Building a Town Hall/Police Station in Walkerton, Indiana Without Raising Taxes or Utility Rates
Located in northern Indiana, Walkerton had operated its Town hall, court and police station out of an old store front on highway 6 (pictured below) for decades. The space was so small the Town’s clerk-treasurer had resorted to using an old jail cell to store Town records! Faced with a lack of space and dozens of needed improvements, the Town had a decision to make; update the old storefront or construct a new building to house the police, court and Town hall?
After careful consideration, it became clear to Town officials the benefit of a new municipal building far outweighed the cost. “We envisioned the new building as the hub of our small town,” said Walkerton Economic Director/Building Commissioner Phil Buckmaster.
Now the question was how to pay for project? “We knew what the best option was for the Town, but with today’s economy we were hesitant to put any additional tax burden on our residents,” said Town Council President Karol Jackson.
Having completed a number of projects with Umbaugh over the years, Town officials enlisted Umbaugh to assist them to resolve the financial issues related to this milestone project. It was clear from the first meeting the Town’s primary objective was to eliminate, or greatly reduce, any tax burden from the project. As Buckmaster put it, “We had the perfect location picked out and a vision for what the building could be. Now we just needed Umbaugh to figure out a way for us to pay for it without raising taxes or utility rates.”
After a comprehensive review of Town’s revenue sources and spending patterns, Umbaugh proposed a plan to the Town Council: utilize already existing county economic development income tax (“CEDIT”) revenue to offset any tax impact the project would have. The plan consisted of the Town issuing property tax backed bonds to pay for the building, but instead of levying a tax rate to pay for the bonds they would use an existing revenue stream, CEDIT, to replace the need for a property tax levy. In the words of Buckmaster, “It was a win/win scenario; no new taxes and low interest rates associated with a tax supported bond issue.”
The result; Walkerton officially opened its new municipal building in the spring of 2014 (pictured below). The $2,000,000 project was a success in many ways; including meeting the Town’s goal of no new taxes or fees. “The Town of Walkerton is extremely appreciative of Umbaugh for their guidance exhibited in financing the Walkerton Municipal Building. Umbaugh’s experience and creativity allowed Walkerton to complete the project without any new taxes or utility rate increases,” Buckmaster added.
Annexation in Washington, Indiana Benefits Economic Development
Annexations can happen for a variety of reasons. Washington, Indiana annexed 1,234 acres adjacent to an interchange for the new section of I-69 connecting Evansville and Bloomington, because the City wanted to have some influence on the zoning and development that was bound to ensue at the new interchange.
Washington is a half-way point between Bloomington and Evansville. The I-69 section from Evansville to the Crane Naval Surface Warfare Center opened in November 2012, making a trip to Evansville significantly shorter.
Washington was able to accomplish all the steps for its annexation in less than twelve months. The process began by assembling a professional services team of attorneys and engineers with Umbaugh as the financial consultant.
It helped that most of the annexation was farmland, and land owners clearly understood that the availability of municipal services would increase the value of their land. The annexation area also included a few homes, whose owners initially were not as enthusiastic.
Washington Mayor Joe Wellman attributes support for the project to good communication with the homeowners: “We went door to door, talking to homeowners about the advantages of annexation. Umbaugh prepared a parcel-by-parcel analysis of the tax impact. We could show each homeowner how the annexation would affect their taxes, but we also explained what they would gain from the annexation.”
Although some concerns were expressed at public hearings, no one remonstrated against the annexation.
The Crane Naval Surface Warfare Center attracts high-tech workers and Mayor Wellman hopes the easy interstate access encourages more of them to become Washington residents.
The annexed land is now zoned for light industrial to commercial development for roadside businesses, and another section could be used for single and multi-family residential development.
Mayor Wellman anticipates the annexed land will attract restaurants, retail outlets, gas stations and hotels, although fully developing the new land could take a decade or even longer.
In late 2014, Washington collaborated with Daviess County to issue bonds to improve roads, rail sidings and other improvements to facilitate future economic development in the annexation area. It’s a good example of how the original annexation is leading to additional economic development opportunities for the larger community.
