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HomeMy WebLinkAboutcoa.lu.an.Annexation Study.1978 . .-\ , .., , '. CITY OF ~ASPEN ~ i""""\ LJq- AJ . 13Q south galena ~treet asp e n ',c 0 lor a d Q: 81611 ..... ..._.~ -. Date: October 6, 1978 To: Mick Mahoney From: Harold Stalf Re: Annexation OUr first assumption was to only recognize those costs directly caused by annexation. Anticipated growth within CitY Government without annexation were not addressed. Secondly, the costs displayed, for tpe most part :reflect the requests of the department head, tempered to some ex- tent by us. We show that the City can in theory afford annexation by utilizing 6th and 7th penny revenues. Also, i:t would be necessary to finance the heavy front end capital'acquisi- tion over several years. ' . . i , I t ! I .I.., I': I i I , J . The costs ,of annexation c.ndcom9arison with resulting revenue have been compiled by Sheri Son field and myself. This is a first cut, with many assumptions having been made, especially in the cost figures. However, I believe the figures presented, fairly accurately account for ,the dollars annexa.tion would require. I "-. ~. ! '.' l , i , I " ; , { I ~ , , I I , , These options, along with a proposed amusement tax if we annex the base of the ski areas, are shown to give Council the knowledge and flexibility required to make such a e.e- eision. . ..~ " . . . Note: Not include in our report is the $55,000 projected one time costs of title search, surveying" etc. that are needed before annexation would be possible. cc: City Council I,' ~',:::::. - ,:;a:c..:'..."_. '_~_'~i' '~,,!,:;:..,!,~. ..~"_.- -.;.........~ -~'.'.- .' .;... ..~. ":'..;' ,....\.. ....""-..0'.-... ,,-. .1""'\ , " . ..." to .....,. CITY OF A~PEN 130 sou th ga Ie na}trce t , '. aspen, .coloradq? 81611 ~~.~ Annexation - 1980 Operating costs a Public Works Personnel-Director 1/2 Sect'y OVerhead ~ Supplies, $30,000 5,000 etc. 5,000 $40,000 Engineering Personnel-Ass't Engineer 1/2 Secretary 2 P'l' Summer OVerhead - Eqpt, Maint, $20,000 5,000 10,000 etc. 5,000 $40,000 Streets Personnel - 5 persons @$14,OOOea = .ta~erials - Cinders, Sand, OVerhead - Supplies, Vehi- cle Maint,etc. Road Maintenance - , $70,000 40,000 15,000 50,000 $175,000 Electric ..No Change . Water No Change (until existing water systems 'are acquired by the City.) Parks No Change (until newpa,rks are acquired or donated to the City.) (trails to be maintained by PitCo.) Recreation NO Change . Heeded in 1980 with or withOl1t>anneJCation. , ".';";" h $40,000 $40,000 $175,000 ~~.,*,1~ ~.... .. ~ Annex~on ?g. 2 Transportation No Change (Until assumption of Central Garage or Towing) Inspection Personnel- 1 Health/Bldg Inspector Overhead - Supplies, etc:. Police Personnel - $17,500 2,500 $20,000 $70,000 35,000 5,000 10,000 $120,000 Equipment - Overhead 5 patrolmen@14,OOOea. 2 sergeants@17,SOOea. 3 cars @ ISO/month Supplies, Training, etc. Uniforms, etc. Municipal Court No Change City Attorney Personnel OVerhead $15,000 5,000 '20,000 - Assistant Supplies City C:,lerk . Overhead - Voting Machines; ,Phones, Increased Records , $10,000 City Manager Personne1- Assistant (fu11 time) $15,000 Finance Personae1- 1 Clerk $10,000 $20,000b $120,000 $20,000 $10,000 $15,000 $10,000 Joint Departments - Chanqe in Share of Costl No Change in ,level of activity due to annexation. current Budget SO/50 60/40 Difference Planning Communic. Anim. Cont. Data Proc. $130,200 101,225 53,400 58,340 $21,700 16,975 8,900 14,725 $60,300 $217,000 168,500 89,000 97,230 $108,500 84,250 44,500 43,615 ~otal Operating $510,300 .11 -Inspection costs covered by Building Dept. revenues $60,300 .---', "..;,..;.,~~-_. ...........,-'''.- -,--~._,. .._.~......,..,.,.,... .:';.".."