Ad-Express and Daily Iowegian, Centerville, IA

January 24, 2014

Resident faults street paving

By Michael Schaffer Managing Editor
The Daily Iowegian

---- — Wednesday’s Ad Express story about Monday’s Centerville City Council meeting results and Jim Milani who talked to the council for almost 60 minutes ended with Milani stating: ... forcing industrial, commercial and residential property located “a distance from the paving project” and have minimal benefit to shoulder higher taxes “is unfair and unrealistic.”

Milani, a Centerville resident and attorney, was at Monday’s council meeting because he was under the assumption the council was going to hold a public hearing regarding the authorization not to exceed $5 million in general obligation capital loan notes for the East and West State streets and North 10th Street paving project.

What happened at Monday’s meeting was the council set Monday, Feb. 3 at City Hall at 5:30 p.m. to have a public hearing on the bond authorization.

The following is additional discussion concerning the street paving project from Monday’s meeting.

Milani repeatedly questioned the use of general obligation bonds only to pay for the project, something he called “a lien on all of the property in Centerville” and questioned why not use special assessment bonds?

“I’m not much in favor of this huge general obligation thing,” Milani said. “There’s nothing mentioned about special assessment (bonds).”

Special assessment bonds impose an additional property tax levied on property owners in the area benefiting from the improvement project. The idea is the value of the property in the project area increases.

“I think paying for these things has to have some relationship between the benefited properties and the people out here,” Milani said.

Milani said the $5 million general obligation bond issue would “completely upset our financial picture” and is “half of our potential legal limit on indebtedness. Use it for this project and you won’t have it for other projects.”

Milani urged caution when dealing with GOs and called the city’s decision to bond for up to $5 million “a real turning point.”

Milani called the current 10 percent special assessment “ridiculous.” He called the council valuations “way off.”

“If the special assessment is not done properly it’s because there’s been a malfunction with establishing values because of a safeguard in the statue that won’t go over 25 percent of the established value,” Milani said.

Milani predicted residential property owners will suffer the most. The entire community will be impacted by higher taxes because it will impact business, industry and slow down residential building in the city.

“If the area does see more building it will be outside the city limits with a lower tax base,” Milani said. “If these taxes go up I doubt that you’ll get anybody to annex like Walmart did.”

Milani said the city’s first investment should be to get rid of some nuisance housing.

Councilman Rob Lind did most of the talking for the city.

Lind said the city is going to revisit its decision to impose only a 10 percent special assessment on the property in the project area. He said the city is not obligated to stay at 10 percent and can go as high as 25 percent special assessment.

Lind said he thought the original 25 percent special assessment was pretty fair.

“And then we had this movement to get down to zero, which I thought was totally … we as a city we couldn’t do that,” Lind said.

Lind said he regrets his vote to drop the special assessment from 25 percent to 10 percent but wanted to see the project go forward rather than not get done.

“I’m not going to vote for 10 anymore. I’m going up,” Lind said. “I’d like it to be 20 percent and the property owners who are benefited will not pay any interest. That we as the city will pick up the interest.”

Lind said this project will not appreciably add more to city taxes then where they are right now.

“You may not like the special,” Lind said to Milani. “It may be too low for you, but there’s going to be other people that hate us because it’s too high for them.”

Lind said the city wants to come up with a plan that’s fair and equal for everybody.

Lind said the days where people living in a project area were required to pay as high as 100 percent of the cost are gone due to the cost of street paving projects “and the city’s tax base is such the cost has to be spread out over more people.”

Patrick Antonen, city administrator, said the special assessment is not officially locked in until the very end of the process.

One thing not much discussed but a part of the paving project is how will the streets in question be altered to meet certain government rules and regulations.

Bill Buss, with Hall Engineering, said not so much for East State Street and North 10th Street but West State Street will have to comply with federal guidelines in terms of width, parking and design.

Antonen said the amount the city bonds for will be based on the bids that come in for the project.

Antonen, in response to a question posed by Councilman Ron Creagan, said the cost per $1,000 of taxable valuation based on $5 million in bonds would be $3.12.

What didn’t transpire Monday was Antonen on Wednesday afternoon called the Daily Iowegian.

Antonen reacted to several statements Milani made during Monday’s Centerville City Council meeting that were published by the Daily Iowegain on Wednesday, Jan 22.

Milani addressed the council for nearly 60 minutes Monday night with his concerns regarding the way the city is approaching the upcoming street paving project on East and West State streets and North 10th Street.

Antonen said Milani’s assertion that a $100,000 residential property would pay an additional $250 per year or $2,500 for 10 years was wrong. Antonen said the true cost for a $100,000 residential property is more like $150 per year or $1,500 for 10 years.

Antonen said the cost for a $100,000 commercial property is approximately $250 per year.

Antonen also questioned Milani’s assertion that disclosures concerning the underwriters compensation and lack of fiduciary duty presents a conflict of interest. Milani said the underwriter may recommend a transaction larger than necessary and are “not required by federal law to act in the best interests of the Issuer (Centerville) without regard to their own financial or best interests.”

Antonen said their is no conflict of interest with Ruan Securities. The agreement the city signed contains language mandated by the federal government.

Antonen talked about the 10 percent special assessment against the property owners in the project area. He said the 10 percent would be enough to cover the cost of the sidewalks and drive-way cuts, which leaves 90 percent to cover the cost to pave the arterial streets paid for by Centerville property owners.

Realtors hired by the city assigned a value to the properties in the street improvement paving project area called council valuation. The city’s special assessment of up to 25 percent is based on that assigned value.

Hall Engineering is estimating the total cost of the project at $4.3 million. The Iowa Department of Transportation is expected to pay $700,000 of the cost of the project.