Dealing with the Challenges of Tax Reform

When I was in college a professor told us that the founding fathers intended for the government of these United States to be like a layer cake with three distinct layers: federal, state, and local. However, over 230 years later, our layer cake looks more like a marble cake. The federal government is setting priorities for states and local governments; the state is reviewing and approving city annexations and zoning designations; and the cities and states are lobbying Congress for favorable legislative action.

The “marble cake” analogy comes to mind when I think of Tax Reform, a popular topic in Tallahassee these days. Our town’s budget has been through one wave of tax reform, and on January 29 voters across the state will decide if there will be a second wave. What were the consequences of the first wave? And what will likely be the consequences of the second wave?

THE FIRST WAVE

In the last three years the Lake Wales City Commission has lowered the city tax rate over two mills, from 9.44 mills to 7.3521 mills. The reduction of the first mill was called for by the City Commission; the reduction of the second mill came after careful deliberation as the Commission’s response to tax reform. (Please note that some cities did not follow the path intended by the legislature and kept their previous millage with a super-majority vote of their city council.)

If our City Commission had not reduced the tax rate the second mill it would have received $921,276 more than what is now being received at the adopted millage. This was a very difficult decision for the City Commission to make in light of these prevailing conditions:

1. Just like in everyone’s household, the price of necessary items keeps going up. In the last three years, City expenditures for the listed items have gone up as follows:


• Gasoline - 40%


• Insurance - 40.2%


• Electricity - 35.2%


• Operating Supplies - 41%

Also note that in the first two years, insurance costs – health, worker’s compensation, and property – went up 74%! In response, the City Commission approved a change in the health insurance carrier and the terms of coverage. With these changes and fewer employees to be covered, insurance costs leveled off to 40% in the third year.

These and many other necessary items have risen drastically in the last three years, leaving the City (just as in your own household) with a limited ability to control these cost items. Despite the increases noted above, the overall General Fund expenditure budget for the current year is below the level it was two years ago.


2. The City has been working to build up its cash reserves since the 2001 fiscal year, when cash reserves were used to cover a serious budget shortfall. The City had made good progress towards establishing a healthy cash reserve until the unanticipated insurance costs rose drastically in the last two years. The City is committed to re-building this reserve.
   
   These reductions have been welcomed by taxpayers, especially small business owners and the owners of rental property who are not covered by the “Save our Homes” Act, (which came into effect in 1995) that capped the county property appraiser’s office assessed value of homesteaded property at 3% per year. At the same time, the difficulty of achieving a balanced budget in the face of these thorny conditions faced by the City Commission last September can now be appreciated.

THE SECOND WAVE

On January 29, voters will have the opportunity to vote on the second wave of tax reform. Next week’s column will explore the expected results and ramifications of that important election.

Utility Infrastructure Planning

Last week in this space we discussed the steps the City has taken to prepare for growth in the substantial revision of the Comprehensive Plan and the Land Development Code, as well as an updating of the City’s impact fees. This week we will explore another important aspect of preparing for growth: the planning and construction of new water and sewer infrastructure.

A new system to ensure the proper planning for water and sewer facilities has been put in place by the City Commission. The new system has the following features:

1. Developments that wish to utilize City water and sewer facilities must now be annexed into the City. This is a change from the past, where developers outside the City were allowed to use these facilities and agree to annex at a later date;


2. The system requires developers who will need City water and sewer service for their future development to sign an agreement and get in the “queue” (that is, to “line up”) for future service. It costs 10% of the water and sewer impact fees to get in line;


3. Once in line, City staff will periodically check to see how many developers are ready to go to the next step, which involves signing a “Utility Service Agreement”. This agreement locks a developer in to making a series of payments of utility impact fees to construct the new facilities that will be needed for development.

At present there are 13 developments in the queue – some of whom were automatically entered as they were already in some stage of the development process when the system was adopted; others have paid the now required 10% fee.

