November 13, 2006
Stormy weather | Angry taxpayers want to repeal Lewiston's new stormwater utility fee, but officials say the move would send city finances down the drain
By Whit Richardson
During Lewiston's most recent municipal budgeting process, which wrapped up in May, the city council was faced with a quandary: how to pay for the extensive upgrades to its stormwater management system required by federal law without increasing property taxes. It's a debate occurring in municipalities across the country, but Lewiston settled on a relatively rare solution known as a stormwater utility fee.
The city will charge homeowners, businesses and nonprofits an annual fee for the amount of runoff their properties send into the public stormwater management system. Only 200 municipalities in the country have adopted a similar strategy, with Augusta the only other city in Maine assessing a stormwater utility fee. But the reason there are so few examples may be because the measure has proven unpopular among property owners ˆ a fact Lewiston is learning the hard way.
The idea was simple enough. Revenues from the fee would pay for the stormwater management system and allow the city to refund the roughly $1.6 million in property taxes typically earmarked for that job. The proposal didn't garner much attention over the summer, when the city was finalizing the details. But when the city council in September officially adopted the fee, dubbed by some the "rain tax," concerned residents, business owners and nonprofits began to question the policy. Ten residents ultimately began a petition process that, if successful, would prevent the city from collecting the fee until voters decide on the issue in November 2007.
David Hughes, a stay-at-home dad behind the petition campaign, says the fee is really just another tax, and one that unfairly burdens businesses and nonprofits. Hughes, a Republican who last week lost an election for state representative, also says the city failed to properly educate the community about the policy. "This year was the wrong year to be implementing a fee that you weren't sure everybody actually understood," Hughes says. "Look at how upset people are at the typical spend-and-tax-after mentality. It's pretty much a no-brainer that if you're going to implement any kind of new fee this year you've really got to do the leg work to make sure the community fully understands it."
Now, the city faces a serious problem: If successful in collecting 1,000 signatures before January 11, the petition will prevent the city from collecting $1.9 million in fees it needs to fund city services, says City Administrator Jim Bennett. Because of that potential gap, Bennett in October issued a citywide hiring freeze and put a hold on all planned capital improvement projects for the year. Those moves would save close to $1 million, but more drastic cuts would be needed to keep the budget intact if the petition succeeds. Bennett has said the city may be forced to lay off up to 50 employees, close a fire station, reduce police patrols or reduce funding to parochial schools.
While Hughes calls the city's dire predictions "scare tactics," Bennett says they reflect a financial reality that Hughes ˆ who critics allege launched the petition drive as a campaign stunt ˆ and his fellow petitioners didn't take into consideration. "I don't think they had an understanding of what the unintended consequences are," says Bennett, "which is to essentially blow a big hole in the budget."
Targeting surface area
Lewiston's stormwater fee is based on the amount of impervious surface ˆ driveways, patios, roofs, parking lots, and the like ˆ that each property contains. Single-family homeowners pay a flat fee of $30 annually, or $45 for duplexes. Properties with more than 2,900 sq. ft. of impervious surface are charged the $30 flat fee, plus 4.4 cents for every additional square foot. The logic behind that fee structure is that industrial or commercial properties often have large amounts of impervious surface, which send the rain directly into the city's stormwater management system, picking up pollutants along the way. "[The fee] more directly ties the costs that are borne by the community to the person that generates that cost," says Bennett.
Hughes, though, says the system means businesses will end up paying more than is necessary. "There comes a point when you incur so many charges on business that you find yourself in this severe competitive disadvantage in terms of attracting new business," Hughes says.
Overall, businesses seem to be split over the new stormwater utility fee, says Chip Morrison, president of the Androscoggin County Chamber of Commerce. But after business owners kept raising a number of the same concerns about the fee ˆ such as when they would learn how much they owe and if the fee would go away after the city completes upgrades to the stormwater system ˆ Morrison in August sent a letter to the City Council asking for clarification. He says he never received a response.
The ongoing confusion over the policy is another reason Hughes says his group started the petition drive. "Some people are not informed about it, but the idea of taxing rain doesn't sit well with them," says Hughes.
The city's communication with business owners over the new fee definitely could have been better, says Peter Geiger, executive vice president at Geiger Bros., which produces promotional materials in a 160,000-square-foot facility in the city. "The fact that I don't even know how much it's costing me is an indication that it wasn't particularly well done," Geiger says.
