City dives into lodging tax and utility fees

At a 90-minute city commission meeting on Monday, March 6, officials had further discussion on three proposals first brought before them at the February meeting.

Proposed changes to the 15-year-old Housing Incentive Program jointly administered by the city and NRABC were first on the docket.

The Housing Incentive Program is designed to encourage current and potential residents to invest in the city’s housing stock. They receive “perks” by purchasing or renovating an existing home or building a new one. Incentives offered include, but are not limited to, city utility credits for one year, property tax incentives, trees to plant, passes and memberships to local recreational facilities, and waiver of building permit fees. The incentives vary based on the applicant’s investment and residency status.

One change proposed by NRABC Director Amanda Hegland, who was unable to attend due to illness, allows applicants for home purchase incentives to apply up to 30 days after closing. Hegland said new residents aren’t always made aware of the program before they purchase a home, and this way city staff will have an opportunity to tell them about it when they contact the city office for connection of utilities. Prior to the change, an application needed to be approved before the closing date.

For new construction and renovation incentives, however, the application must be reviewed and approved before a building permit is issued. City staff have been directed to inform potential applicants about the incentives when they first inquire about building permit requirements, so they have the opportunity to apply before their building permit is approved.

Other limitations also apply. For example, home purchase and construction incentives are offered for the applicant’s primary residence only. Rental properties are not eligible, and only one family unit application will be accepted per lifetime. Also, the recipient must remain current on city utility bills. Incentives will be void if a resident becomes delinquent at any time.

The proposed changes were unanimously approved by the commission.

Full details on the Housing Incentive Program, as approved at Monday night’s meeting, are available from the “Housing” tab on the city website, http://www.cityofnewrockford.com.

A second proposal brought forth by Hegland, the establishment of a 1 percent city lodging tax, generated contemplative discussion among officials.

City Attorney Travis Peterson reviewed two sample ordinances with the commission, which are currently in place in the cities of Steele and Rugby.

As reported last month, the tax funds are to be used for marketing efforts that “encourage and attract visitors to the city.”

All proceeds from the tax are to be deposited into a visitor promotion fund, established and maintained by the city.

The primary question and discussion point amongst commissioners was how the funds would be administered. Peterson noted that N.D. Century Code calls for a destination marketing organization or visitor’s committee to advise the city on uses of the funds. In Rugby, their ordinance specifies that the Greater Rugby Area Convention and Visitors Bureau serves as the advisory organization. Steele’s ordinance doesn’t specify a particular group or organization.

Both the NRABC and the New Rockford Area Chamber of Commerce were brought up by commissioners as possible advisory organizations.

City Auditor Becki Schumacher explained that in Crosby, where she previously lived, the visitor committee was composed of representatives from the local economic development organization, chamber of commerce, city and someone in the lodging business. Schumacher noted that Hegland planned to establish a new committee and had potential members in mind to approach but did not give any specifics.

Peterson said that it should be clear who will handle the funds before an ordinance is drafted or considered. Upon further clarification, he will draft an ordinance for review and first reading at the April meeting.

Commissioners also heard from Peterson regarding a proposal from Schumacher to reduce or eliminate the practice of allowing residents to avoid payment of utility fees for non-use. The city is losing important revenue used to pay off the debts from the recent water system upgrades and cover the cost of supplying garbage service.

There are two primary issues: One is that temporary or part-time residents request to have their utilities disconnected for a period of time and avoid payment of fees during the period of non-use. Some have even requested a pro-ration of their monthly bill for a two-week vacation.

The second issue is that some commercial property owners who also own homes in the city have chosen to forgo garbage collection services at their homes. They instead haul their trash to the dumpster at their commercial property. There are also owners of multiple commercial properties that choose not to maintain garbage collection units at one or more properties. That is more lost revenue for the city, Schumacher said. She requested that Peterson recommend ordinance changes that would effectively change the policy, as the intent is to require all “users” to pay at least the minimum monthly service charges and the debt service fee of $16.50 per month.

“There is nothing in our ordinance that says payment of fees are terminated upon request for temporary disconnection,” Peterson said.

He referenced a few different ordinances that supported his assessment. For example, Chapter 18.02.15 sets minimum monthly rates and charges for use of and service applied.

Peterson said that it is not unreasonable for a resident to ask for services to be disconnected when they are not occupying the property. However, he recommended that the city consider increasing the fees for disconnection and reconnection. Right now, per Chapter 18.02.14, there is no fee for disconnection, and a $10 fee applies for reconnection.

Many other cities Schumacher queried said they continue to charge residents the minimum rates for utility services while temporarily disconnected. Peterson said he wanted to do some research on those communities and see if their ordinances were more clear, or if it was simply a policy not to allow residents to forgo payment for temporary non-use.

The ordinances regarding payment for garbage collection are more clear. Chapter 7.02.02 makes the collection, removal and disposal of garbage “compulsory and universal,” per Peterson. Therefore, language in the current ordinance supports the city’s view that all property owners and/or occupants should pay for such services.

In Chapter 7.02.09, the ordinance further states that no one can refuse garbage service, and that residents are not exempt from payment for non-use.

“Perhaps it was a policy that never should have been,” Peterson concluded.

Residents and property owners will receive notice regarding this change in the garbage collection policy. This will have an effect on anyone who has refused garbage service at one property, as they will now be required to pay the minimum collection fee each month.

Also at the meeting, President Stu Richter opened the two bids the city received for lease of the airport land. After discussion, they rejected the high bid of $12,250 per year, as the bidder is under 18 and doesn’t have the legal capacity to enter into a contract with the city. Commissioners then accepted the one remaining bid, from Casey & Levi Weber, for $10,700 per year. The lease is effective for three crop years.

The next regular commission meeting is set for Monday, April 3 at 7 p.m.