Policies governing benefit districts and special assessments have not been updated since 1971, and city administrators believe they are outdated.
Aside from “cleaning up the language” to reflect current building practices, city officials asked Tuesday that a specific portion of the policy address the way trails and bridges are financed. Assistant city manager Jason Hilgers said taxes to pay for those items have been imposed on a case-by-case basis, often being debated on the floor at the city commission meeting. He said many developers have asked for copies of the policies governing how those specials are imposed, but the city has none.
When a new property is developed, the developer must go to the city and acquire a permit. In that process, a benefit district is created to build infrastructure—streets, sewer, water, etc.—and those costs are divided up among the lots and repaid through special assessments. Hilgers said in most cases, walking trails and bridges are also planned and plotted during that development stage. But unlike other special assessments, the trails and bridges are not “set in stone” and the cost to the city-at-large and the special assessments assigned to the abutting property owners are debated.
Commissioner Wynn Butler suggested the city look at who benefits most to determine the cost split between the city and abutting property owner. He said a 65/35 split would be appropriate with 65 percent shouldered by the city. Commissioner Jim Sherow agreed with a split close to that, even going as high as 70/30.
Butler said the trail would increase the property value and therefore property owners should shoulder some of the expense rather than all the cost being shouldered by the city-at-large.
Mayor Loren Pepperd disagreed with Butler, saying that because of the foot traffic along the trail, buyers would be less likely to buy abutting property.
Commissioner Rich Jankovich said his property abuts Hudson Trail, and he does see a lot more foot traffic from people who live in and outside of his neighborhood. He said the 30-foot easement for the trail also reduces potential usable space on his property, and agreed with Pepperd that it might actually decrease property value.
Sherow said he would like to see what other cities in relative size and scope of Manhattan do. Pepperd said they receive tax figures on all the cities in the Big 12 and thought that would be a good place to start. Hilgers said the problem with looking at cities outside Kansas, was that Kansas was the only state that uses special assessments on property.
The other guidance on special assessments city officials sought was on how to control the delinquencies on property taxes. Hilgers said the problem was not in collecting the tax; eventually the city did collect from the owner or at a tax auction. The problem was with the interest paid by the city on the property tax until payment was made. Hilgers said administrators already know they are going to be short this year even after putting money aside to pad the delinquency rate on property tax, which he said was 2 percent nationally.
After a long discussion, commissioners agreed the city should look into creating a “letter of credit” similar to one Wichita uses. The letter would hold the developer responsible for the property taxes until the property was sold to a private home owner. The second idea that held weight with commissioners was to not allow developers who are delinquent on other properties to have permits until after the property taxes were caught up.
No decisions were made regarding the special assessment policies because Tuesday night was a work session. A proposal will be brought before the commission at a later date.