Transportation Utility Study
In June of 2020, the Common Council voted to hire Ehlers to assist with conducting a study on a Transportation Utility to determine whether it is a viable method of funding the City's transportation costs as well as establishing the fee structure, implementation and administration framework, and revenue needs. Based on information presented at the September Council meeting, the Common Council voted to continue moving forward with the study to its completion. This was not a vote to approve/implement the Transportation Utility. In December, the the consultant presented the information in the final report and the Council voted to hire a utility attorney to assist with drafting an ordinance for consideration. Again, this was not a vote to approve/implement the Transportation Utility. Once the draft ordinance is complete, it will be brought back to the Council, along with all other data/information to date, for possible consideration by the Council for implementation.
On February 9th, 2021, the Common Council voted to delay any consideration of the TUF and to continue looking at all funding mechanisms for road projects including potential revisions to the revenue generation of a TUF to reduce impact on property owners and to continue educating the public about the Transportation Utility concept.
This page will be the City's source for providing information to the public on this process. Information, such as powerpoints, scholarly articles on Transportation Utilities, and information from the League of Wisconsin Municipalities regarding TUF legality in Wisconsin. The City will also post information on community meetings that will be scheduled to give the public a chance to ask questions and learn more about what the TUF is and what it would mean to the community if one is implemented.
Articles and Powerpoint Presentations:
Final Transportation Utility Creation Feasibility Study - This is the final report prepared by Ehlers and raSmith that details the findings regarding the City's potential creation of a Transportation Utility. It reviews financial projections and different funding scenarios and how that would affect the City's debt capacity and debt tax rate.
Ehlers December Presentation - A powerpoint presented by the consultant at the December 8th, 2020 Council meeting.
Ehlers September Presentation - A powerpoint presented by the consultant at the September 8th, 2020 Council meeting.
Funding Streets Through Transportation Utility Fees - A League of Wisconsin Municipalities article that discusses the legality of TUFs (page 21-27).
An Alternative to Funding Local Transportation Needs - A powerpoint prepared in 2012 by R.A. Smith, an engineering firm with experience in trip generation-based user fees and the subcontracted consultant on the City's study.
Transportation Utility Fees: Possibilities for the City of Milwaukee - A 2007 study conducted by the UW-Madison La Fallotte School of Public Affairs for the City of Milwaukee that recommended the City adopt a TUF. The City did not ultimately adopt it.
The Transportation Utility Fee- Conference Paper written in 2010 by professors at the University of Florida and the University of Arizona.
Community Meetings: All meetings, unless otherwise noted, will be held at the Community Center 30 S. Main Street.
First series: There will be a brief presentation (same for all three meetings) and then there will be a question and answer session.
- November 5th, 2020 at 530pm
- November 6th, 2020 at 2pm
- November 7th, 2020 at 1030am (virtual only via Facebook Live) - cancelled
A copy of the powerpoint presentation for the November community meetings can be viewed by clicking here. The presentations were also broadcasted on Facebook live and interested individuals can view the discussion there.
Second Round of Community Meetings:
- December 29th, 2020 at 615pm Clintonville Community Center
- December 30th, 2020 at 615pm Virtual Only on City's Facebook Page
A copy of the brief powerpoint presented at the December Community Meetings can be viewed by clicking here. The presentations and discussions were also broadcasted on Facebook live.
Frequently Asked Questions:
1. Is a Transportation Utility legal in Wisconsin? Short answer - Yes. Long answer - While a Transportation Utility has not been tested in Wisconsin, the League of Wisconsin Municipalities has issued a legal opinion that a Transportation Utility is a valid use of the Home Rule Authority that essentially provides municipalities with the legal authority to do what they believe is in the best interest of their community provided that it does not conflict with or attempt to regulate something that the State already regulates if the State has not specifically prohibited municipalities from doing it. The State has no laws regarding Transportation Utilities, nor is the specific method of funding transportation needs dictated by the State, and therefore, Home Rule Authority applies. The LWM article can be found towards the top of this page.
2. Is this similar to a wheel tax? No. A wheel tax is a local vehicle registration fee that municipalities can can implement and it is collected by the State as part of the annual vehicle registration fee. The fee is the same across all vehicle types but not all vehicles are subject to the fee as the State has exempted some types of vehicles. There is no connection between the fee and the use of the road system. A TUF is applicable to all improved properties, regardless of value, and the fee varies based on the properties use of the system. The wheel tax amount on a vehicle is the same whether that vehicle leaves a property once a day or 100 times a day.