The annexed land now contains a new water tower—visible from the I-69 exchange and clearly marked with the city’s name, so those who drive through on the interstate know where they are. Said Wellman, “We’re already on the map. Development of this area will make us a bigger star on the map.”
Starke County Uses Creative Financing for Jail Expansion
Starke County, like many counties in Indiana, struggled to fund a jail expansion at a time when it was already struggling to provide essential services with less money.
Indiana changed its A-D felony sentencing to a six-level grid in July of 2014, reserving state prisons for high-level offenders and keeping lower-level offenders at county jails for treatment-oriented rehabilitation or serving them locally with community-based correction programs and probation. Experience tells us that when county jails become overcrowded, the potential for lawsuits increases.
Persuading taxpayers to vote in favor of raising property taxes for jail expansion to meet the new sentencing grid requirements is understandably difficult. As an alternative, Indiana counties can fund additional jail space with existing income tax revenue streams, additional income tax rates or other existing local revenue sources.
With assistance from Umbaugh, Starke County adopted an additional County Economic Development Income Tax (CEDIT) rate of sixty-five hundredths of one percent (0.65%) imposed on the adjusted gross income of county taxpayers. The additional CEDIT required enabling legislation from the Indiana General Assembly. In Starke County’s case, the legislation allowed the county to implement the rate to provide specific funding for its correctional facility and still maintain the low property tax rates that were important to their constituents and essential to economic development.
Starke County issued bonds to renovate its existing facility and build new jail space to address the needs for the foreseeable future, giving them additional flexibility to address the impact of the new sentencing grid. The additional CEDIT tax is designed to provide funding to repay the bonds and meet ongoing operating expenses as needed.
Patoka Lake Regional Water & Sewer District Makes Major Water System Upgrades with No Rate Increase
Having a long-term plan for maintaining and upgrading your water utility system is an excellent idea. But sometimes Mother Nature forces you to reexamine even the best of plans.
The Patoka Lake Regional Water and Sewer District (PLWSD) had a multi-phase plan to upgrade its water supply system and had just completed upgrades to its water treatment plant when the drought of 2012 occurred. A water system that was adequate under normal conditions suddenly was put to the stress test. The district was able to fulfill its contracts to supply water, but as the drought wore on the system constantly ran at full capacity while water levels in the tanks continued to drop.
PLWSD is a regional water district serving portions of eight southern Indiana counties and wholesale to 37 water utilities supplying places such as Paoli, Huntingburg, and Santa Claus. Umbaugh has consulted to PLWSD on rate making and bond sales since the District was formed in 1975.
Plans were on the books to upgrade water mains installed in 1977 through 1979 and pumps that were becoming undersized for the growing customer needs. While water supply was sufficient, there needs to be more distribution system capacity.
“Knowing that some of our older bonds would be paid off in 2017, we meant to wait on the next phase of improvements until then, but the drought opened our eyes,” said Bruce Heeke, PLWSD general manager. “We assembled some preliminary cost numbers and moved ahead with engineering to determine what would it take. The board made the decision to go ahead, because a lot of people depend on us.”
By refunding two sets of existing revenue bonds and getting low interest rates on new bonds, the District was able to authorize nearly $30 million in a series of system improvement projects without asking for a rate increase.
The new projects are:
• increasing the water treatment plant’s capacity from 10 million gallons per day to 15 million
• adding a new one million gallon storage tank in Orange County
• adding a new 24” water main to a new Baseline Road storage tank
• adding a new 24” water main to the Ferdinand area
• adding 18 miles of 24” water main lines to southern Dubois County.
Heeke is pleased to say that even with all these improvements the PLWSD has not had a water rate increase since 2008. “We will see how the maintenance and operation costs stabilize. We may need a small adjustment in the future.”
“When circumstances called them to task, Patoka’s Board and staff did an excellent job of getting things done quickly,” said John Seever of Umbaugh. We are very proud to be associated with them.
