ELKHART — Mayor Dick Moore proposed reducing the amount charged for commercial compacts Friday in hopes of diffusing a growing debate.
Moore announced he will submit a proposal to city council that would reduce the formula commercial customers outside of the city pay for sewer service.
The current compact plan calculates the fee based on 75 percent of assessed property value. The new plan changes that to 50 percent.
Moore said the proposal will include the phase-in of costs over two years that council approved earlier this month as an attempt to compromise with businesses that have voiced concern over the policy.
The city currently provides sewer to about 70 commercial customers under the compact policy and approved an ordinance last year that would extend that policy to a similar number of businesses who have been paying based on an agreement that charged 300 percent of what they would pay if located in the city.
Moore estimated the 50 percent plan would result in a savings of $787,000 per year for all commercial customers.
At the same time, the city would see revenues fall from an estimated $2.3 million to about $1.5 million.
Even though the city has struggled with declining property tax revenues in recent years, Moore said the decrease from the new proposal would not be “crippling” for the city.
Friday’s proposal came after he met Friday morning with business leaders, including some who are upset with the plan passed by city council last year.
Moore’s plan comes two days after council president Ron Troyer said he would hold meetings and draft a new ordinance.
Moore expressed hope that Troyer would embrace his plan. Troyer could not be reached for comment late Friday afternoon.
Councilman Dave Osborne said he expects the plan will be sent to the finance committee where it will receive a hearing with input from the public.
Moore also said the policy shift would now become known formally as a payment in lieu of taxes which is often referred to simply as PILOT.
Moore said his proposal would put Elkhart “at the same level” as Goshen and South Bend.
A group of business representatives who attended the Friday morning meeting with Moore issued a statement, saying the 50 percent plan “still represents a significant increase” over what they currently are charged at the 300 percent policy.
Steve Schemenauer said they remain committed to supporting an alternative plan through city council.
“Our expectations for progress in this meeting were low and the outcome matched those expectations,” Schemenauer said.
Moore acknowledged meeting with the group during his press conference and said they discussed their financial concerns. “It was as expected a financial concern. Hearing nothing new, I proceeded to announce the press conference,” Moore said.
Schemenauer said he believes “the mayor is entrenched” in a belief that county commercial and residential property owners are ‘not paying their fair share.’ Moore contend, in part, that change in policy is an attempt to level the playing field.
Schemenauer added: “When asked to take a broader view and compare this charge to other areas such as Goshen, Middlebury, Mishawaka, South Bend, (and) he explained his allegiance was only to the city of Elkhart. He did mention that other cities collect PILOT revenue, but did not have any data available to share when pressed.”
Troyer announced his plan following a boisterous meeting Monday in which business owners criticized the new policy and the mayor for not remaining at the meeting to hear their concerns.
Moore then canceled a meeting with business representatives and eventually rescheduled it for Friday.
Business owners and some Republican city council members called for a new policy that is based on usage instead of assessed property value.
Moore said he believes the assessed value concept is “still the right way to go.”
“It is a tax and our taxes are based on our assessed value,” Moore said “You cannot establish a fee that supports the city’s taxpayer’s day-to-day operation based on usage.”
Statement from Mayor Moore's news conference