~-'- I: , II , II j ! ! . ;1 j I ., I, ~. ~ I , ',i I ; i Ii " I .1 I I , , ! I I I , ; , I I 1"""--, Annexation - Capital City Hall - Basement (Police, Council ) Street Dept. - Epuipment (Trucks, Plows, etc.) - Cinder Storage Facility Police Dept. - Radios, Lights, Uniforms"etc. Street Lighting capital Expenditures - Total Financed over 10 years (optional)' = $65,000jyear " LOst Revenue Water Department Food Tax Refund $132,000 42,000 $174,0001 year Summary Costs ReVenues Operations Capital LOst Revenues $510,300 65,000 174,000 $749,300 Unrestricted Restriced Total Revenues Total Cost . . . ,r"\ Annexation Pg.3 $300,000 250,000 20,000 10,000 5,000 $585,000 $240,047 544,000 $784,047 (749,300) , $34,647 Differenc Prc:lPosedAmusement 'l'ax,woU::Ld create additional revenue ,of $840,000.00 - -\ ..} 1 j 1 I I i , , .\ J J j I ;-,",. ~\. '!:" ;., I: I', -I ~,:~ ~, "j '~ ESTIMATE OF REVENUES GENERATED DUE TO ANNEXATION** (an ~ge year of operations stated~ 1977 dollars) UNRESTRICTED REVENUES Description 1. Property tax (~ased on assessed valuation per PitCo Assessors office) a) At 1977 mill levy of 2.01 1) Total area except Highlands 2) Highlands only 2. Utility Franchise Taxes (based upon usage estimates by the utility) a) Canyon Cable b) Rocky Mtn Natural Gas c) Mountain Bell d) Holy Cross Elec 1; 3. Revenue Sharing (based on 1977 per capita receipts) 4. Cigarette Tax (based on estimated increase in state sa~es tax collections within the city) 5. Misc Licenses and Permits a)Liquor occupational taxes and licenses D)Sales tax licenses c) Business licenses (110 e,st businesses) 6. City's share of county sales tax (based upon agreement with PitCo) 7. pepartmental Revenue Increases ,a)Building dept., Total unrestricted revenues RESTRICTED REVENUES Description . Re$triction 1. Sixth Penny Sales Tax Park Dedication Fees Open space, parks & 'recreation acq & improvement; historic bldg restoration Transportation & mall acq, impro & operations Ullfl as: specified in , granta.ward Construction &'nrt:nce of highways, roads & streets in the city 2. Seventh Penny Sales Tax 3. Special Grants ,4. Highway Construction & Maintenance Funds Est. 1\1IIt. I I I I , i ! I I ! I I I i i I $ 37,129 2.552 39,681 2,718 9,836 9,000 18,060 39,614 47,152 _ 41,650 4,000 200 2,750 6.950 42,000 23,000 $240.047 Est. 1\1IIt. $ 250,000 250.000 * * Exact amount of federal or state participation is undete~inable due to continuing legislative change. See attached list of grants available, provided by Jennifer Carr. (p. 6) See list of assumptions attaChed. (p. 7) ** ......,-........ .~- ......- ~. ... .. f""", a) Highway Users Tax (based upon t:he Colo Annual Ilwy Report and estimat:e.s of mileage and car regist:rations in the area) b) County Road and Bridge FUnd (based on 1977 ' County R&B eill levy of 1.67) c} Motor Vehicle Registration Fees (based on estimated number of vehicles registered in the area) d) Specific Ownership Taxes ,(based on 1977 increase in assessed valuation for property tax purposes) ~otal restricted reven~es =:PROPOSED REVENUES: .: Description ., '.. _1. Amusement Tax' of 7% (based on 77/78' season skier visits at 78/79 rates and estimated pass vsnon-passholder sJciersl a) Aspen Mtn. ($3.0 mill. b) Buttermilk Mtn. ($2.8 mill. c) Highlands ($6.3 mill. . .. =::..2. Property Tax increase of 7% (based on 1977 mill of 2.01 and 1977 PitCo Assessor' s va1~tion) . a) .~tal annexation area except HighlandS ]:)) BighlandS annexation , . '. .... ~1 proposed revenues ,.:t' ...... r"~'T " -.. 'l .... , . . . ..'. " Sales) Sales) Sales) . . 'r'"'' .-... ., " ." . . ,\ " , . ';-" , '. ',. .~ . . -~. < - t.. $ 18,485 , '., I . " , 15,42.11 ~ . " , . . , 7,740 ,\ : \~ . . 2,444 '$ 544,~93 " ~ Est:. Amt. " ..... . $ 441,000 196,000 210,000 $ 847,000 .. i .~ . ; $ 2,730 I " , 849,730 ..:-!':;': t . . .~.:- . . { ,.;- I '\ \ '. I I I . . I I .. I' .i: r t r." t; ;,1 , . . I I" ..., . ti 11. .' I I I I . I I I I I i , i j , - . ::,{" ~.. .-.."-".... "t7~...J."'''OJ.c programs In The Case of Annexation i I I I I I r-':. ...... .....,. . 