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Gehrig says he has 'perfect solution' to end special assessments

special assessments
Fargo's Special Assessment Task Force met on Tuesday, Feb. 12. Task force member and City Commissioner Tony Gehrig revived his call for using sales tax revenue to replace special assessments for improving existing infrastructure. Dave Olson / The Forum

FARGO — Fargo City Commissioner Tony Gehrig said he has the answer to rid the city of "the most unpopular tax in North Dakota, especially in Fargo."

He's referring to special assessments that homeowners face when street or utility reconstruction or rehabilitation projects are undertaken in their neighborhoods.

The answer he said came in the past legislative session when the approval was given to the Prairie Dog Fund , which are dollars targeted for infrastructure projects across the state based on population.

Gehrig, who is a member of a task force that has been studying the special assessment issues for almost a year, estimates the city will receive about $13 million or as high as $20 million from the fund in coming years because the fund is also based on oil and natural gas prices which are currently high.

That $13 million figure approaches the $15.1 million the city has averaged in assessing specials the past five years on homeowners in established neighborhoods to help pay for improvement projects.

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"It's the perfect solution. It's predictable and solid revenue," Gehrig said as the 13-member task force is planning to complete its report to the Fargo City Commission later this month after two public hearings this week.

The hearings will be held Tuesday, June 18, at 5:30 p.m. in the upper level of the Fargodome and Thursday, June 20, at 5:30 pm. in the Oak Room at Fargo Cass Public Health at 1240 25th St. S.

The forums will review the history of special assessments in Fargo, hear the legal side to the issues from attorney John Shockley, discuss consensus points reached by the task force and seek pubic comments on potential alternatives to current policies.

Input will also be received on the city's website beginning on Tuesday and continuing through Friday, June 28.

City Commissioner Tony Grindberg, who is chairman of the task force, is not on the same page as Gehrig although he thinks the Prairie Dog Fund is a "game-changer" as City Administrator Bruce Grubb calls it.

Grindberg also thinks the fund should be used to reduce the share property owners pay for projects in their neighborhoods, but by how much he's not quite sure yet.

Fargo City Engineer Brenda Derrig said her department is also "very excited" about the new state funding which she believes can "help the citizens of Fargo." She said it'll be up to the city commissioners to decide how to use the funds and to possibly reduce special assessments.

Dan Eberhardt, the city's special assessment coordinator who works with Derrig, said in 2016 the city and homeowners split the cost for projects on a 55/45 split under a new policy. In 2017, it was a 50/50 split. Grindberg said that was simply too much of a burden, especially for retirees and senior citizens with fixed incomes.

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Last summer the mix was changed to a 70/30 average with the homeowner paying the lesser amount, and it was decided to form the task force to come up with further information and suggestions.

Eberhardt, who has seen several policy changes on specials over recent years, said last year the city actually reverted to a 2013 policy that capped projects of $40 per foot on front yards for new water mains and sanitary sewers and $75 a foot for roadway work. He said those charges averaged out to be about a 70/30 split.

Because of the policy change, the city was about $15 million short last year in funding and had to cancel all water main replacement projects this year.

There are, however, some new construction special assessments such as the Main Avenue project and for some neighborhood overlays and seal coats this year, he said. They will be assessed in the next year because projects must be completed before specials can be determined, Derrig said. She said she doesn't know what commissioners will decide on when and if specials should be retroactive to this year's projects.

As for specials in newly developed neighborhoods, Grindberg said he believes that homeowners should continue to pay for 100 percent of streets and utility projects, as is the current policy. Under that policy, the city, in partnership with a developer, will finance the work which Grindberg said gives smaller builders a chance to be a player in "building homes rather than just one large developer controlling everything."

Grindberg said the average homeowner stays in a home about seven to nine years, so the special assessment would go to the next owner until the 25-year payback is done.

Now, residents have their chance to give input.

Grindberg said the task force report after the public input will probably be discussed at a City Commission meeting in late July and will be part of creating the new city budget that has to be done by Oct. 1. He noted that the Prairie Dog money might not be available until October of next year.

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The task force, he said, has made suggestions through a survey they completed. In discussions, the task force also worried about having enough funding if specials were to go away to pay for infrastructure projects.

Some of the main points of the task force's work were suggestions they favored in the survey that said the city should:

  • Share more information and better communicate about assessments when specials are planned so there are "no surprises";
  • Continue having property owners in existing neighborhoods pay at least a share of projects through specials;
  • Continue the policy of homeowners paying specials in new neighborhoods;
  • Develop a longer term Capital Improvements Plan;
  • Reduce the amount the city charges for engineering and administration and offset that with other sources of revenue;
  • Immediately pass on interest savings to property owners with outstanding special assessment balances after refinancing existing special assessment debt.

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