November 29, 2009

Should Boise create an LID for the streetcar?

An option to make property owners help pay for the possible project has some legislators hoping to change state law.

BY CYNTHIA SEWELL cmsewell@ idahostatesman.com - Idaho Statesman

Copyright: © 2009 Idaho Statesman

An option to make property owners help pay for the possible project has some legislators hoping to change state law.

A city in Idaho can pass a one-time assessment on private property owners with just a majority vote of its city council - and that doesn't sit well with some state lawmakers.

"The way the process works today, the people who are paying the taxes don't have a say, and that needs to be fixed," House Majority Leader Mike Moyle, R-Star, said.

Moyle and Rep. Raul Labrador, R-Eagle, say they will bring a bill requiring a vote of property owners on any city-initiated local improvement district that levies an assessment to pay off $1 million or more in bonds. The change would not apply to districts initiated by property owners.

Local improvement districts are used by many Idaho towns to fund street, sidewalk, irrigation, sewer or other vital infrastructure projects - and are most often introduced by property owners asking that a district be created to fill a specific need. All private property owners within the district must pay the assessment.

A local improvement district, or LID, carries its own tax levy and it appears on the property tax bill, just like the city, county, school or other taxing districts.

Boise is considering creating a local improvement district to raise $10 million to $15 million to help pay the $60 million cost of the first phase of a streetcar system. The district would tax about 660 Downtown private property owners - who could pay their one-time assessment all at once or over a 20-year period.

"That's the kind of project I don't think an LID is appropriate for," Labrador said. "We have gotten away from the initial purpose of an LID, which was to help on small projects - very local, small projects."

Any LID-changing bill would need to pass muster with the Senate Local Government and Taxation Committee, which is chaired by Sen. Brent Hill, R-Rexburg.

When he was first approached by Labrador in October about the bill, Hill wasn't too keen on the idea of changing the law. But when he heard about Boise's plan for a streetcar district, Hill said the issue warranted further discussion.

"I think the city is reaching the bounds on this," Hill said.

State law allows cities to create districts for "optional improvements."

"I don't think that was what most legislators envisioned when they put in that provision - it was curbs, gutters, sidewalks, not public transportation systems."

Moyle does not have a problem with cities using districts to pay for optional improvements as long as that is what the property owners want. For example, if the majority of Downtown property owners want a new amenity and they are willing to tax themselves for it, then it is their choice as taxpayers and they can petition the city to create the district, Moyle said. But if a city can initiate a new taxing district for something property owners may not want or need, then the law isn't working.

"While we can't comment on a bill until it has been introduced, the current LID statute has numerous avenues for property owners to register opposition; any further restriction by the Legislature would leave local communities with less ability to solve their own problems," Adam Park, Mayor Dave Bieter's spokesman, said.

At both the initiation and assessment phases, property owners can file protests, which the council is required to hear, but the decision to move forward and levy the assessments lies solely with the council.

Rep. Branden Durst, D-Boise, does not think the law needs to be changed.

"It's not our job to be constraining city government. It is our job to be empowering city government," he said. "We need to stand up for our city governments because city governments get stepped on a lot, especially when certain legislators try and use state law to hamstring people trying to do their jobs. I think that is disheartening and disingenuous."

Moyle says he does not want to take away cities' authority; he wants to give taxpayers authority. "We still want to allow cities to use the tool, but we want to limit them from abusing it."

That's why the bill will apply only to city-created districts looking to raise $1 million or more, Moyle said.

The current state law does not prevent a city from holding a vote, Durst said. So if the city's elected leaders thought it was the right thing to do, they would do it.

"We elect people to make decisions for us," Durst said.

If people do not like those decisions, he said, they can vote officials out of office.

The city has been visiting with property owners, giving them the proposed assessment formula, but it has not yet offered to let property owners vote on the matter.

"As of now it is uncertain if a streetcar LID will ever be necessary, so any discussion of an advisory vote is premature," Park said.

In the current economy, some infrastructure construction bids have been coming in below projections.

If the streetcar bid does come in below the projection, "those savings would go toward reducing the LID," said Bieter's economic development assistant, Cece Gassner. And if the savings are substantial enough, the city may not need to create a taxing district at all.

Hill said he has no problem refining the LID law, but any changes need to be the right change for the right reason.

Hill plans to ask his committee, city leaders and others what they think about changing the law.

"I don't want to punish every city council in the state because one city council is trying to abuse the statute," Hill said. "It kind of makes you sad, those few that try to do things with the statute that I don't think it was intended to do. It gives everyone a bad taste in their mouth."

Cynthia Sewell: 377-6428