1"-"'0. The fallowing prv~rams are potential funding sources for various needs which could occur in the event of annexation. I have not; gone into a lengthy researcheffo,rt due to time constr.mts. It is not possible to put: an exact dollar figure on these progZlOlSI as the need and scope has not been defined. LAND ACQUI.sITIO~1 ' Resource Conservation and Development Loans Co:nmunityFacilities Loans , Community Development Block Grant/Discretionary '. Leases, permi'ts, and Easements for Public Works Four Corners Regional Commission Development Surplus Land for Community Development Surplus ProPE'lrtypt.iJ.ization Disposal of Federal Surplus property . \ \ . ..- . -. , .' . ... DATA AND INFOR11.l\TION Information on Agricultural Activities . . Soil Survey Snow Survey and Water Supply Forecasting- Geodetic Surveys ' .' ." Mineral Research and Resource Water Resources Investigation Park an4 Recreation Technical Assistance Park Fractice Program Prices and Cost of Living Data Air Pollution Control Technical Information Drinking Water Supply - Technical Assistance '"r..,. ......; . ~;:,., , . ""; . . . ...~.'.. ,..'.'. . . . '.." .. .- . T..., .. ... ,COMMUNITY FACILITIES, Cooperative Extension Se"ice Watershed Conservation EConomic Develo~ment - ~echnical Assistance ,OUtdoor RecreatIon -. Acquisition, D!'lv.el.opment and l'i",'"ningc . .. .. . .~ .; : '., t -:;1', , . t . ,: SUMAN RESOURCES Child Development - Child ,Abuse and Negl.ect Prevention Public Education on Druq Abuse - Technical Assist"'n~ ~unity Relations Service Law Enforcement Assistance -Technical Assistance .... ...... ;........ . nANSPORTA.TION .Development and Promotion of Intermodal . Comprehensive Planning Assistance State and Community Highway Safety ., Transportation .' . PtlBLIC HOUSING PROGR.'UoIS - CONS~RtJCTrON OR PURCRASE HOrtgage Insurance - Construction/Rehab CondCJ Program ~ " ' Hcrtgage Insurance - Rental Housinq Low/Moderate 1;nCOllle . Ifortgage Insurap,\:e for Purchase, or Refinancing 'I ~~--:- . ....'... .. '1 e! "" .L ; '. ..:' , PtlBLIC HOUSING PROG1W-!S Lower Income Housing AssistanceProg-ram ! .. t " '., " i . HOUSING - LAND ~CQUISITION Rural Housing Site Loans aural Rental Housing Loans '.- -... " , - .. - . , . .......... .... .., '::', .. f ..:. ".. ',. f.,_~_: -"'1 :."'~f.. .:-...'.....',.._...' .JOi " ' ,'.. "'.' .' '. \. ': .."'" . .. .~. -;- L . .. .. ~ ~ .. r-.. ~ pg. 7 ASSUMPTIONS 1. The estimated amounts are based on an average year of operations and are stated in 1977 dollars. These amounts may not include all start-up costs that would be incurr,ed in the first year of annexation. 2. Estimated population in the annexation area is 3,249 and in the City o"f Aspen is 51990. Both are based on the number of dwelling units times average number of persons per unit. 3. Estimated 1% sales tax collections from the annexation area are $250,000. 4. All roads in 'the area are accepted by the city in their present state and maintained in such state by the city, or, in those instances t-lhere propertyQwners want improvements, the city will establish an improvement district to fund the expenditure. 5. J\.dditiOI'lal parks and recreatio.nal facilities are provided a,ta later date. The county continues to provide trail maintenance. 6. County and ether property tax levies and assessed valuation remain <it approxiltia,telythe same rate and amoun~~ 7. The total area after annexation would encompass Mt.n. Valley to. the Airport Business Center anQ Highlands. This includes the current City of Aspen water service area plus Highlands. 8. The original building department revenue increase of $15,000 was based upon 1977 county building department revenues of $22,000 ,for the annexation area only and was reduced for build out, limita.tions on the present zoning of the a,rea. This aI!lount was revised to $23,000. !"""\ ^ d / ANNEXATION FEASIBILITY For Philip S. Mahoney and H. J. Stalf By Bob Kranz Admin. Intern ,- / ~"'/" ,f~~~J.."'_" 11 ktJ ....