FARGO — City staff will be evaluating and offering options on a new city special assessment policy after City Commissioners voted 3-2 to approve the effort but not before a heated discussion.
Commissioners Tony Gehrig and John Strand, who both voted against moving ahead on the recommendations of a 12-member special task force, said they had many questions and reservations.
On the other hand, Mayor Tim Mahoney and task force chairman Commissioner Tony Grindberg said the issue is complicated but that the city staff can evaluate the options and the effect on taxpayers can be learned. However, they pointed out that somebody has to pay for infrastructure improvements such as street reconstruction and water and sewer lines and that the property owners that benefit should have some responsibility.
Gehrig offered up his solution that he has discussed before: Dramatically reduce the specials or get rid of them altogether.
"These recommendations do neither of those things," he said.
He believes the $13 million in new state money needs to be used to eliminate specials. The money is from the "Prairie Dog" fund created by the North Dakota Legislature this year for cities to improve infrastructure and keep property taxes down.
Gehrig said that amount from the state is pretty much the average in specials assessed for each of the past five years in Fargo.
"Every penny of that amount needs to go offset the cost of specials," he said. Then he said the city's half-cent sales tax can be used to pay any other costs.
Gehrig said that about $2 million of the $7 million in sales tax money that goes to the water plant isn't used. Instead, Gehrig said "it's a way to funnel money from the sales tax to general fund. It's money laundering." He said it should be going to pay for infrastructure.
"We should not insult the people of Fargo by pushing these suggestions forward," Gehrig added about the task force recommendations. He said it was a big election issue last time and will be again.
Commissioner Dave Piepkorn challenged Gehrig, saying that somebody has to pay the bill for infrastructure projects.
He said Gehrig using the word " money laundering" is "embarrassing."
"That's ridiculous," he said.
Grindberg said the new city effort on specials wasn't a "shell game."
"We are bringing state funds for the first time to complement local funds and modernize our infrastructure and reduce the impact on taxpayers. It's going to be substantial," he told Gehrig. He suggested he sit down with city staff and see how the system works.
Grindberg also said if it weren't for some special assessments, utility rates or property taxes would go up.
"If I'm a taxpayer and my specials are paid off and you're going to tax me and raise my utility rates to pay for somebody else's specials that they benefiit from, that's not right. That's not going to fly in the eyes of the voter," Grindberg said.
He agreed the recommendations don't change the system where the city pays for infrastructure such as streets and utility lines in a new developments called "greenfields" with the cost then being repaid by the specials that new homeowners pay on their property taxes for up to a 25-year period.
But he said that's the way the home builders in Fargo want it so they have an equal playing field.
Grindberg also said if the city didn't finance the new developments, lots would almost double in price, so new homeowners are paying for it one way or another.
Piepkorn said there are a lot of things that can be done to improve the special assessment system and that the task force suggestions had some good ideas.
Piepkorn also asked Gehrig why he didn't show up at many of the task force meetings as he was a member. Gehrig fired back that it was his military duties that kept him away.
Strand said he believes the task force recommendations didn't offer a lot of changes. He wanted to sit down in brown bag discussions or have much deeper discussions about the ramifications and see an analysis of any special assessment changes.
"I have many pages of questions," Strand said.
Mahoney and Grindberg said they hope to get more details on the task force proposals and the effects and then they can vote on proposals.
"But we need to get to an end game," Grindberg said.