Last night, Lowell City Council spent about an hour in its regular meeting reviewing matters such as a trail grant application and the Arbor Board’s tree plan. However, the biggest news of the night came from the preceding Committee of the Whole meeting in which council members gave the green light to placing a city income tax on the November ballot.
Searching for a Solution to Street Funding
The Committee of the Whole was scheduled at 5:30pm to discuss progress on the Storm, Asset Management and Wastewater (SAW) grant project and street improvements. Representatives of engineering firms Williams&Works and Prein&Newhof were on hand for the meeting. These firms have been contracted by the city to create, respectively, a street asset plan and a SAW capital improvement plan.
“They are going to help you figure out how to put a street plan into place, but first we need to talk about financing,” said city manager Mike Burns at the start of the meeting.
Burns then reviewed the current city road funding situation. For Fiscal Year 2019, the City of Lowell is expected to receive nearly $400,000 from the state for road work. The use of this money, known as Act 51 funds, is dictated in part by the state.
Three-quarters of the Act 51 money is earmarked for major streets, such as Bowes, Gee and Hudson, while the remaining 25 percent can be spent on local streets which make up the majority of the city’s roadways. Once the city has its SAW program in place, the state will allow the city to comingle its money and use cash normally earmarked for major streets on local roads instead.
The City of Lowell also usually transfers $100,000 to its local street fund from the general fund each year. Once the cost of maintenance is subtracted, the city is left with about $300,000 annually to pay for street projects.
“You might be able to do a block a year,” Burns said.
Governor Gretchen Whitmer has proposed a gas tax increase to raise revenues for road repairs statewide. If passed, that is expected to funnel an additional $248,000 to the city. However, the future of that proposal is unclear.
“The fact of the matter is you need more revenue for streets,” Burns said. “There’s no way around it.”
City Income Tax Said To Be Best Solution
Burns ran through the city council’s street funding options which included suggestions such as selling off Lowell Light and Power or discontinuing local law enforcement.
“That would be a nightmare,” Mayor Mike DeVore said.
Bonding for street repairs, as was done in 2006, was also briefly mentioned, but Burns said it wasn’t a viable option. What he thought was the best solution was to institute a city income tax of 1 percent for residents and 0.5 percent for non-residents. Any city income tax would have to be approved by voters.
“I think in order to sell that you have to include a millage reduction,” Burns recommended.
The council was then walked through the numbers if they reduced millage rates by four mills or five mills. By adding a city income tax and dropping four mills, the city would have $851,888 for street repairs in 2020 after administrative costs were deducted. If they reduced the millage rate by five mills, there would be $731,915 available for street repairs in that year.
This money is in addition to the Act 51 funds. Burns said he would expect to discontinue the $100,000 transfer from the general fund to the local street fund each year if the income tax was implemented.
Dave Austin of Williams&Works then reviewed the level of improvement that could be expected with each option. Currently, the city street conditions break down as follows. Note: one mile of roadway typically includes two lane miles.
- Good: 3.7 lane miles (9 percent)
- Fair: 11.6 lane miles (28 percent)
- Poor: 26.5 lane miles (63 percent)
Noting how quickly roads can deteriorate without proper maintenance, Austin said he made a similar presentation to the city council in 2010. At that time, 77 percent of the city’s roads were in good condition.
Then, Austin reviewed how the various funding models would affect the road conditions by 2030.
2030 Roads Using Only Act 51 Money (Current System)
- Good: 18.5 lane miles (44 percent)
- Fair: 0
- Poor: 23.4 lane miles (56 percent)
2030 Roads with Income Tax and 5 Mills Reduced
- Good: 31.6 lane miles (77 percent)
- Fair: 0
- Poor: 10.3 lane miles (23 percent)
2030 Roads with Income Tax and 4 Mills Reduced
- Good: 33.5 lane miles (81 percent)
- Fair: 0
- Poor: 8.4 lane miles (19 percent)
Brian Vilmont of Prein&Newhof then covered how utility projects would be addressed in the coming years. He noted that street and SAW projects would be scheduled in such a way to ensure newly reconstructed roads would not have to be torn up later for utility repairs. He also outlined how portions of road repairs could be paid by a water, sewer or storm system fund should utility work be done.
Issue Expected on November Ballot
At the end of the presentations, Austin said the next step was to get direction from council on how they wanted to fund upcoming projects.
