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Ad hoc business committee suggests changes to city's street assessments policy

WILLMAR -- An ad hoc business committee says Willmar is falling behind on street reconstruction and should develop a new plan to reduce costs to property owners.

WILLMAR -- An ad hoc business committee says Willmar is falling behind on street reconstruction and should develop a new plan to reduce costs to property owners.

The committee is recommending the city reduce special assessments and increase funding from other sources.

Under the present formula, 75 percent of street reconstruction cost is paid by special assessments to property owners. The city pays the remaining 25 percent from interest earned on the community investment fund, utility replacement fee and state aid.

The committee is recommending the 75/25 formula revert back to the 50/50 formula, which was in effect before the City Council changed it in 1997.

To attain the 50/50 formula, the committee recommends the city implement a monthly utility hook-up fee, which would represent half of the city's share. Other possible funding sources could be property taxes, a street reconstruction sales tax or a monthly utility franchise fee.

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In addition, the committee recommends the council participate in the construction cost of major corridors and non-residential streets.

"The city of Willmar has seen some tremendous growth in the last 5 to 7 years and all indications lead us to believe that we will continue on that path, that the city needs to develop a new street funding improvement plan that best meets the citizens' needs of today and tomorrow,'' said the committee in its report to the City Council on April 17.

Committee member Greg Hilding said times have changed over the past 10 years.

"We've got to have a policy that facilitates economic growth -- smart growth -- where we can have sensible development and encourage furtherance of our community,'' said Hilding, Bremer Bank president who was representing the Willmar Area Development Corporation.

"We have major traffic corridors that circle around employment, retail opportunities, health care accessibility, so a street assessment policy that fits the true set of Willmar characteristics in 2006 may very well be different than what we put together in 1997,'' he said.

Gary Geiger, chairman of Heritage Bank and representing the Willmar Design Center's Transportation Committee, says the number of miles of streets being reconstructed has declined from 1991 through 2005 as construction of streets in new developments has increased.

The committee says the city needs to catch up on street reconstruction.

"It doesn't speak well for the future. It may be 20 years before we're in real big trouble, but it's just not smart,'' said Geiger in a Tribune interview.

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"I find that the reason for that is not a conscious decision on anybody's part. It's the way we decide how many dollars to spend on streets. That's fascinating, too. We have this community investment fund that was a brilliant idea at the time that decision was made because that wouldn't put a burden on anybody to use the earnings off this chunk of money,'' he said.

"And probably at the time they put this together, interest rates were relatively high and it just seemed like a brilliant idea. I applaud them for that. But you have to review your decisions as time goes on because interest rates fell and that's the reason we're not doing it. We've got to say wait a minute, we've got take a different plan here, a different policy.''

Committee member Ken Warner, president of the Willmar Lakes Area Chamber of Commerce, said the 75/25 formula is becoming cost-prohibitive for property owners.

"It's just a shock that if there was some way we could go back to more of a 50/50, knowing that you're going to have to pay that large assessment, but if you pay a little bit on the front end on a monthly basis or some other kind of basis, then that 50 percent wouldn't be such a large hit when it got to be your turn,'' he said.

Warner said the business community does not support the concept of a street utility fee as another source of funding. Such a fee would raise revenue based on the volume of traffic generated by each classification of property in the city.

About 140 cities including Willmar have endorsed the concept. The League of Minnesota Cities has repeatedly asked the Legislature pass a law that would let cities enact the fee, but to no avail.

"I think the business community looks at that as just another one of those unfair kind of taxes or fees that you're penalizing somebody for being successful when those are the kind of businesses that -- if it's Affiliated Community Medical Centers that brings in a couple thousand patients a day to a McDonald's to a bank -- it doesn't seem like it's equality,'' he said.

Also, Warner said some questions remain, such as how the fee would affect property owners who have a day care on their block or how a bus route would affect the community.

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"Instead of having that being the only option, let's look at several different options,'' he said.

Warner believes the public would support additional investment if the purpose is explained. He cites the public's support for the local option sales tax, and he said the business community is more than willing to pay its fair share.

"Let's sit down at the table, put some good heads together and see if we can come up with a solution that's a win-win for everybody,'' he said.

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