Should neighborhoods foot bill for local roads, sidewalks? Lansing considers special fees
Sarah Lehr
LANSING — City officials are asking residents whether they would pay extra to fast-track street and sidewalk repairs in their neighborhoods.
A survey, available online at www.lansingmi.gov/1848, is intended to gauge support for a hyper-local road funding proposal that's still in an exploratory stage, Lansing Mayor Andy Schor said.
Under Lansing's current repair schedule, it would take 50 years or more for the city to repave all the city's streets and sidewalks, city officials say. Under the tentative proposal, street and sidewalk repairs in certain neighborhoods would be expedited, if the majority of residents in those areas agreed to pay an assessment.
The proposal would create designated areas, known as special assessment districts.
"The idea behind a special assessment is that people who benefit from an improvement would pay for an improvement,” said Tony Minghine, chief operating officer for the Michigan Municipal League.
Financial details have yet to be worked out, Schor said, but the survey gives the example of an average homeowner in an assessment district who would pay between $100 and $150 annually for up to seven years.
That revenue could cover up to 50% of a district's repair costs, a survey question suggests. The rest of the money would need to come from the city's property tax for local roads or state or federal sources.
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Concern about rich vs. poor divide
Schor hasn't taken a position on special assessments for roads and sidewalks, adding only that he's been approached by residents about the possibility and is looking to gather input.
A potential concern is that a divide could arise between rich and poor neighborhoods if only wealthier areas agreed to pay the extra fee, Schor acknowledged.
Still, assessment revenue could free up more money in the city's budget for repairs in neighborhoods that are outside the assessment district, Schor said.
"It’s not that higher income neighborhoods are more interested in having better roads, but they can more readily pay that special assessment fee," said Eric Lupher, president of the Citizens Research Council of Michigan, a nonpartisan think tank.
Typically, special assessment districts are created in Michigan via a petition with signatures from the majority of people who own property in that area.
"You need to make sure you have community buy-in," said Shu Wang, an assistant professor who specializes in local government finance at Michigan State University. "There is an equity concern. Do some places feel like they are not benefiting?"
Mayor cites funding limitations
A review by the Citizens Research Council found 11% of local governments in Michigan were using special assessments to fund services in 2018 — more than double the percentage in the 1980s.
"I think more cities are turning to special assessments because doing nothing on infrastructure is not a good option," said Schor, a former Democratic state representative. "I've seen local communities having to pick up the slack for the state not providing the funding they expect."
This fiscal year, Lansing has budgeted about $8.9 million for road repairs, which includes $4.5 million from the state and $2.1 million from the federal government.
Still, Lansing officials estimate they would need as much as $25 million more a year in total funding over the next decade to bring most streets to good condition.
Schor has blamed that shortfall on insufficient funding from Michigan lawmakers and says state restrictions hamper Lansing's ability to raise revenue at the local level.
Cities in Michigan can't adopt a local sales tax and Lansing already imposes a income tax at 1% for residents, the maximum it is allowed.
Lansing assesses nearly 20 mills total in property taxes, including a 1-mill tax that brings in more than $2 million a year for streets and sidewalks.
Legally, assessments are not a tax
But, state restrictions make it difficult for Lansing to increase its property tax revenue.
A 1994 constitutional amendment called Proposal A capped the growth of a parcel's taxable property value at 5% or the rate of inflation, whichever is less. The change added to the effects of the Headlee Amendment, which protected property owners from rapid tax increases by requiring local governments to roll back millage rates to offset growth in property values. Lansing's electorate would need to vote to restore the city's pre-Headlee tax rate.
Legally, special assessments are not considered a tax, so the fees aren't limited by those restrictions.
"The assessments give more flexibility," said Wang, who described the process as a way to "get around" Headlee and Proposal A.
The city has not set a date to close the online survey, which also asks about support of speed bumps and allowing people to get overnight street parking permits.
The city plans to create a series of online surveys on community issues under a $100,000 contract with the software company Elucd, Inc, Lansing spokeswoman Valerie Marchand said. The city paid for the partnership using a portion of the proceeds from the $18 million sale of the Townsend parking ramp.
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Contact Sarah Lehr at (517) 377-1056 or slehr@lsj.com. Follow her on Twitter @SarahGLehr. Click here to subscribe to the Lansing State Journal.