SPAN></FONT><o:p></o:p></P></DIV>
<DIV>
<P class=MsoNormal><FONT face="Times New Roman" size=3><SPAN
style="FONT-SIZE: 12pt"> <o:p></o:p></SPAN></FONT></P></DIV>
<DIV>
<P class=MsoNormal><FONT face=Verdana color=navy size=2><SPAN
style="FONT-SIZE: 10pt; COLOR: navy; FONT-FAMILY: Verdana">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?</SPAN></FONT><o:p></o:p></P></DIV>
<DIV>
<P class=MsoNormal><FONT face="Times New Roman" size=3><SPAN
style="FONT-SIZE: 12pt"> <o:p></o:p></SPAN></FONT></P></DIV>
<DIV>
<P class=MsoNormal><FONT face=Verdana color=navy size=2><SPAN
style="FONT-SIZE: 10pt; COLOR: navy; FONT-FAMILY: Verdana">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.</SPAN></FONT><o:p></o:p></P></DIV>
<DIV>
<P class=MsoNormal><FONT face="Times New Roman" size=3><SPAN
style="FONT-SIZE: 12pt"> <o:p></o:p></SPAN></FONT></P></DIV>
<DIV>
<P class=MsoNormal><FONT face=Verdana color=navy size=2><SPAN
style="FONT-SIZE: 10pt; COLOR: navy; FONT-FAMILY: Verdana">BTW - am I correct in
assuming that the members of this SID are, in effect, donating this park rebuild
to the city?</SPAN></FONT><o:p></o:p></P></DIV>
<DIV>
<P class=MsoNormal><FONT face="Times New Roman" size=3><SPAN
style="FONT-SIZE: 12pt"> <o:p></o:p></SPAN></FONT></P></DIV>
<DIV>
<P class=MsoNormal><FONT face=Verdana color=navy size=2><SPAN
style="FONT-SIZE: 10pt; COLOR: navy; FONT-FAMILY: Verdana">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.</SPAN></FONT><o:p></o:p></P></DIV>
<DIV>
<P class=MsoNormal><FONT face="Times New Roman" size=3><SPAN
style="FONT-SIZE: 12pt"> <o:p></o:p></SPAN></FONT></P></DIV>
<DIV>
<P class=MsoNormal><FONT face="Times New Roman" size=3><SPAN
style="FONT-SIZE: 12pt"> <o:p></o:p></SPAN></FONT></P></DIV>
<DIV>
<P class=MsoNormal><FONT face="Times New Roman" size=3><SPAN
style="FONT-SIZE: 12pt"> <o:p></o:p></SPAN></FONT></P></DIV>
<DIV>
<P class=MsoNormal><FONT face=Verdana color=navy size=2><SPAN
style="FONT-SIZE: 10pt; COLOR: navy; FONT-FAMILY: Verdana"><o:p> </o:p></SPAN></FONT></P>
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<P class=MsoNormal><FONT face=Verdana color=#990000 size=2><SPAN
style="FONT-SIZE: 10pt; COLOR: #990000; FONT-FAMILY: Verdana">“Be the change you
want to see in the world.” - Mahatma Gandhi</SPAN></FONT><FONT face=Verdana
color=navy size=2><SPAN
style="FONT-SIZE: 10pt; COLOR: navy; FONT-FAMILY: Verdana">
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