HomeMy WebLinkAboutCouncil Minutes - March 25, 2025 (208) 359-3020
35 North 1st East
Rexburg, ID 83440
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Special City Council Meeting Minutes – March 25, 2025
Mayor Jerry Merrill
Council Members:
Bryanna Johnson Eric Erickson
Robert Chambers David Reeser
Colin Erickson Mikel Walker
City Staff:
Stephen Zollinger – City Attorney
Matt Nielson – Finance Officer
Keith Davidson – Public Works Director
Alan Parkinson – Planning & Zoning Administrator
Scott Johnson – Economic Development Director
Deborah Lovejoy – City Clerk
5:00 P.M. City Hall Council Chambers
Roll Call of Council Members:
Attending: Council Member Johnson, Council Member Chambers, Council Member E. Erickson (via Zoom), Council Member C. Erickson, Council Member Reeser, Council President Walker and Mayor
Merrill.
Finance Officer Nielson reviewed part of the state requirement process for cities to permanently override the 3% budget cap.
Finance Officer Nielson reviewed the permanent override examples/analysis figures. This option is more difficult to pass because it needs a 2/3 majority vote. The city’s budget for 2025
right now on property tax is about 6.9 million. He said he received the letter below from the county on March 12th, 2025, and the net taxable value is almost exactly the amount he calculated
for the assessed value. The new budget would be 7.9 million dollars which means a new levy rate of .00357. The new levy increase is .000451223. The increase cost for $100,000 of assessed
value is $45.00.
Finance Officer Nielson reviewed the examples of the costs over 30 years of the net assessed value after the homeowner’s exemption section of the analysis. A large apartment with an
assessed value of $28,804,700 one-year cost is $12,997 and the compounded 3% over 30 years cost is $618,353. He reviewed those same costs for a townhouse, single family home 1800 square
feet, single family home 5726 square feet, and large, big box buildings.
Finance Officer Nielson said if the permanent levy override were voted upon and approved, the city would not see funding from the override for a couple of years.
Council Member Reeser asked if the one-million-dollar levy override would cover future street reconstruction repairs. Public Works Director Davidson replied that it depends on the prices
received back from the bids. He has seen the prices ramp up rapidly and hopes those prices level off. He asked the City Council to keep in mind that the sewer line replacement costs
are also included in the million-dollar costs.
Council Member Chambers asked if LID 54 is completed this year, how many years before the city would have to go back to reconstruct that road again or is the time frame tied to the life
of the street? Public Works Director Davidson replied, the ideal life of the street would be 30 years; however, there are streets that have not been reconstructed in 50 years. They
are going to need to reconstruct some of the main roads sooner because of the heavier traffic. He said the higher traffic volume roads are going to deteriorate faster. The roads that
are needing reconstructed sooner will cause the less trafficked roads to wait longer to be reconstructed.
Council Member Chambers said the property owners pay less with a permanent levy override. Public Works Director Davidson replied yes, some homeowners would pay less with the levy override;
however, the commercial property owners would pay more because it is based on their property’s assessed value.
Discussion regarding the increased taxes on residential property verses commercial property. Over the last five years residential property values have increased; however, commercial
property values have stayed about the same.
Council Member Johnson said she would prefer to start with the simplest solutions to fund LIDs, one of those solutions is the city’s street budget. The carryover for streets was 7.2
million this past fiscal year, the previous fiscal year the carryover was 6.7 million and two years prior the carryover was 4.6 million. There is a sizable carryover in the city’s street
budget. She asked them to review all the street projects that have been earmarked but not completed in that budget year. The City Council decided a few years ago to not LID residential
areas as much. She wondered if they could patch the street more and file down the sidewalks. They could also reconstruct fewer streets. She said she would prefer to discuss these other
solutions before trying to pass a levy override.
Council Member Reeser said he agrees with Council Member Johnson’s request to look at the simplest solutions; however, they need to determine the long-term solution for street reconstruction
costs because the simplest solutions will only fill the gap in the short term. Council Member Johnson said the City Council cannot control whether a levy passes; however, they can control
the city’s budget.
Finance Officer Nielson reviewed the street carryover amounts at fiscal year-end. He asked the Councilmembers to keep in mind the city has many funds associated with streets. The Street
Maintenance Fund 2 illustrated in the chart below is the account used for all the city’s street maintenance. The revenue in fund 2 is collected from franchise fees and fuel tax. He
said there is never any carryover from fund 2 because the monies left over after the city completes street maintenance each year are transferred to Fund 43-Street Reconstruction and
sometimes transferred to Fund 44-New Street Construction, depending on which construction projects are in the capital improvement plan.
