Council rejects franchise fee options
"Paralysis by analysis" is how Farmington City Council member Christy Jo Fogarty described the council's decision to delay a decision to deal with a deficit in the fund that pays for the annual seal coating of Farmington's streets.
On Monday, three of five council members said they weren't ready or interested in approving a franchise fee agreement to build up the funds that are needed to pay for the city's seal-coat street maintenance program. Council members put off the project for a year and will consider other funding sources as part of next year's budget process.
Farmington city engineer Kevin Schorzman cautioned against putting the seal coating process on hold because, he said, usually those are the kinds of projects that keep getting put aside when dollars get tight.
"These things don't die in a big explosion. They just kind of go away," Schorzman said.
Putting the seal-coat process on hold for a year "won't be the end of the world," Schorzman said. But delaying it any longer can lead to larger problems down the road. Seal coating puts a protective layer of oil down on the tops of roads to keep water, salt and other chemicals from getting into cracks. If roads go too long without the maintenance, the cracks deepen and the roads fall apart.
"This is something we just can't choose not to do in the future, or we'll be faced with much more costly options," Schorzman said Tuesday.
Farmington's seal coating program has been on a seven-year rotation of neighborhoods. In 2011, streets in a dozen different developments were slated for the service. That won't happen now.
For more than a decade, the city of Farmington has funded the seal coating through a combination of city funds from the road and bridge fund and assessments paid by residents of the neighborhoods where the seal coating was done each year. It was supposed to be a 50/50 split, with the city carrying half of the load and the residents funding the other half.
After analyzing 11 years of the process, Schorzman found residents were carrying more of the burden than the city of Farmington. The difference wasn't large, and the excess funds from residents were still going into the seal coating project, but it was enough to call attention to.
Historically, Schorzman said, the cost for assessments included what the city paid the contractor to do the work, as well as an extra 27 percent to cover engineering, legal and administrative fees. When Schorzman tracked the past decade, though, he found those costs to be more in the area of 13.6 percent over the contractors' work.
That might appear residents were over-assessed by $109,000 over 10 years, but Schorzman said that's not accurate. Assessments were based on half of the project costs instead of the total cost, so in reality, the residents actually funded an additional $55,000 for seal coating over that decade, or about $5,000 annually for 11 years.
The extra funds from residents were still put into the seal coating costs, Schorzman said, and ultimately decreased the amount the city had to pay.
All tapped out
These days, there are no more dollars to be spent on seal. Over the past three months, city staff has worked on setting up a franchise fee program to help generate that funding, but council put an end to that that idea Monday.
Franchise fees would be tacked on to residents' gas and electric bills each month. The funds generated by those fees would then be forwarded to the city to be put into a separate fund to pay for seal coating. The city would no longer assess residents for the project.
Council received four options for franchise fees Monday. Each would have generated the funds needed to continue the seal coating project ensure funding for the future.
But council member Julie May didn't agree the options were acceptable. She objected to adding what she called a new tax for residents and said city officials should have started planning for the shortfall several years ago.
"Please don't say we have options here. This discussion really should have happened two to three years ago, so don't say we have an option," she said. "I don't think I could walk out of here with my head held high if we chose one of these options."
Mayor Todd Larson, too, said he was not comfortable with the options presented. He recommended the matter be tabled for a few months and come back next year. His motion was supported by May and council member Steve Wilson.
To Fogarty, though, franchise fees made sense. The system would provide the cash flow the city needs to pay for a necessary function, and she sees putting off a decision as a waste of time. She and Terry Donnelly cast the dissenting votes.
"I think this is a terrible decision," Fogarty said. "We're making a plan not to make a plan.... This is paralysis by analysis."