He estimates his company's stormwater utility bill will be somewhere between $20,000 and $25,000. While he laments the additional cost, he seems resigned to paying it. "It's not so much money that it changes the course of how I do business, but it could mean less profit sharing, it could mean less investment in something else," says Geiger.
Bennett agrees that many people seem uninformed about the issue, which he regrets because he says the utility fee system is saving residents money. If the city had continued to pay for the stormwater management system out of property taxes, the average homeowner in the community would be paying about $115 more annually, Bennett says. Instead, they now receive a $30 bill. "It's clear that every single-family residence in the community saves money by doing this," Bennett says. "Do I think everybody gets it or understands it? I think clearly they don't."
No exemption for nonprofits
Critics like Hughes also think the fee unfairly targets historically tax-exempt nonprofits ˆ and some organizations feel the same way. In September, Bates College, Central Maine Medical Center and St. Mary's Regional Medical Center sent a letter to the city noting their opposition to the new fee, citing its disproportionate reliance on large property owners, its ambiguity about credits offered to organizations that build their own stormwater systems, and concerns about what the fees would actually be used for.
By the city's calculations, Bates College would be charged $62,500, St. Mary's would be charged $28,000 and CMMC would be charged $16,400.
A spokesman for Bates College would not comment on the issue because he says the college is still discussing the issue with the city. No one at CMMC was available to comment for this story. And although St. Mary's CEO James Cassidy put his name on the letter, Mike Grimmer, the hospital's vice president of facilities, said he understands the city's position. Even nonprofits should be held responsible for their environmental impact, Grimmer says. "[The city has] tried to fairly look at the nonprofit sector and say, 'Okay. What services do they use, what services do they impact?'" Grimmer says.
But that question of fairness is central to the debate over the stormwater fee, and will be a big component of the opposition's signature-gathering process this fall and winter. Hughes is confident his group can collect the 1,000 signatures required to put the issue on next year's ballot by stressing the perceived burden on business and nonprofits. But he's also planning to stress what he sees as the bungled job the city did in reaching out to its residents. And if the petition cripples the city budget, Hughes says, it's the city's own fault. "We wouldn't be in this problem now if they had gotten the money before they spent it," Hughes says. "It goes toward the attitude of government spending and spending and not thinking about where the money is really coming from."
While Bennett acknowledges that Lewiston voters are worried about municipal spending, he hopes they also realize the city can't avoid costs associated with federal stormwater regulations. If the stormwater fee is repealed, taxpayers will have to foot the bill some other way. "The bottom line is that those costs are mandated and there isn't anything anybody can do," Bennett says. "It needs to be paid."
The city will charge homeowners, businesses and nonprofits an annual fee for the amount of runoff their properties send into the public stormwater management system. Only 200 municipalities in the country have adopted a similar strategy, with Augusta the only other city in Maine assessing a stormwater utility fee. But the reason there are so few examples may be because the measure has proven unpopular among property owners ˆ a fact Lewiston is learning the hard way.
The idea was simple enough. Revenues from the fee would pay for the stormwater management system and allow the city to refund the roughly $1.6 million in property taxes typically earmarked for that job. The proposal didn't garner much attention over the summer, when the city was finalizing the details. But when the city council in September officially adopted the fee, dubbed by some the "rain tax," concerned residents, business owners and nonprofits began to question the policy. Ten residents ultimately began a petition process that, if successful, would prevent the city from collecting the fee until voters decide on the issue in November 2007.
David Hughes, a stay-at-home dad behind the petition campaign, says the fee is really just another tax, and one that unfairly burdens businesses and nonprofits. Hughes, a Republican who last week lost an election for state representative, also says the city failed to properly educate the community about the policy. "This year was the wrong year to be implementing a fee that you weren't sure everybody actually understood," Hughes says. "Look at how upset people are at the typical spend-and-tax-after mentality. It's pretty much a no-brainer that if you're going to implement any kind of new fee this year you've really got to do the leg work to make sure the community fully understands it."
Now, the city faces a serious problem: If successful in collecting 1,000 signatures before January 11, the petition will prevent the city from collecting $1.9 million in fees it needs to fund city services, says City Administrator Jim Bennett. Because of that potential gap, Bennett in October issued a citywide hiring freeze and put a hold on all planned capital improvement projects for the year. Those moves would save close to $1 million, but more drastic cuts would be needed to keep the budget intact if the petition succeeds. Bennett has said the city may be forced to lay off up to 50 employees, close a fire station, reduce police patrols or reduce funding to parochial schools.