Finance Officer Nielson said the funds in the Fund 33-Street Impact cannot be used for street reconstruction. State code requires the city to specifically identify projects in the impact
analysis and the project must add to the city’s capacity. Fund 33-Street Impact are monies from newcomers paying their proportionate share to not reduce the city’s service level as
the city grows. Fund 43-Street Reconstruction and Fund 44-New Street Construction pay for projects that are in the capital improvement plan; however, sometimes he will use Fund 84-2nd
East Moody Construction. Because of the amount of work the city is completing in that area, he added the dedicated fund for those projects. Fund 85-Street Lighting funds can only be
used for street lighting.
Finance Officer Nielson explained Fund 43 and Fund 44 new street and street reconstruction in the chart below illustrates the carryover amounts that could be used for street reconstruction.
He is forecasting the city’s levels of sales tax and fuel tax decreasing because the state is forecasting a decrease as well. He pointed out it may appear that the city carried over
7.1 million dollars in the Street Fund in 2024; however, the reality is the city carried over 4.7 million in funds 43 and 44 because the other funds can only be used for specific items.
He asked the City Council to consider the carryover amounts from funds 43 and 44 are oftentimes already encumbered, meaning there is a project underway that did not happen last fiscal
year, it may happen in October or November which is a new fiscal year. Another factor is there could be a project under design slated for next spring. The city is required to report
on the state of future projects. He said the city reports those future projects through the city’s five-year plan. The city engineers identify the five years of projects and for 2024
they have identified the city will need 13.2 million dollars to complete those projects without factoring in inflation.
Public Works Director Davidson cautioned City Council when reviewing the Street Budget, there are large projects being considered, such as the overpass over Highway 20, which city staff
hope to apply for federal grant funds; however, oftentimes those grants come with matching funds and when considering a 30 million dollar project that match is quite large. He said
having money in the reserve is beneficial when considering large projects.
Council Member Johnson said in the 2023 Street Report Budget, the city has earmarked 10 million dollars for projects in the next five years. She suggested decreasing the number of projects
planned in the five-year plan and decreasing the number of LIDs in the residential neighborhoods. The city could have saved money by patching Park Street instead of reconstructing that
road. She asked if the city
engineers could analyze the criteria that determine whether a road needs to be completely gutted or if other measures could be used to fix the road. The city residents are informing
the City Council these LIDs are a burden on them and to do something different to fund LIDs.
Mayor Merrill explained that one of the biggest complaints from residents during the summer are the condition of the roads. He said he understands LIDs are a burden to property owners;
however, the City Council is trying to balance the costs of street reconstruction. The city could reconstruct less roads; however, the longer the city waits to reconstruct the road
the more the asphalt falls apart.
Council Member E. Erickson asked Public Works Director Davidson about the process of determining which roads need to be reconstructed. Public Works Director Davidson said with the limited
funds available in the street budget, it takes the city over 50 years to get around to reconstruct all the city streets. The city has purchased a dura patcher to try and stretch out
the life of the asphalt as far as possible. The asphalt in the high traffic volume roads starts to deteriorate quickly once water starts to pond and potholes are formed. There are other
forms of street maintenance to try and extend the life of the asphalt such as a chip seal/slurry seal and CRABS process.
Public Works Director Davidson shared a situation with one of the garbage trucks sinking up to its axle in a neighborhood road. When patching small sections of road there are some costs;
however, patching larger sections of road becomes more expensive. There are neighborhood roads in rough shape; however, city staff have focused on reconstructing main roads based on
the City Council’s direction.
Discussion regarding neighborhood roads needing repairs.
Council Member Johnson asked if the city requires the sidewalks to be replaced when they are reconstructing a street. Public Works Director Davidson explained the corner section of sidewalk
must be replaced to meet ADA federal regulations. When sidewalks are up against the curb there is a cross slope along the driveway sections. The cross slope must meet the 2% ADA standard,
when the cross slope is greater than the 2% that driveway apron must be replaced. The replacement of the sidewalks is based on criteria the City Council has implemented.
Council Member E. Erickson asked about non-existing sidewalks. There is a city ordinance requiring property owners to install sidewalks. Public Works Director Davidson replied yes, there
is a city ordinance the City Council passed many years ago requiring the property owners to install sidewalks on their property.