- "iI ,-,., )-.., This report is a general review of the economic implica- tions of annexation for the City of Aspen. I. Annexation and Increases in Services . Annexation will extend the area within which. Aspen must provide services. ,Fortunately, however, most of the services in Pitkin County are provided through the county government or independent districts. This means that such public services as schools, sewer, fire protec- tion, and electricity will be unaffected by annexation. Similarly, certain services, such as dog wardens, communications, data processing and water are already provided by the City to outlying areas and will not need .~ to be newly extended into annexation areas. The services which the City must extend to an annexation area are police protection, road maintenance, building inspection, health department, and general administration. Police protection for a given area can be calculated at about one officer per thousand citizens. Supervision, training, equipment and pay for a single officer runs about $25,000 per year~ Annual road main~ tenance costs, including snow removal, patching, etc., are estimated at about $7,000 per mile. The remaining costs are difficult to estimate and will vary widely with the condition of the area annexed. I ~-,/ f"""\ ~ 2 \' , , II. Annexation and Revenue A$pen receives more than half of its General Fund revenues from its sales tax. Moreover, between 80 and 85 per cent of Aspen's tax base is dependent upon levies, fines and fees which do not/vary with the taxpayers' residence. In other words, 80 to 85 per cent of the City's tax base would be unaffected by annexation. Of the remaining 15 to 20 per cent of the City's tax base, only part of it will be positively affected by annexation. ("Positive effect" meaning increased tax revenue with annexation.) The tax sources positively affected, include the county road and bridge tax,vehicle taxes, highway users tax, non-business licenses and '.. permits, various franchise taxes, and property taxes. Opposite the additional tax revenues the City will earn with a given annexation, are the revenues lost from reduced water rates and food tax refunds. The rate , the City charges for water in the county is approximately twice what it charges to City users. When an area is brought into the city, its residents will be eligible for the lower rates. Similarly, they will be eligible for food tax refunds not extended to county residents. OVerall, for a given annexation area, the City will annually lose between $5 and $10 in lost revenue and extended service area costs, for every $1 it receives in new tax money from the annexed area. The ratio will I"'" ,.~ , , 3 vary with the condition of the annexed area and such factors as property values, the percentage of people applying for the food tax refund and the amount of ,public roadway in the area. ,/ / The philosophy behind Aspen's tax structure revolves around the community's status as a resort town. The large influx of visitors places a heavy burden on Aspen's municipal services and facilities. Aspen's tax structure represents an attempt to place the costs for these services and facilities on the visitors who use them. For this reason, Aspen's property tax is extremely low and 80 to 85 per cent of its tax base is " non-resident dependent. Equity The,financial problem.s the City faces in annexa- tion give rise to questions of equity in regards to the City's tax base. Specifically, are the residents of Aspen's outlying areas paying taxes in proportion to the services they receive? Information reviewed for this report suggests that they are not. For example, a resi- dent of the Mt. Valley area pays the same taxes as a resident of Aspen through the 80 to 85 per cent non- resident dependent taxes. Moreover, they pay substantially r--... ,~ , .. higher water rates which amount to an additional taxI and they are not eligible for the food tax refund. For this higher level of taxation the Mt. Valley residents receive fewer public services and no political / 2 privileges from the City of Aspen. Whether the issue is taken as a political matter of equity to citizens of the outlying areas or a prac- tical matter of the economic feasibility of annexation, the City clearly must consider establishing a tax base which is tied to residency. This most probably means raising property taxes. lBetween $200,000 and $300,000 is annually trans- ferred from the Water Department Fund to the City's General Fund. As such, the Water Department operation must be viewed as a tax source. 