Lebanon Upgrades Storm Water System While Keeping Property Taxes Unaffected
Cities everywhere are struggling to maintain aging infrastructure and meet requirements for handling storm water. The City of Lebanon issued its third set and final of storm water bonds to fund storm water drainage and storm sewer improvements along streets throughout its storm water district. The final project will improve storm water management along Lafayette Avenue, Grant Street and South Meridian Street.
The City was having issues with storm water and was frequently receiving complaints about basement flooding, particularly along Meridian Street. So the City decided it needed to get something done.
In all, the storm water capital projects will accomplish $6 million in storm water improvements without affecting the existing storm water district property tax levy.
They did this by carefully planning projects over a multi-year period, refinancing one set of the existing bonds, and issuing new bonds each year for three years as prior debt was being paid off.
Lebanon has been fortunate to see its assessed value growing and as new businesses have chosen to locate in the city’s business park as well as existing businesses expanding.
Lebanon funds its storm water needs using a double barrel approach: the project needs are funded through property taxes and the operation and maintenance expenses are provided through a monthly storm water fee charged by the storm water utility.
The other advantage of spreading the storm water construction projects over multiple projects and multiple years is that the projects are easier to manage and they can be scheduled around other community events, including the city’s big July 4th festival and parade.
School District and City Cooperation Benefits Both Parties
Lebanon Community Schools was planning a comprehensive renovation of Lebanon High School. The City of Lebanon, with its growing business park, lacked a place to host major meetings, events and conferences.
Good timing and creative thinking led to a solution that benefits both the school district and the city.
The City of Lebanon, through its Lebanon Redevelopment Commission, proposed a cooperative venture. Funded by a $500,000 contribution of TIF funds from the Lebanon Business Park, a planned meeting room at Lebanon High School grew from 2,000 to 9,000 square feet with full technology and catering for up to 600 people. “Anything you can find at a conference center, you can find here,” said Dr. Robert Taylor, superintendent of Lebanon Community Schools.
The room, which can be divided into sections, is used by the school district for meetings and events, and it’s available to outside organizations.
“Boone County groups were having events at the Indiana Roof Ballroom in downtown Indianapolis, because there was no comparable venue in Zionsville, Brownsburg, Avon or Plainfield,” said Taylor. “The new conference center is keeping those meetings here in town.
The conference center has hosted an Indiana Association of Cities and Towns (IACT) conference, a workforce development conference, the annual United Way breakfast, and an education summit with U.S. Representatives Susan Brooks and Todd Rokita.
“The conference center enhances education, because Rep. Brooks and Rep. Rokita met with our students while they were here for the summit,” said Taylor.
Umbaugh assisted Lebanon Community Schools on bond financing for the renovations and works with the City of Lebanon on various projects. This unique school-city partnership creatively saved taxpayers from funding two different facilities when a shared facility can serve multiple needs.
“Furthermore, Dr. Taylor was made a voting member of our redevelopment commission as one who understands the importance of economic development and intergovernmental cooperation.”
Public Outreach and Transparency Earn Approval for LaPorte County Public Library Renovations
LaPorte County Library has embarked on a multi-year program to improve each of the seven libraries in its county-wide system. The library received approvals for $12 million in funding in early 2015, but the groundwork started long before.
In 2012 the library began a strategic planning process by listening to library users through community meetings and user surveys regarding how well the library system was meeting patrons’ needs. Library staff attended community meetings by other organizations as well.
“We came to this after some tough times,” said Fonda Owens, LaPorte County Public Library executive director. The ideas for facility renovations started small, but the list grew as more library users shared their ideas.
“They told us ‘we want spaces to sit quietly and places to work in groups. We want be able to plug in devices without sitting on the floor; we need more electrical outlets,’” said Owens. Additional studies identified deficiencies with lighting and accessibility.
As the plan took shape, Umbaugh developed financial projections to show the tax impact for various budget levels, plus how the tax increase would affect property tax caps.
Fulfilling a commitment to be open and transparent, the library shared information with the public, the library board and staff: “We posted our community meeting reports on our website, along with committee meeting minutes, the architect’s work, statistical and financial reports and our annual report,” said Owens.