Finance Officer Nielson reviewed the General Fund and the services the city is paying for with those general dollars which are sales and property taxes. The chart illustrates the actual
subsidies of those services from 2022 to 2024. He said he added the 2025 budget; however, because the city is in the middle of fiscal year 2025, he could not show the actual subsidies
for that year. He calculated the average per year and included the total average subsidy per year for each of the different services.
Finance Officer Nielson explained there are a couple of methods to subsidize. One method is to pay for the subsidy directly out of the General Fund, the other method is to transfer money
into the respective fund for that service. The recreation programs subsidy is in Fund 03, in 2024 they were able to decrease the subsidy by about $5,700. Rexburg Rapids is subsidized
mainly for capital replacement which was established from the beginning to make sure the assets are being taken care of. The Recreation Administration Fund is the fund for the positions
that run all the recreation programs.
Finance Officer Nielson continued to review the other funds for the different subsidies. The Cultural Art Fund includes the Tabernacle, Romance Theater, and Legacy Flight Museum. The
average subsidy for the Cultural Arts was about $686,503; however, last year’s subsidy was large at about 1.3 million dollars because of the repointing of the Tabernacle to the amount
of almost $900,000.
Finance Officer Nielson said the average subsidies for the Police Department are about 5.9 million dollars and last year's budget for police was about 6.4 million dollars. The police
budget generally never decreases because of the growth in the city and the personnel growth in that department each year. The costs are primarily operational. The police budget also
includes a fund transfer to set aside money for a future building which is part of that analysis.
Finance Officer Nielson explained the fire budget is like the police budget in that their budget typically does not decrease. The fire budget is heavier on the capital side than police
because they have expensive equipment that they must purchase. A fire truck costs over one million dollars, he pointed out that the 1.7-million-dollar fire budget is the city’s share
of the three entities.
Finance Officer Nielson said the parks and trails budget does not typically decrease as well; however, the city has received a few grants. The subsidy last year for parks and trails
was $1,000,037, this year the subsidy is $993,000. The average subsidy is generally over one million dollars. The city is setting aside a small amount of money for trails and parks
capital reserve. The money is being set aside
for additional pickleball courts and the conversion of the Smith Park tennis courts to pickleball courts this spring.
Finance Officer Nielson reviewed the Airport Fund, it is a 50/50 ownership with the county, and the city averages a $50,000 subsidy, the county’s subsidy for the airport is about $50,000,
totaling to about a $100,000 subsidy. He noted the FAA funds 90% of the airport projects, which if they did not fund those projects the city and county’s subsidies would be astronomical.
Finance Officer Nielson said the golf courses are also a joint venture with the county, it is a 50/50 ownership between the city and county. The golf course subsidy has decreased compared
to the prior two years. The city/county is setting aside money to replace the irrigation system at Teton Lakes within the next 10 years.
Finance Officer Nielson reviewed the fiber fund. The fiber project was funded through a grant. The city built the fiber ring which led to a private public partnership with Silver Star.
They hope to connect all the residents and businesses in the city to fiber.
Finance Officer Nielson reviewed the other General Fund Departments Fund Net (expenses less revenues) as illustrated in the chart above. The Finance, Planning and IT Departments are
a significant expense. He also reviewed the revenue sources such as overhead charges, other revenues, property tax
and sales tax. The business type funds, or the proprietary type funds will pay overhead charges. Another example is the building inspections will have an overhead expense for those services.
He noted the sales tax is very volatile; those taxes could go up or down quickly depending on the economy.
Finance Officer Nielson expressed caution when pulling funds from the General Fund because the reserve in the general fund is dropping significantly and steadily. These are the areas
the City Council could cut out to fund LIDs.
Finance Officer Nielson reviewed the March 25th Work Meeting Analysis. The analysis illustrates the costs of the LIDs over the last 10 years. The costs of LID 45 were about $681,00 10
years ago and LID 54 is a large project at an estimated cost of 4.5 million dollars with the city share of 3.5 million dollars and the property owner’s share of $997,500.
Finance Officer Nielson reviewed the different city participation percentages for the costs of LID 54. He specifically explained, the column indicating the city’s 100% participation
for curb and gutter, excluding sidewalk and driveway and the estimated property owner cost with curb and gutter city participation. In 2018 the City Council made the decision to move
the franchise fees from the General Fund into the streets budget. The added funds from the franchise fees were about $630,000 more per year that is available for street reconstruction.
He said if the City Council had not made the decision to move the franchise fees into the street budget, then approximately 1.9 million dollars would be available for street reconstruction.
