Chatfield property owners could see a property tax increase of 4.85 percent in 2013.

During a Committee of the Whole discussion last week, the Chatfield City Council discussed the primary goals, which will make up next year's operating and capital budget.

In presenting the proposed 2013 budget, city clerk Joel Young said the goal is to maintain the 2013 property tax levy at a level as close to 2012 as possible in order to limit the financial burden on residents "during this time of economic stress." The budget also allows for a slight increase in the property tax levy to account for continually increasing costs of doing business, so that leaders and residents are not unduly burdened in the future.

A 4.85-percent increase would amount to an increase of $58,298 over last year, for a total levy of $1,260,664.

Personnel

Young explained the preliminary budget includes funding for a 3 percent increase in the general pay grid, a pay step increase for those employees who will qualify for such an increase in 2013 and a 10 percent increase in health insurance premiums.

This amounts to a real-dollar increase of $35,000.

Library

Young explained while the Library Board of Trustees and staff have done an excellent job of holding down costs at the library, the effects of continually increasing costs are starting to show.

The library's general fund subsidy will increase from $90,000 in 2011 to $103,354. The request for 2013 would increase the general fund subsidy to $116,050.

Fire

In order to keep up with the costs of state-of-the-art equipment for the fire department, the city has already increased the amount it charges townships that use the fire department.

In keeping with past practice, the city will increase the amount it supplies to the fire department to match the townships' rate increase. This year that number is $11,000.

Ambulance

According to Young, the general fund subsidy to the ambulance department is relatively stable and is not expected to increase this year.

The annual cost of operating the ambulance department, including a $30,000 annual allocation to its capital improvement plan, will be approximately $264,000 in 2013. This is paid for primarily with charges for services (approximately $200,000), about $19,500 from the city's general fund, $16,500 from area townships and $15,000 from the training institute.

"The ambulance department is one of the few services offered by the city that has the capacity to charge user rates that reflect the cost of the services provided. In order to minimize the burden to the general taxpaying public, rate increases should be considered so as to eventually eliminate the general fund subsidy," Young added.

EDA

During the Committee of the Whole meeting, extensive discussion took place regarding the city's role in purchasing and selling property.

One priority of the Chatfield Economic Development Authority (EDA) is property located along Highway 52 and bounded by Twiford St., Division St., Main St. and Grove St.

Councilmember Paul Novotny, who serves on the EDA board, said he thinks if the council wants to redevelop, the city and EDA are going to have to work together.

The group specifically discussed three commercially-zoned properties along Highway 52, one of which the EDA already purchased in 2011 as an initial step to assemble enough property to spur the development of businesses and the creation of jobs in the area. Next to the city-owned property is a piece that is not for sale. On the other side of that is a third piece which is for sale.

Councilmember Russ Smith, who also works with the EDA, said, "The city owns some of the land already. We've lost out on a couple businesses coming into town because there wasn't property available. Say it was Alco or Pamida. They're going to want to be on 52. If we had something available to them ..."

Councilmember Josh Thompson disagreed.

"Why does the city have to own it? We sit there with the risk of spending the money, hoping someone comes in to buy it. We sit on it and make taxpayers pay extra money to purchase it," said Thompson.

"I have to disagree with Josh. I think $20,000 (to EDA) would be a well-spent amount of money. We're looking at a strong position which could increase employment and help our tax base," said Jacobson. "Worrying about if it's 2 percent on budget, that $20,000 is money well spent and I think the general public would agree with that. I'm not a big believer of the city owning property. But I think in this case we need to try to pursue this with any means possible."

Thompson next asked, "How much land do we need to have sitting there vacant? We're now looking at buying additional property and we're not set up to sell the stuff we have. I understand it's a planning process, but we also have downtown buildings vacant."

Hainlen said there are different types of properties that suit different types of potential buyers.

"We have certain businesses that you want right along 52 and others in the industrial park that don't need that exposure for their success. Certain businesses are better suited for certain locations. The downtown doesn't have enough square footage for the business we've been in conversation with (about the property along 52)," said Hainlen.

Young next reminded the group of the history of the development.

"Thirty years ago that zoning changed from residential to commercial. How do you do that when all the lots are only 60' by 128'. Who is going to fit there? There is a business that is ready to go if they had a little more space ... We don't think a business is going to buy a 60' x 128' now, and then hope they can buy another one and another one. If you want this area to transform, you're going to have to do something to transform it," said Young.

"If there's a business that's waiting for us to buy it, why aren't they buying it?" asked Councilmember Dave Frank.

"One house (of the three) isn't for sale," said Young.

"If we need to raise the tax levy to buy it, do we then drop it if they come in and buy it? We're asking taxpayers to pay extra money to develop it for economic purposes, but not giving it (the money) back to taxpayers," said Thompson.

Novotny suggested maybe some of the money could stay in the EDA.

Hainlen pointed out that more businesses coming to town would mean more tax revenue for the city.

"When you have a business that's looking to expand, they're going to go where they get cooperation. If they want to expand in this area, we need to be thoughtful enough as a city council to respect that," said Hainlen.

Center for the Arts

The Chatfield Center for the Arts typically receives a subsidy of $22,000 from the city. This amount is not expected to increase in 2013.

This will likely change next year, as the center's existing cash balance will be depleted.

Debt service

The city did not issue any additional debt in 2012, but did issue bonds to re-fund the 2008 series. This was done to take advantage of lower interest rates.

This re-funding of the 2008 issue will save the city $328,000 over the life of the bonds and decrease debt service payments by $17,000 per year.

Water fund

Although the city is expecting to expend approximately $209,000 on water in 2013 (including $70,000 to support infrastructure and debt service obligations), there will be no impact on the property tax levy.

User rates are expected to increase by approximately $.27 a month for a minimum user and $.55 a month for a user of 5,000 gallons of water per month. No significant water improvement projects are scheduled at this time.

Sewer

In 2013, the city's sanitary sewer enterprise is expected to expend approximately $712,000. This includes a $350,000 allocation to support infrastructure improvements and debt service allocations.

"If we want to start replacing four-inch main, we need to come up with a plan," said Young.

The group spent a significant amount of time discussing city priorities for sewer repairs, but Young said the general fund subsidy would not be increased through property taxes at this time.

The budget suggests a 6 percent increase in sewer user fees in 2013, and 4 percent increases each year after. Six percent equates to an increase of $2.16 a month for a minimum user and $3.54 a month for the user of 5,000 gallons of sewer.

Young explained there would be no general fund increases for refuse collection or cable television.

The final budget will be approved during the Dec. 10 meeting.