Wright City leaders are becoming increasingly anxious about a looming problem in the city: Streets and other infrastructure that were built for a town of 2,000 people are beginning to buckle under …
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Wright City leaders are becoming increasingly anxious about a looming problem in the city: Streets and other infrastructure that were built for a town of 2,000 people are beginning to buckle under the weight of 5,000 who now call the town home, with more moving in every year.
Projects to repair or upgrade streets to handle the city’s ongoing population growth have gone unfunded because the city doesn’t have nearly enough funding to meet their need, according to Wright City’s elected leaders. The topic has come up numerous times in recent years, but last week aldermen began serious talks about new ways to raise money for the city.
To illustrate the size of the problem: The city has identified $30 million in needed street projects, but only has a little over $2 million in annual revenue, according to data publicized by Alderman Karey Owens.
On Dec. 8, Board of Aldermen President Ramiz Hakim asked the board and city administrators to give serious consideration to three new taxes or fees meant to address the city’s funding shortfall:
1) A “road impact fee” that charges home builders for the increased use of city roads that they are bringing into the city.
2) A “tax” on new house construction that would be included in building permit fees.
3) New business license fees that scale up or down based on how active the business is.
“What we’re trying to do is find creative ways to get infrastructure ahead of growth, but not put that burden on the current residents by increasing their tax burden,” Hakim explained.
No decision was made on any of the proposals on Dec. 8, but quick action could be required in order for aldermen to propose them to voters during upcoming local elections in April.
The first proposal would attempt to tie developers and new businesses directly to the deterioration of city streets that they use. The city would charge a “user fee” for new developments and spend that money to repair wear and tear on roads used by the development.
However, this option is the most limiting to the city, because the money could only be used for infrastructure directly impacted by a development. The city would also have to do some complicated calculus to figure out the exact cost of future wear and tear, advised City Attorney Paul Rost. Also, and very importantly, the city wouldn’t be able to spend that money to repair damage that’s already happened — it can only be used for future expenses.
“There has to be a reasonable relationship between what the fee is and what the impact is of the development,” Rost explained. He added that the city could expand where fees could be spent, but only with citywide voter approval.
Although new home developments eventually generate increased property taxes, that revenue is on a years-long time delay, commented Alderman Hakim. There needs to be an immediate revenue source to get ahead of infrastructure needs created by new residents, Hakim said.
“If there was a way to tax new residents that move into the city by increasing the (building) permit fee, which would then be passed along to them, that in turn would increase revenue ... that would help us get ahead of infrastructure quicker,” Hakim said.
He noted that new home construction in Wright City is significantly cheaper than nearby places in St. Charles County, and that the city should be taking advantage of that gap to charge a new fee. Hakim suggested that the city could assess as much as $5,000 per new home.
Wright City issued about 60 new home permits this year, which would have generated $300,000 if the city had this fee, Hakim said.
And if that tax ends up “pumping the brakes” on growth and slowing down the city’s population increase, that might not be a bad thing, Hakim commented.
But this proposal has a complication, which is the question of how to handle apartments. Alderman Nathan Rohr noted that the city has at least one major apartment development coming in the near future, and maybe more. Will builders be charged $5,000 for each living unit? That could drastically increase their up-front costs.
A new home tax would have to be approved by city voters.
The last proposal is a type of fee that many larger cities already have, according to city officials, which is a business license fee that scales based on the type of business or amount of revenue being generated at the business.
Wright City currently charges a flat $50 fee for business licenses, regardless of whether the business is an insurance agent office or a heavy manufacturer. Hakim said he wants to see fees that are more reflective of each business’s impact on infrastructure.
The new fees could potentially take different forms. For example, a retail store might pay a percentage of its sales revenue, but a warehouse might pay a certain amount of money per square foot in the facility.
“This is an opportunity ... to have people pay their fair share, based on the deterioration of our infrastructure,” Hakim said.
This proposal, in whatever form, would require a public vote.