New water and sewer facilities to serve growth are already in various stages of developments. These projects include:

• A new water plant will soon be finished at the airport. Initially it will be used for the new fire hydrants at the airport (the first time the airport has had fire hydrants) and will be converted to a potable (drinking water) well to serve the west SR 60 area;


• A new elevated water tank is being designed for construction in the area of Scenic Highway and Hunt Brothers Road;


• A new sewer force main will serve the Buck More Road area, and developments south of SR 60 from the Hunt Brothers Road area to US 27. The City Commission has hired the contractor and this project will begin in the near future;


• A phased expansion of the sewer treatment plant and operational improvements have been engineered and the plans have recently been submitted for state agency approval;


• The City is changing how it disposes of the water that has been treated at the sewer plant. Rather than all of the water going into the Rapid Infiltration Basins near the Scenic Highway between Lake Belle and Hunt Brothers Road, the City is beginning to use some of it for irrigation in the Longleaf Business Park, the new soccer/multi-purpose field complex on Hunt Brothers Road, and soon in the city cemetery. There are also plans to serve the Whispering Ridge and Mayfair subdivisions.

Preparing for growth is a multi-faceted process, and the City is successfully moving forward to encourage quality growth and the facilities needed to serve it!

Preparing for Growth

There is a feature that appears in this newspaper entitled, “Lake Wales in Motion,” which lists new developments. The City Commission has directed that the City must be well prepared for growth, and that existing residents not be saddled with the costs associated with new development. To this end, important steps have been taken in the areas of planning, impact fees, and utilities to ensure that, to the greatest extent possible, growth pays for itself.

Planning

In 2005 the City Commission adopted a substantial overhaul to the City’s Comprehensive Plan and the Land Development Regulations. City staff had recognized the need for this change for many years… in fact, the Land Development Regulations had been re-written twice by mid-2001, but each time the documents were not judged by City staff to be worthy of City Commission review.

In 2004 Assistant City Manager Judy Delmar and Director of Planning and Development Margaret Swanson took up this task. They each continued with their existing workloads while they wrote the massive document, which was then reviewed by the Planning and Zoning Board and transmitted to the City Commission with a recommendation for approval. A number of public hearings were also held before City Commission adoption.

Some of the major changes in the new code include the following:

• Tree ordinance – developers are required to replace trees that are cut down on site, or pay into a fund to plant trees elsewhere in the city;


• Sidewalks – developers are required to build sidewalks, and if there are good reasons not to, they pay into a fund to build sidewalks elsewhere in the City;


• Commercial zoning strategy – existing commercial areas have a wide variety of permitted commercial uses, to encourage re-development of older commercial areas. Many new commercial areas have a new future land use designation: Limited Commercial/Industrial. This designation is more restrictive on the types of uses and discourages strip malls along state highways;


• Two entrances to subdivisions with over 50 lots – this provides for better access for public safety vehicles as well as residents;


• Density reduction – the prior code allowed for some areas to be developed at a density of 25 units per acre! The maximum density that can now be built is 12 units per acre; and


• Site plan requirements have improved – Large residential developments reviewed under the new regulations have a “spine” road that runs through the development. The spine road does not have driveways coming out onto it, but connect “neighborhood nodes” of houses. They also provide for open space within the development. (Example: Whispering Ridge, on 11th Street south of SR 60.)

Margaret Swanson has continued to recommend adjustments to the Land Development Code as new situations present themselves. The next amendment to the code to be proposed is the Historic Preservation Ordinance. This is a very important document for our town, as we are blessed to have many historic structures. The ordinance recommends that the downtown area be named a historic district under the terms of the ordinance, while any other area of the City must undergo a process in which a majority of the property owners vote to make their area a historic district.

The primary regulation for properties within the historic district includes a process for developing vacant properties and modifying existing buildings. The ordinance proposes that a technical committee review such developments or modifications, and make a recommendation to the City Commission. The goal is to preserve the celebrated character of our historic areas.

Impact Fees

Also in 2005 the City Commission directed staff to review the City’s impact fees. An impact fee is paid by new development (or an existing development that increases its demand for service) and it represents the cost of expanding a City service to accommodate the new development. For example, the water impact fee represents the cost of expanding the water system – the well plants and water pipes – to accommodate the addition of this new customer. Impact fees are collected for the following City service areas:

• Water


• Sewer


• Police


• Fire & Rescue


• Parks


• Library

As this is a technical and esoteric area that could bring lawsuits if the fee is proven to be incorrect, the City followed the industry standard and hired a consultant to do this work. The fees are now updated every year. In addition to these City imposed fees on new development, the City also collects impact fees for the County in the areas of Transportation (used by the County to improve County roads), Corrections (for jail expansion), Emergency Medical Service (ambulances), and Schools.

