Some Ypsilanti officials said a special assessment district for electricity may be one of the last options for the city to create an additional revenue source to help offset growing costs.
Now, the city is determining who should pay more and what the legal ramifications are.
Ypsilanti is in the process of figuring out the challenges and benefits of the special assessment district.
Steve Pepple | AnnArbor.com file photo
City Manager Ralph Lange said City Attorney John Barr is providing legal advice on how to make the district "defensible."
"We have to be extremely careful," Lange said.
Within city limits, there are 4,951 parcels and close to 40 percent of the city's land total is tax exempt property, some of which is Eastern Michigan University.
The city is seeking to make every parcel holder, including EMU, pay a fee in the district.
EMU will likely be the largest payer in the district, according to early projections. During a Tuesday council meeting, it was mentioned that a possible negotiations team may be set up to hammer out details with the university.
Lange declined to comment about the negotiations team and whether the city is facing any sort of challenges or push back from the university. Prior to the start of the meeting, council held a closed session to discuss a "confidential attorney opinion" regarding the district.
The university has not responded yet to a Monday request seeking comment.
Council Member Susan Moeller, who is also an EMU professor, said she believes the university should be required to pay just like any other member of the community.
"I do still feel EMU, as a main member of this community, should pay," Moeller said. "I'm not sure why they're fighting on this. Even though I'm involved at EMU, I think they can help the community and it would help the image of the university."
Based upon one of the proposed assessment fee calculation methods, EMU could potentially pay $32,315.33 for just one of it's largest parcels. Lange said the city has not yet figured out the total amount the university might pay. The city could not provide the number of parcels the university has.
When calculating the district, staff made six different special assessment estimates. Four were calculated using information from the Washtenaw County equalization records through the Geographic Information Systems program to define individual parcel areas for each parcel in the county.
The remaining two were calculated as a flat fee per parcel by dividing the total cost by number of parcels.
The GIS based categories were found by dividing the range of perimeters into five or 10 equal categories. All of the city’s parcels were ranked based on size of perimeter and the total range from smallest parcel to largest parcel, was cut into five or 10 equal categories.
The majority of residential parcels, which have the smallest perimeter, fall under category one for both scenarios, but institutional or industrial parcels have the largest perimeter in the city and are mostly in the larger categories.
Within each category, City Planner Teresa Gillotti and her staff totaled the land area of each parcel in square feet, found the total area in each category and then determined what percentage of the city all the parcels in each particular category were.
They then calculated the share of total electricity costs all owners in that category would pay and the total electricity costs were divided by number of parcels within the category to determine the fee per parcel.
City Manager Ralph Lange
Using the 10 categories method, the average resident could pay approximately $52 per parcel this year and about $66 each year up until 2022. Using the flat fee method, residents would likely pay $105.65 per parcel this year and $132.58 next year.
The city owns 65 properties and would pay $29,281 in fiscal year 2013-14 and about $36,000 in 2014-15.
Some council members expressed concern over the legality of having a "select few" entities pay the brunt of the district.
Ypsilanti Mayor Paul Schreiber mentioned the Highland Cemetery at 943 N. River St. will pay much more than the average resident, but doesn't have as many lights as some of the residential streets.
"I'm worried that some residents are going to be paying $700 and others $52," he said. "It seems like residents should be paying at least 15 percent of the costs."
Council Member Daniel Vogt said the city needs to examine the benefits each entity and resident stands to gain from the district, when determining who pays a certain amount.
"Some get a lot more benefit," Vogt said. "I think that’s the kind of things have to look for if we’re going to meet the legal challenges."
Council Member Brian Robb disagreed with the thought that residents should pay more.
"We’re making the argument of defending the one percent," Robb said. "We’re saying that we need to push the burden on citizens instead of the businesses."
Ypsilanti resident James Blair said he favors a special assessment district, but only if every entity pays its fair share. Blair said he has about four churches in his neighborhood, none of which pay taxes and he believes they should also pay into the district.
Blair urged council to consider bringing down its millage rates if it pursues the district.
"I think we need streetlights and I think we need the assessment," Blair said. "It should be equally distributed... If we keep adding these assessments, we’re going to keep being uncompetitive. We have the most expensive tax rates and have working class guys that can't even afford to live here."
Lange said the district will give the city much needed funds to remain solvent.
"The city has experienced a continuing reduction of revenues for half a decade now," Lange said. "It's forced the city to make some really tough choices... .The city has tried numerous of times to make up fo the millions of dollars we lost in property tax decreases.
"The last real chance to reclaim revenue for a service we provide is this street lighting assessment so that’s why we’re here," Lange said It's not anything we would like to do, but it’s a service we're having a harder and harder time doing."
Lange said the district will allow the city to save about $490,000.
"That's a huge number when you're talking about being in debt for $1.3 million," he said. "Right now the city covers the entire burden of covering the lights. If you have an assessment, that’s going to absorb 90 percent of the light costs."
Schreiber echoed Lange's sentiments and said he believes there are only four ways the city can obtain more capital: Property taxes, fees for service, revenue sharing and an income tax.
Schreiber said the city's property tax rates are already at the "constitutional limit" with 20 mils and the income tax was voted down convincingly by voters.
"Right now we're scraping by," Schreiber said. "...By 2018, we'll be down to the minimum and we're trying to figure out how to stabilize the budget."
However, some city council members see the assessment district as not only an opportunity to raise more funds, but a way to move the city toward being more sustainable and "green."
"This will be the biggest thing in lighting in the state if we can pull this off," Robb said.
Although many council members favor pursuing the district, Moeller said she's already received complaints from several residents.
"I think that right now it's unclear," Moeller said. "This is all well and good, but we got tons of complaints. They said they didn't want to pay, didn't understand why we were doing it and what the savings were going to be... The numbers aren't convincing to me yet."
Council is tentatively scheduled to consider a preliminary resolution on March 19 and a public hearing will be held at that time.
Katrease Stafford covers Ypsilanti for AnnArbor.com.Reach her at katreasestafford@annarbor.com or 734-623-2548 and follow her on twitter.