Newalbanism – for the record

In my most recent posting, I provided a cursory review of the annexation proposed by the City of New Albany, making the assumption that readers who wanted to drill down into the details would do so and that others who have read my policy posts in the past would know that I had done the homework and could provide a reliable summary.

I also indicated that had I been a member of the council I would have voted to proceed with the annexation process despite any objections to the timing of the mayor’s initiative.

Apparently, there is more interest in the details than I had assumed – my assumption being predicated on the fact that practically no member of the general public attended the presentation of the resolution and ordinance.

I will presume that parliamentary difficulties will be resolved and that Tuesday’s special called meeting will end with a fiscal plan approved (resolution) and the annexation declared by ordinance on first reading.

Here are some key facts:

1. The area proposed for annexation is a limited one that is clearly appropriate for the city to annex. I would wager that most residents, if not most readers, will be surprised to discover that this area is not already within the city’s corporate limits. Let’s take a look at the boundaries.

A. As one approaches the Lee Hamilton Expressway from the southwest, the current city limits end at the on/off ramps on “this side” of I-265. Moving to the right on the map, the first parcel of non-public land is a large farmstead that is bounded by the eastbound on-ramp and extends to Payne Koehler Road. If I’m not mistaken, this is the Shope homestead, a parcel that is intended by its owners to be developed at a higher density. The future assessed value of this parcel will, someday, be significantly higher than it is today. This is the only subject parcel south of the Interstate.

B. The next parcels contain both the Prosser vocational-technical school campus and the office complex that contains the developer lobbying organization One Southern Indiana.

C. The Meijer big-box store and the woodland/wetland buffer behind it are the next parcel. The homes nearby to Prosser and Meijer are not included.

D. Next comes the movie theater Great Escape and then the commercial frontage on the east side of Charlestown Road. The residential properties behind those parcels are not included (Sunset, Smithwood).

E. Although the Northside Christian Church complex is opposite parcels proposed for annexation, none of that property is encompassed in the annexation ordinance.

F. The 10 (or s0) significant buildings at the Charlestown Crossing center are the next parcel included.

G. Finally, vacant buffer land, presumably developable, along St. Joseph Rd. between the subdivisions and the Interstate complete the subject area.

This constitutes 219 acres with an assessed value of $56,327,400. The city tax rate is $1.17 per $100 of assessed value. City property tax payers pay an additional $1.14 for other distributions, for a total of $2.31. The addition of this land is projected to allow the city to increase its maximum permissible levy by 4.28%. Circuit breakers will reduce the revenues slightly, resulting in the fiscal plan estimate of $566,440.

Using U.S. Census data tweaked to local norms, city staff have identified only 9 possible residential units, 8 of which are presumed to be rentals, and estimate that perhaps 19 individuals may reside in the annexation zone. That number is statistically insignificant for revenue distribution calculations. While the ordinance places these individuals into city council district 1 for voting/representation purposes, these people would be reassigned during the 2012 reapportionment to a contiguous district. They would not be eligible (by residence) to vote in the next city election.

2. City properties still pay county taxes, with some adjustments to avoid double taxation. The county will lose some revenues, but the fiscal plan addresses only new revenues to the city. For the tax year 2012, paid in 2013, the estimated new property tax revenues to the city will be $566,440.

Because CAGIT and CEDIT (income tax) distributions are based on the proportionate assessed values in the county, New Albany receives about 40% of the CAGIT certified shares and about 47% of CEDIT.

The new CAGIT proceeds are estimated at $73,086; CEDIT is estimated at $49,866. Neither distribution would be available until the 2014 budget year.

3. Beginning in 2013, the Cumulative Park and Recreation Fund is projected to receive an additional $5,520.

4. Stormwater fees are estimated to be $52,302 and can be collected, in all likelihood, beginning in 2012.

5. Sewer revenues are projected to decrease by $41,314 a year when these parcels come within the city limits and stop paying the 50% surcharge. Replacing those revenues to the sewer budget would require new revenues averaging 25 cents a month to each rate account, less for in-city ratepayers, if the city council does not choose to subsidize the loss with some of the increased property or income tax revenues.

Total new revenues are estimated to be $747,214. New costs and revenues lost are estimated to be $52,037, most of which is sewer revenues. Unstated in the fiscal plan is the cost of actually doing the annexation, estimated to be a one-time cost of $20,000. There are no grounds for litigation, so most of the costs are for professional services.

Some questions have arisen regarding new costs to the city. Mickey Thompson of the streets department estimates, for fiscal plan purposes, that the 1 mile of new city streets would consume the same resources as any other mile in the city – $7,267. In fact, the streets in this area are mostly new, sound, and well-maintained, so snow removal might be the only expense for several years.

Matt Denison of the Board of Public Works and Safety estimates the need to add a few lights with a cost of $3,456 a year for electric service. As many as 18 lights may be requested and paid for by the city.

New public safety expenses are estimated at $0, with existing staff and facilities well able to extend service to these 219 acres without new costs.

The chiefs of fire and police concur.

The Twin Oaks fire station is 2.66 miles from the center of the new area. The Grant Line Road station is slightly closer. The Grant Line Road Industrial Park is currently served by existing fire houses even though it is further from the stations than the to-be-annexed area.

—————————————————-

Opponents who wish to substitute their own numbers here will face a pretty high bar to justify their methodologies and findings. If the numbers in the fiscal plan are substantially wrong, the annexation process would collapse and council would simply have to begin again because of notice provisions.

But suppose that one believes that annexing these 219 acres will require significant new expenses. At what dollar figure could one argue against this annexation? Only $100,000 in net new revenues? Only $1,000 in net new revenues?

It’s frankly unlikely that serious problems will be uncovered. If they are, the council has until the last day of the year before they will vote to enact the annexation ordinance.

It’s also unlikely that council will again kill this proposal in its cradle. A majority vote on Tuesday will begin the process. If it passes, the final reading will come on December 31. If it fails, there will be no discussions, no public hearings, and no new revenues.

To state it more simply, the haste is necessary. That is not to defend an administration that waited until the very last minute to toss this into the 2010 mix. But even the slightest delay now puts this annexation off to the future. It can’t be addressed in July and still be effective. There is no time left on the clock.

If passed this year, it can go into effect only on the second Jan. 1 following passage.* That makes Tuesday’s vote the only one that can bring these parcels on to the city tax rolls on Jan. 1, 2012. Primary services must be extended to the area by the end of that year (except for fire, which must begin immediately even though the tax revenues won’t come in for at least 18 more months). Property tax revenues won’t issue until 2013. Income tax proceeds won’t issue until 2014.

Why would we wait?

*This is because of recent legislation that, in this case, protects the New Albany Township Fire Protection District from losing customers without time to impose higher fees on their remaining customers.