Next week’s column will feature a review of the substantial work that is being done to upgrade our City’s utility systems and prepare for the demands of growth.

More on Code Enforcement

Last week in this space we examined the code enforcement process. This week we will review recent code enforcement activity, the professionals who carry out this important work, and the role of citizens in the process.

Code Enforcement Activity

Each month the City’s two code enforcement officers investigate an average of about 130 code enforcement cases. Of these, about 118 cases are resolved when the owner voluntarily corrects and eliminates the code violation. The other 12 or so cases per month are brought before the Code Enforcement Board for hearings.

Cases are usually presented before the board for two public hearings. If the board determines that the violations alleged to be on the property do in fact exist, the board then orders the owner to make corrections. If the violations are not corrected, the case is brought back for a second hearing in which the board imposes fines and places a lien on the property. As discussed last week, a lien is a legal claim against the property. The City may foreclose (take ownership away from the owner) if the owner allows the lien amount to build up to an amount that he or she will not pay.

Code enforcement activity received a boost from several sources in the past two years:

• The City Commission accepted a special Community Development Block grant after the 2004 hurricanes that repaired four homes and demolished 20 abandoned buildings. Some of these buildings, such as the Ridge Dry Cleaners on Dr. Martin Luther King Jr. Blvd had been an eyesore for years. In addition, there were over 30 abandoned buildings demolished with other funding sources since March of 2005.


• The City Commission adopted a “Code Enforcement Amnesty” program during this same period. The goal was to assist property owners with code violations by reducing fines and having liens released. The program ran for 10 months and 14 properties were brought into compliance; and


• With the assistance of police officers, “code enforcement sweeps” are conducted 4-6 times per year, along with community clean-ups. In last Saturday’s event on Lincoln Ave, the police department and the City’s community development consultant began the painting of the Walker Building, which was recently acquired by the City.

Another subject of activity is illegal signs. Last year our code enforcement officers removed over 2,000 illegally placed signs from around the City. Many of these were the small, temporary signs that are placed on wire hangers and stuck in the ground.

Code Enforcement Officers

Code enforcement has become a legal and technical activity. The Florida Association of Code Enforcement (FACE) offers three levels of classes that lead to the certification of a Code Enforcement Professional. In addition to FACE, the Polk Association of Code Enforcement (PACE) meets monthly with guest speakers on legal issues and public safety.

Our two code enforcement officers are not police officers but they work out of the police department. Bill Gindlesperger is a certified code enforcement officer and a former president of PACE. He has worked for the City for a total of 5 years. Angella O’Connor recently transferred to code enforcement from the communications section (which was transferred to the Sheriff’s Department). She has worked for the City for nearly 1.5 years.

The Role of Citizens in Code Enforcement

Citizens play a key role in this operation, as they are the eyes and ears of code enforcement. Suspected violations can be called in anonymously by leaving a message at 678-4223, extension 275 or 265, between the hours of 5 pm and 7 am. Suspected violations can also be transmitted via the City’s website: www.cityoflakewales.com.

Citizens who are visited by code enforcement officers can also be of great assistance, by viewing the process as working for the betterment of the community. Code enforcement officers are seeking compliance with City codes, and a sense of cooperation and community spirit is very beneficial and always appreciated.

Several citizen groups have been very helpful in the utilization of properties that have been acquired through the code enforcement process:

• The Green and Gold Foundation approached the City with a proposal to have houses built on some of the vacant lots acquired by the City. The City Commission conveyed three building lots to the Foundation, who has found a buyer to build houses on the lots; and


• The B Street Center is now operating a Farmers’ Market on a lot that was acquired by the City. This provides a community service and utilizes this lot for a worthwhile activity. (The Farmers’ Market is at Lincoln and C Streets every Friday afternoon and all day Saturday.)

The City Commission has placed a special emphasis on eliminating dilapidated buildings from our City. It is my hope that with the information provided in this space, everyone will have a new appreciation for this important goal.