Flat Tax Base Challenges City’s Capital Improvement Plan

In 2015, the City of La Porte City has no shortage of projects designed to improve the community’s infrastructure. What it doesn’t have, unfortunately, is enough money to adequately fund them all.

As the City Council prepares its budget for FY2016 (July 1, 2015-June 30, 2016), there are several capital improvements on the City’s “to-do” list:
Street Repairs: The Public Works Department has identified a number of La Porte City streets in need of repair. First on the list for 2015 are West Main Street and Third Street at an estimated price tag of $280,000. Beyond this year, additional street repairs await the go-ahead from the Council, which will need to find more than $900,000 to fund them all. And that’s not counting the cost to reconstruct the four blocks of Main Street that are part of the City’s Downtown Streetscape Plan.

Streetscape Renovation of Downtown La Porte City: This project would involve a complete reconstruction of the streets and sidewalks in the 200-500 blocks of Main Street. The plan would include working with La Porte City Utilities to run new water lines and relocate power lines underground. In June 2014, the overall cost to complete the project was estimated at $1.52 – $1.88 million.

Downtown Facade Improvement Grant: Administered by the Iowa Economic Development Authority (IEDA) and funded by the US Department of Housing and Urban Development, a Downtown Facade Improvement Grant would provide funds for La Porte City to improve the appearance of its commercial buildings in the business district. If awarded, the grant would provide $500,000 for façade improvements, including items ranging from masonry work and tuck-pointing, to windows, doors and awnings. Grant awards for the coming year will be announced by early summer and, if awarded, the City has committed $150,000 in matching funds in support of the downtown property owners, who will be funding the remaining 25-30% of the project’s total cost. If awarded, work on La Porte City facade improvements would likely begin in the summer of 2016.

Construction of a New Public Works Facility: A new public works facility located in the vicinity of 101 Elm Street would house all of the City’s machinery and equipment and provide suitable space to properly service them when needed. Preliminary estimates project the construction to cost around $500,000.
Rehabilitation of Wolf Creek: Last October, the City of La Porte City was awarded a grant of $75,000 from Resource Enhancement and Protection, commonly referred to as REAP. The grant money will be used for Phase I of the Wolf Creek Reclamation and Park Development Project. The first phase of this project involves the acquisition of approximately 1.93 acres of land at 504 Tama Street, stream bank reclamation along both sides of Wolf Creek, and the installation of a canoe/kayak access point. The stream bank reclamation along Wolf Creek will include clearing, grubbing, excavation, rip-rap, and seeding. The total estimated costs of Phase I are $113,036.00. While the grant will fund the bulk of the project, the City will be responsible for the nearly $40,000 needed to complete the first phase.

How quickly the City can begin to address the projects that make up its capital improvement plan will depend upon the amount of money the City Council can squeeze out of its budget. The City’s primary source of revenue comes from the taxes assessed to residential and commercial property owners. In 2014, the City’s property tax base grew by just 0.6% to $61,043,000, an increase of just $380,000 over the previous year. Because of property tax rollbacks put in place by the state of Iowa and a number of other factors, the meager increase of La Porte City property values will result in a net gain of less than $6,400 of property tax revenue in the City’s FY2016 budget.

Last November, when work on the FY 2016 budget began in earnest, the City Council issued a memo to each department head, presenting them with a target spending goal for their operational budgets. The budget reduction requests, which did not include the wages or benefits for each department, ranged from a 4.5% cut (Public Works) up to a 16.7% (Administration) reduction in spending. If met, the target goals would allow the City to realize a savings of more than $106,000, some of which would be used to help fund wages and benefits for City employees in FY 2016, as the City could see an increase of as much as $15,000 in its health insurance rates.

Answers to the budget questions that remain will need to be found in the coming weeks, as the City enters the final stages of the budgeting process. In La Porte City, difficult decisions remain before the members of the City Council, as they seek to balance the desire of maintaining city services while holding the line on property taxes.