Tuesday, July 29, 2014

Council must develop better compact fee policy

Posted on March 23, 2013 at 1:00 a.m. | Updated on March 23, 2013 at 7:13 p.m.

Statistics released last week show that the Elkhart County labor force grew in January to 91,182. Jobs also increased by about 2,500 over January 2012. Yet unemployment here increased by 1 percent to 10.3 percent — still a remarkable improvement over the 20 percent rate we experienced at the height of the recession.

After years of hard work, our economy could go either way. A setback could wipe out all our gains.

So the last thing we need is a city policy that puts jobs at risk.

Mayor Dick Moore, in an attempt to generate new revenue and codify policy, proposed a new compact fee strategy in late 2012. Commercial customers outside the city that hooked up to municipal services before 1999 once paid a standard fee, about 300 percent of fees paid by Elkhart businesses. Moore wanted those 75 customers to pay a fee based on assessed property values.

Caught up in partisan squabbling over a related issue, Moore’s unilateral decision to give the RV/MH Hall of Fame a rate discount and forgive a $115,000 debt, councilors approved the policy. They realized their mistake almost immediately.

Business owners told the council that they faced fee increases of up to 1,400 percent. Some said they’d need to forgo expansion plans. At least one owner warned of poaching by competing cities. Others said they’d be forced to close.

The Moore administration’s response: This has never been an issue for the 63 companies already on compact agreements.

By late February, a member of the Elkhart County Redevelopment Commission suggested that to retain employers, it may be time to build a wastewater treatment plant east of the city. Moore, at about the same time, offered what he considered a compromise — phasing in the new rates over three years.

That only gave other communities more time to steal local jobs; in the end, it did nothing to address a fundamentally bad policy.

How fundamentally bad? Reporter Dan Spalding surveyed eight Indiana cities and found that none based compact fees on property value. Anderson, Columbus, Lafayette and Terre Haute make no distinction between city and county customers, while Goshen and South Bend charge the same rates and assess an annual fee known as a PILOT — Payment in Lieu of Taxes.

Whoever developed Elkhart’s policy either did not research competing strategies or rejected them as inferior. And, to its discredit, the city council gave Moore a pass.

Moore finally agreed to consider a revised ordinance, designating Ron Troyer and Dave Osborne — a pair of council Democrats — to represent the council in compact discussions. Troyer, the council president, said Wednesday that he planned to hold hearings and draft a new policy. The Greater Elkhart Chamber of Commerce offered to help study the issue.

Then, after meeting with a group of business leaders Friday morning, Moore announced a new policy of his own. Instead of basing fees on 75 percent of a property’s assessed value, Moore wants the floor set at 50 percent.

Two weeks hardly seems enough time to adequately investigate and draft a new policy. Especially when business leaders who met with Moore claimed that he didn’t listen.

Steve Schemenauer, an owner of Sherwood Industries, called Moore “entrenched.” Moore admitted as much, observing that he heard “nothing new.”

“It was as expected a financial concern,” Moore said at a Friday news conference.

Moore said that from now on, the city’s new policy would be referred to as a PILOT and it would put Elkhart on an even footing with Goshen and South Bend. But when business leaders pressed him Friday for details on PILOT revenue, Schemenauer said that Moore “did not have any data available to share.”

That doesn’t explain how Moore’s new plan qualifies as payment in lieu of taxes. Nor does it give the impression that he’s done more than cursory research on compact fees in competing cities.

But the mayor did accomplish one thing Friday — he made it clear that he’s still committed to the dangerous strategy he adopted in 2012. A concept based on assessed value is “still the way to go,” he said.

Sloppy or nonexistent research and commitment to a bad idea got us into this mess. Superficial thinking and hardened commitment to the same bad idea won’t fix it.

Remember those 91,000 Elkhart County workers? Many of them live in Elkhart. They depend on jobs outside the city. If those employers go away because of excessive compact fees, so do thousands of Elkhart workers, their paychecks, homes and tax payments.

If city leaders believe they’re struggling to fund basic needs now, with 10.3 percent unemployment, adopt Moore’s approach. Then see what happens to the Elkhart economy.

Troyer and the city council need to thoroughly research policies in competing cities, listen to business owners and develop a new compact fee policy that encourages stability and growth.