While Hughes calls the city's dire predictions "scare tactics," Bennett says they reflect a financial reality that Hughes ˆ who critics allege launched the petition drive as a campaign stunt ˆ and his fellow petitioners didn't take into consideration. "I don't think they had an understanding of what the unintended consequences are," says Bennett, "which is to essentially blow a big hole in the budget."
Targeting surface area
Lewiston's stormwater fee is based on the amount of impervious surface ˆ driveways, patios, roofs, parking lots, and the like ˆ that each property contains. Single-family homeowners pay a flat fee of $30 annually, or $45 for duplexes. Properties with more than 2,900 sq. ft. of impervious surface are charged the $30 flat fee, plus 4.4 cents for every additional square foot. The logic behind that fee structure is that industrial or commercial properties often have large amounts of impervious surface, which send the rain directly into the city's stormwater management system, picking up pollutants along the way. "[The fee] more directly ties the costs that are borne by the community to the person that generates that cost," says Bennett.
Hughes, though, says the system means businesses will end up paying more than is necessary. "There comes a point when you incur so many charges on business that you find yourself in this severe competitive disadvantage in terms of attracting new business," Hughes says.
Overall, businesses seem to be split over the new stormwater utility fee, says Chip Morrison, president of the Androscoggin County Chamber of Commerce. But after business owners kept raising a number of the same concerns about the fee ˆ such as when they would learn how much they owe and if the fee would go away after the city completes upgrades to the stormwater system ˆ Morrison in August sent a letter to the City Council asking for clarification. He says he never received a response.
The ongoing confusion over the policy is another reason Hughes says his group started the petition drive. "Some people are not informed about it, but the idea of taxing rain doesn't sit well with them," says Hughes.
The city's communication with business owners over the new fee definitely could have been better, says Peter Geiger, executive vice president at Geiger Bros., which produces promotional materials in a 160,000-square-foot facility in the city. "The fact that I don't even know how much it's costing me is an indication that it wasn't particularly well done," Geiger says.
He estimates his company's stormwater utility bill will be somewhere between $20,000 and $25,000. While he laments the additional cost, he seems resigned to paying it. "It's not so much money that it changes the course of how I do business, but it could mean less profit sharing, it could mean less investment in something else," says Geiger.
Bennett agrees that many people seem uninformed about the issue, which he regrets because he says the utility fee system is saving residents money. If the city had continued to pay for the stormwater management system out of property taxes, the average homeowner in the community would be paying about $115 more annually, Bennett says. Instead, they now receive a $30 bill. "It's clear that every single-family residence in the community saves money by doing this," Bennett says. "Do I think everybody gets it or understands it? I think clearly they don't."
No exemption for nonprofits
Critics like Hughes also think the fee unfairly targets historically tax-exempt nonprofits ˆ and some organizations feel the same way. In September, Bates College, Central Maine Medical Center and St. Mary's Regional Medical Center sent a letter to the city noting their opposition to the new fee, citing its disproportionate reliance on large property owners, its ambiguity about credits offered to organizations that build their own stormwater systems, and concerns about what the fees would actually be used for.
By the city's calculations, Bates College would be charged $62,500, St. Mary's would be charged $28,000 and CMMC would be charged $16,400.
A spokesman for Bates College would not comment on the issue because he says the college is still discussing the issue with the city. No one at CMMC was available to comment for this story. And although St. Mary's CEO James Cassidy put his name on the letter, Mike Grimmer, the hospital's vice president of facilities, said he understands the city's position. Even nonprofits should be held responsible for their environmental impact, Grimmer says. "[The city has] tried to fairly look at the nonprofit sector and say, 'Okay. What services do they use, what services do they impact?'" Grimmer says.
But that question of fairness is central to the debate over the stormwater fee, and will be a big component of the opposition's signature-gathering process this fall and winter. Hughes is confident his group can collect the 1,000 signatures required to put the issue on next year's ballot by stressing the perceived burden on business and nonprofits. But he's also planning to stress what he sees as the bungled job the city did in reaching out to its residents. And if the petition cripples the city budget, Hughes says, it's the city's own fault. "We wouldn't be in this problem now if they had gotten the money before they spent it," Hughes says. "It goes toward the attitude of government spending and spending and not thinking about where the money is really coming from."
While Bennett acknowledges that Lewiston voters are worried about municipal spending, he hopes they also realize the city can't avoid costs associated with federal stormwater regulations. If the stormwater fee is repealed, taxpayers will have to foot the bill some other way. "The bottom line is that those costs are mandated and there isn't anything anybody can do," Bennett says. "It needs to be paid."
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