Street, sewer repair to cost Fargo taxpayers more in 2016

November 24,2015

FARGO – Special assessments, the property tax used to pay for streets and sewers, are expected to go up next year under a new policy the City Commission adopted Monday night.

City Engineer April Walker told commissioners the gap between the actual cost of infrastructure projects and what owners of benefiting properties pay has widened significantly in recent years, leaving the city to pay the rest.

This is because the city caps the dollar amount property owners pay even as construction costs increase,Walker explained. In 2015, for example, the cost to rebuild residential streets exceeded $4.5 million, but the amount the city assessed was a little more than $1 million.

If the trend keeps up, Walker said it'll be hard for the city to repair its infrastructure on a timely basis, which could increase total costs significantly.

City staff recommended a cost-share approach in 2016 where the city pays 55 percent of a project and property owners pay 45 percent. In 2017, staff recommended shifting to a 50-50 cost-share. The commission agreed to both.

The effect of the policy change will vary depending on the property and the project, but city staff provided some examples. Reconstruction of a street is now capped at $75 per frontage foot of a residential property, meaning the owner of a 50-foot lot pays $3,750 up front or $510.66 a year, including interest.

At 45-55, the average cost goes up to $80 per foot, so the owner pays $4,000 up front or $547.94 a year. At 50-50, the average cost is $90 per foot, so the owner pays $4,500 up front or $603.85 a year.

Owners of multifamily and commercial properties pay even more.

New streets and sewers are already assessed 100 percent, so this policy change doesn't affect them.

Commissioners Mike Williams and Tony Gehrig both called it a "tax increase," but Williams voted with the majority. Gehrig, who wanted the commission to cut property taxes to match the increase in specials, voted "no" after he couldn't get anyone to second his amendment.

Taxpayers ultimately pay for city projects but the difference with specials, for the most part, is they're targeted at properties that benefit from an individual project while property taxes in general are paid by all property owners.

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