Public Works Director Davidson said he and Mayor Merrill met with the County Comissioners regarding the County Road and Bridge tax dropping by about $700,000 that the city receives.
The County Comissioners are looking to see if they can change the direction of those funds to hopefully give back a little bit more to the city.
Council Member E. Erickson asked Public Works Director Davidson, if LID 54 is an unusually large LID. Public Works Director Davidson replied no, LID 54 is not necessarily large; however,
there are more properties that do not have sidewalks. The city engineers survey all the curb and gutter slopes to look for water drainage issues. The slopes of the gutter help to keep
water off the roads; therefore, maintaining the life of the asphalt. Mayor Merrill added when a property has more curb and gutter then that assessment is a lot more, it would make sense
for the city to take care of the costs for curb and gutter.
Council Member Reeser asked if the Councilmembers would consider a temporary moratorium on requiring new sidewalks until the LID funding is sorted out. Public Works Director Davidson
mentioned a property owner had requested to delay the replacement of sidewalks because they plan to redevelop the property. The city allowed that property owner to postpone the replacement
of the sidewalk for a year. There are benefits to having sidewalks especially in areas where there is heavy pedestrian travel.
Discussion regarding areas with no sidewalks and the sidewalk replacement criteria. Council Member C. Erickson mentioned there are sidewalks included in LID 54 that do not need to be
replaced. Public
Works Director Davidson said the City Council could adjust the current criteria requiring sidewalk replacement.
Council Member Johnson said the easiest solution is to reconstruct fewer streets included in an LID and for the city to pick up more of the LID costs for property owners. She is in favor
of delaying this LID until they try to figure out other funding options.
Council Member E. Erickson said from his point of view, the city picking up the costs of the curb and gutter is a good gesture. The property owner is still going to have the expense
of replacing or installing sidewalk on their property. He said he is not in favor of raising taxes which is what a general bond would do. The LID philosophy is that the person who benefits
the most pays for the improvements.
Council Member Chambers asked about the property owners that have a $20,015 assessement and if the city covers all of the costs for curb and gutter, how did those savings impact the
costs of those assessements. Finance Officer Nielson reviewed the estimated savings for the property owners when the city covers the costs to replace curb and gutter.
Discussion regarding the city covering the entire costs to replace curb and gutter and not to cover any of the costs to install new curb and gutter. Discussion regarding ribbon curbing.
Council Member Johnson asked to review the costs analysis if the city were to cover the costs of replacing the curb and gutter and 30% of the sidewalk. Finance Officer Nielson reviewed
the costs to the city with replacing the curb and gutter and picking up 30% of the sidewalk costs.
Finance Officer Nielson mentioned the option to lower the interest rate for the property owners that choose to finance the LID. He expessed caution when deciding how much to lower the
interest rate because too low of a rate may incentivize property owners not to pay off the LID loan. Council President Walker suggested lowering the LID loan interest rate to 3%.
Discussion regarding the city making accommodations to cover the costs of curb and gutter on previous LIDs due to having to take out the curb and gutter to meet city standards.
Council President Walker suggested the city cover 100% of the costs to replace curb and gutter and 30% city participation of the costs when the driveway apron needs to be replaced to
meet ADA Standards. Council Member Johnson said she agrees with keeping the 30% city participation of the costs of the sidewalks. Mayor Merrill cautioned increasing the city’s participation
is going to have a larger impact on the city’s budget. Council Member Johnson said she is interested in trying to help people who do not have exsisting sidewalks.
Mayor Merrill said as property owners, we need to have some ownership and not have the city pay for property improvements. The city taking 100% of the costs to replace curb and gutter
is a large portion of the assessements. He said it makes sence for the city to pay to replace the curb and gutter because it is part of the street. Council Member C. Erickson said he
agrees with Mayor Merrill that the city should cover the costs to replace the curb and gutter because it is a part of the street.
Discussion regarding private companies replacing sidewalks at a lower costs for property owners.
Council Member C. Erickson said they have spent hours trying to figure out how to fund LIDs; however, in order to balance the budget and fund LIDs the city would have to take away some
of the services such as safety and other areas. Public Works Director Davidson said the City Council recommended changes will be made to Resolution 2020 – 25 and presented at the next
City Council meeting.
Adjournment 6:46 P.M.
APPROVED:
________________________________
Jerry Merrill, Mayor
Attest:
________________________________
Marianna Gonzalez, City Deputy Clerk