3. Why are we not using the wheel tax method? One of the benefits of using a Transportation Utility Fee to fund transportation needs is that it is an equitable way of allocating the financial responsibility for those needs by shifting the the costs to those who use the system more, typically the non-residential properties. A wheel tax does not provide any sort of equitable division of that financial responsibility. Many businesses do not have company vehicles and many employees do not live in the City so they would not be subject to a Clintonville wheel tax. They do, however, use and impact the City's transportation system. A TUF, which is applied to the property, accounts for actual use of the system (in the City's case, how many trips a property generates) even when there are no vehicles registered at a particular property. Another primary benefit of the TUF is that is would provide a sufficient source of revenue to meet the needs of the City's road maintenance and replacement projects. A wheel tax cannot do that without an exorbitant fee. If the City were to implement a wheel tax of $25, which is a rough average across the State, it would only generate about $100,000, which is significantly less than what the City needs to generate in order to have sufficient funds to afford the minimum road projects without borrowing or using alternative methods of financing, such as special assessments.
4. Why do we not use special assessments to fund road projects? Special assessments are certainly an option for the City and many municipalities across the State do utilize them. However, in a relatively low-income community, putting that financial burden on our residents is simply unimaginable. Road reconstruction projects are incredibly expensive. A one-mile stretch of road surface reconstruction (excluding underground infrastructure) would cost approximately $1 million. Using special assessments, the Council could elect to put that entire $1million burden on the property owners on that street, even though, in most cases, that road is used by many people who do not live on it. Special assessments, if not paid in full upfront, are then put on the tax roll for a period of 3-5 years, with interest. It can be difficult to sell a home with a special assessment on it in an amount that could be expected in such a situation.
Let's use Robert Street, which was one of the roads reconstructed in 2019, as an example. As an estimate, the road surface portion of that project, which was only 2 1/2 blocks, cost roughly $500,000. If the City had used 100% special assessment for that project, the average special assessment per property would have been $13,000. At the current projected TUF amount, it would take 83 years to pay an equivalent amount in TUF fees as the property owner would pay in special assessments over a max of five years. Granted, that property owner would almost certainly never pay that again as the life cycle of a road is roughly 50-75 years but that does mean that property would be subject to that special assessment twice before an equivalent amount of TUF fees had been paid for the first one.
Finally, when the City receives a CDBG grant for a road project, the City is actually not allowed to do any special assessments so the City would have to borrow for the matching funds that would be required.
5. For projects like Robert and 12th Streets, did the property owners have to pay more than their normal taxes for this project? No. As discussed in FAQ #4, the City is not allowed to utilize special assessments when CDBG funding is used. The City received $1million in CDBG funds to help pay for this project so it was not permitted. All non-utility costs were funded by CDBG and debt.
6. Why are the current taxes not sufficient for the road projects? As previously mentioned, road reconstruction projects are incredibly expensive. Currently, the City funds all road projects by borrowing and then levies for the annual debt and interest payments. However, the current borrowings are making the assumption that the City is going to receive CDBG funding to help pay for the road projects. If that does not happen, the City has no other source of funding except to borrow more, which will require the City to raise taxes, or to utilize special assessments, which would be more than an individual resident could afford. If the City were to decide to do all projects projected for the next seven years and did not receive any grant funding, it would require a more than $3 increase to the mil rate by 2027, which means that a $100k home would be paying $300 more in property taxes than it is right now, which is roughly double the projected Transportation Utility Fee. The City is projecting that implementing a TUF would result in both lower taxes and more road and non-road related projects.
In addition, municipalities in Wisconsin are limited as to how much debt they can have at any given point. To borrow for all projects without grants would have the City almost maxed out on its allowable debt and would also affect its bond rating which would mean the City would be classified as a higher risk for credit and would be charged a higher interest rate and thus, require more taxes to fund the debt payments. Reliance on debt for road projects is simply a vicious cycle that is not viable long-term solution.
6. What will the annual fee be for a single family home? The current projections for the total annual cost for a single family home is $158, which is comprised of the base fee of $75 and a usage fee of $83. This equates to a monthly charge on the utility bill of just over $13. The base fee and usage fee follows the traditional utility structure where a customer pays a meter fee and a usage fee. The base fee is intended to cover overhead costs (such as billing, management, equipment, rent, etc) and contingency/cash flow needs and the usage fee is intended to cover the projected project costs. It is the City's believe that this is the highest the fee would be if the TUF is implemented and it may possibly be lower depending on final budgetary projections.
More FAQs will be added once staff is able to evaluate the questions received from the community during the community meetings.
Anyone with questions is welcome to email the City Administrator at [email protected]. (Clicking on the link will auto-generate a new email.