2As indicated by the negative revenue flow ratio for annexation, property taxes, etc., do not nearly offset the costs of expanded service areas and reduced water rates. 4 ., 1""". ~ .,' 6 3. Cost Analysis of Capital Improvements Given the selection of priority annexation units, a cost analysis of the capital improvements needed to bring each area up to City standards should be completed. For example, bridges, roads, street signs, or street lighting may be below City standards. These would have to be improved at the time of annexation. " 4. Homeowner Survey The City must next survey the selected areas to determin~ firs~ if the residents are favorably disposed toward annexation,and second, whether or not they are willing to accept an assessment district to bring the area's roads, etc. up to City standards.l The City could offer to manage the district and defray some of the improvement costs, This could be done by accepting ten per cent of the district's overall assessment or simply having the various City departments complete any improvements which could be done "in house." " IGiven the fact that the City presently manages assessment districts for curb and gutter improvements within the City, I see no reason why similar districts could not be created in the annexation areas, The alternative is to raise property taxes sufficiently to cover lost revenues, increased services area costs and capital improvements in the annexation area. : ~ ~ 5 \ , III. Moving Toward Annexation What follows is a general outline of the steps the City of Aspen must take as it moves toward annexation. 1. Definition of Possible Annexation Areas In 1972, the Engineering Department completed a detailed study of potential annexation areas. Twenty-six areas were identified as logical annexation units. For each annexation area a schedule was attached showing the additional revenue generated by that annexation. The City's first step toward annexation would be to instruct the Engineering Department to revise and update this report. The new report should also include a '.,jI schedule of costs for extended service areas and lost revenues, in addition to the schedule of new revenues generated by each annexation unit. Also, this report should be completed with a substantial degree of Planning Department input on the selection of particular annexation units. 2. Selection of Priority Annexation Areas Given the revenue information generated by the Engineering Department report, and local political con- siderations, the City administration must select annexa- tion units upon which it would seem reasonable to proceed. ~ .""'" ,r"'"'\ , 7 5. Restructuring of the City's Tax Base simultaneous with steps 3 and 4 above, the City Finance Department should complete a review of the financial ramifications of annexing each of the priori- tized units. Based on this review, the Finance Department should present recommendations for restructuring the City's tax base in such a way as to make the new revenue annually generated by an annexation unit nearly equal to the annual costs of its annexation. Conclusion The Upper Roaring Fork Valley is an area of tremendous growth. The opportunity to maintain Aspen's sovereignty over the Aspen Metropolitan Community will very quickly pass. It is critically important that the city move in the relatively near future to make annexation economically feasible. ...