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City proposes not paying for SSWM mistake

City management is seeking to amend an ordinance they feel was made in error, which in effect would nullify three years of the city failing to pay its portion of the storm and surface water management utility fee required by code.

It was brought to the attention of city administration recently that the city hadn’t followed the fee structure under code for the last three years, resulting in a deficit of more than $2 million to the utility fund according to what current legislation requires.

In 2007, the city council raised the idea of increasing the SSWM fee on city streets.

The SSWM fee is charged annually to the property tax statement of residential, commercial and industrial property owners to protect the environment from flooding and pollution on city streets.

Up until 2007 the city hadn’t paid a SSWM fee for city streets. The city had been, and still does pay 30 percent of the fee for all other city-owned facilities such as city hall, police station and parks. In an effort to help bridge a funding gap the council decided it would pay the same amount, or 100 percent, of what the state was obligated to pay for state rights-of-way. The state is obligated to pay a maximum of 30 percent of the normal fee, and the council decided the city would also pay 30 percent of the normal fee for its own streets and roads, according to Bauer in an e-mail.

"Unfortunately the table attached to the ordinance was labeled with 100 percent instead of 30 percent which was inconsistent with the dollar amount of the subsidy described to council. As a result, 100 percent of the normal fee was put into the ordinance rather than 100 percent of 30 percent," said Bauer. "The city subsidized the utility with tax supported funds in the dollar amount described to council, but the actual language in the ordinance would have required a much larger payment."

For the 2008, 2009 and 2010 budget the city did implement the new 30 percent subsidy for the utility, but it did not match the formula listed in the ordinance, which was never implemented.

Now, the city wants to retroactively amend, or correct the ordinance dating back to Dec. 1, 2007 to read that streets and roads are charged a monthly fee of 30 percent instead of 100 percent.

If passed by the council, the ordinance would erase the city’s responsibility to pay what the actual ordinance has required for the last three years.

Considering the current financial situation at the city, the bill says applying the ordinance would be prohibitively high, “and is not in the public interest.”

Bauer said the city couldn’t identify any other cities that pay 100 percent of the SWWM fee,stating that the majority of cities don’t charge anything, and if they do the charge is between 25 to 30 percent of the value of their roads.

“Unlike commercial properties, streets provide a network of storm-water infrastructure, which is a contribution to the utility,” said Bauer.

The utility has continued to be self-supporting over the last three years and the utility doesn't have a deficit because all of the budgets were based on the level of fees actually charged for all customers, including city streets, instead of the figure that would have resulted from following the legislation, according to Bauer.

“Given that human beings are involved, some mistakes may, and probably will be made in the future," said Bauer. "The fact that the city's new leadership team brought this error forward and promptly took steps to address it is a positive sign that we will address problems and identify and implement solutions."

Daniel Smith, an island resident who was involved in updating the SSWM system in 2006-2007, said the city should rectify the problem.

He said that since the city has paid only 30 percent of its total liability over the last three years, it owes 70 percent ($2,065,194) to the utility to comply with municipal code.

That figure doesn’t include the 1 percent monthly penalty charged under municipal code for delinquent bills.

“Everyone else – like me, the school district, churches, businesses – paid the fees the laws required and the city didn’t,” said Smith. “That’s not a model of transparency. I have a conceptual problem with that.”

The city is moving the ordinance forward and will have a second reading on Oct. 13, during which it will hold a public hearing, allowing community members to make comment before the council makes a decision.

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