“I think the income tax is the only feasible solution,” said councilmember Greg Canfield. He noted earlier in the meeting that one benefit of the tax would be that non-residents who drive on the roads would be helping to pay for the repairs.
Other councilmembers were in agreement that that city income tax seemed to be the best solution, and the conversation then turned to how to inform the public of why an income tax was needed. Burns suggested putting a calculator on the city website so people could determine how much the proposal would cost them. Previously in the meeting, he mentioned that between the income tax implementation and millage reduction, he expected the proposal would cost residents about $300 a year.
There was also discussion about placing a time limit on how long the tax would be collected and who would be responsible for creating informational sheets for the public.
Councilmember Cliff Yankovich asked, “Do we have to tell people the water and sewer rates are going up too?”
The consensus answer to that question was ‘no.’ Vilmont noted his firm has found that in cities in which the median income is greater than $45,000 and average annual water and sewer rates are $600, residents are willing to accept rate increases to fund capital improvements. The median income in the City of Lowell is approximately $61,000.
At the end of the Committee of the Whole, the council agreed to have city attorney Dick Wendt draw up the appropriate ballot language so they can formally approve putting the issue to a vote in November. By consensus, they decided to pursue a five mill reduction in property taxes in exchange for the city income tax.
Closed Session Nixed at Regular Meeting
At 7pm, the council reconvened for its regular meeting. At the start, Canfield asked to add a closed session to the agenda for purposes of discussing the purchase of property. Canfield noted that although Wendt was absent from the meeting, councilmembers had not yet had a chance to discuss recent developments in the issue at hand.
Although the specific nature of this closed meeting request was not disclosed, recent closed sessions have been held on the Unity High School property.
Councilmember Jim Salzwedel asked if this was an appropriate time to ask questions about the matter or if they were better held for the closed session. Burns replied that it was within the council’s right to have an open discussion but mentioning any purchase prices in public could be detrimental to negotiations. DeVore noted the council had not yet received a new offer.
A vote was taken on the motion to add a closed session to the agenda. The motion failed with Canfield, Salzwedel and Yankovich voting for the session, and DeVore and councilmember Marty Chambers voting against it. To go into closed session, a supermajority was required, and no closed session was held.
Trails, Trees and Showboat Among Other Business
During the regular meeting, Lowell City Council took a number of actions:
- Approved a contract with ArchiveSocial to archive the city’s social media sites for Freedom of Information Act purposes
- Approved a lease with Wind Craft Aviation for $1,000 a month for building three at the Lowell Airport
- Approved up to $26,000 in architectural services for design work on the new Lowell Showboat
- Approved the application for the annual Riverwalk Festival fireworks display
- Accepted the $1.3 million grant from the Michigan Economic Development Corporation for the Showboat reconstruction
The council also got a look at the Fire Authority budget for the upcoming year. Two versions were presented: one with three full-time firefighters and one without full-time staffing. Burns appeared concerned with the $67,000 price tag for the new positions and mentioned that for planning purposes, it would be helpful to see at least five years of projections on the cost to the city.
When asked about what Vergennes Township and Lowell Township thought of the staffing request, DeVore said it was his understanding they were supportive and planning to come up with a funding source.
Dr. Jim Reagan appeared before the council to present the Arbor Board Tree Plan and noted the group is hoping to replace some of the trees on Main Street that have overgrown their location. Chambers expressed concern about berries falling from trees onto the sidewalk. Reagan said efforts were being made to find non-fruit bearing trees that could withstand the elements on Main Street.
In the other main business of the night, there was a public hearing held to approve a state grant application for the Lowell Area Trailway. The Lowell Area Recreation Authority is pursuing a $6.7 million project that would connect the trail on the west side of town to trails on the east side of town. A significant portion of the expense comes from the construction of two pedestrian bridges over the Flat and Grand Rivers. While the city committed $25,000 to the project several years ago, the trail is being funding almost entirely by grant money and private donations.
Last year, this project caused some controversy when the trailway was planned to run along Bowes Road. Residents on the street were unhappy with the loss of yardage and landscaping to the ten-foot wide trail. Since then, LARA has worked to reconfigure the trail to bring it off Bowes Road and run it along the Grand River instead. Lowell City Council approved the grant application which will now be forwarded to the state.
The next Lowell City Council meeting will be held on Monday, April 1, at 7pm on the second floor of City Hall.