Was the time devoted to outreach and transparency worth it? “Yes. It made a huge difference,” said Owens.
A public hearing in early 2015 could have triggered a public remonstrance about the project, but no remonstrance materialized.
The library kept the County Council informed throughout the process, including providing a binder with information from the user surveys and public meetings, reports from the architects and attorneys, and the Umbaugh report on financing and tax rates.
“We presented the binder to the Council during the public comment portion of the February meeting and asked to be on the agenda the following month. We came back in March, with board members, library supporters, our attorney and Belvia Gray from Umbaugh. The library supporters packed the room.”
The County Council approved the projects!
Owens concludes: “Our mission statement says our libraries are the center of community life. We will be that place where people can come together in accessible, comfortable spaces for early childhood literacy, tutoring and life-long learning. I am so happy for the community.”
A Long Wait Followed by Rapid Action: Fort Wayne Purchases Investor-Owned Water Utility Assets
It took ten years of protracted negotiations and litigation, but Fort Wayne City Utilities completed its acquisition in December 2014 of assets owned by an investor-owned water utility in north and southwest Fort Wayne in a negotiated transaction. The acquisition also settled ongoing litigation regarding the price Fort Wayne paid for the assets it acquired in the northern part of Fort Wayne.
Umbaugh was hired in 2013 to assist Fort Wayne with the economic evaluations proposed during negotiations to ensure the acquisition cost had no negative impact on existing customers. Umbaugh also acted as financial advisor on bonds and provided guidance on structuring agreements and in seeking approval by the Indiana Utility Regulatory Commission.
When a letter of intent on the acquisition was reached in July 2013, Fort Wayne Mayor Tom Henry stated: “This is a win for our community. Our efforts in the north have already reaped over $10 million in savings for residents over the past five years, and this effort in the southwest will save residents over $2 million annually as a result of lower rates and reduced or avoided expenses in water softening. This partnership will enhance our quality of life and position Fort Wayne for future growth and success.”
Negotiations following the letter of intent were also protracted, and reaching a final definitive agreement took another year (July 2014). Filings were made immediately with the Indiana Regulatory Commission, and its approvals were received in October 2014. An official statement was prepared, and $63 million in revenue bonds were sold just three weeks later in a competitive sale. The final closing on the bonds was in December 2014. Umbaugh acted as the municipal advisor on the transaction.
More than 2,000 customers were connected to City Utilities Service two days after the bonds were sold, and the remaining customers will be connected in phases over the next twelve months. Even before they are all connected, all 12,500 water customers in the former investor-owned utility’s service area started paying City Utility rates, resulting in savings of about $120-$140 per year on their water bill.
Umbaugh was pleased to assist Fort Wayne move the project along as fast as circumstances would allow, and to help city utilities achieve its goal of better service and lower costs for their residents.
Delphi: The Planning of a Stellar Community
The elimination of most semi-truck traffic from downtown Delphi when the Hoosier Heartland Highway was completed presented a window of opportunity for this Carroll County community to realize a long-term vision of creating a walkable, vibrant downtown, including new shops and restaurants, outdoor dining, upper-story residences and a restored 19th-Century opera house. As a result, the City of Delphi was selected as one of Indiana’s Stellar Communities.
Becoming a Stellar Community allows the City to accelerate its plans instead of spreading them out over five or 10 years longer. The Stellar Program matches the City to traditional and special grant programs to fund projects.
Umbaugh is the municipal advisor to the City and was enlisted to help Delphi address the financial accounting and reporting implications of this exciting and challenging opportunity. Umbaugh’s role in the project was to:
· Assist the mayor and clerk-treasurer in properly accounting for all grant dollars and local match requirements;
· develop a financing plan for the City to identify the sources and timing for their local match requirement; and
· work with the City’s engineer and other officials to help ensure transparency of project costs and funding sources throughout the various construction periods.
In total, the City currently has planned nearly $23 million in Stellar Projects with a local requirement of only $2.57 million.
Nonetheless, taxpayers and council members still needed reassurance that this is a wise investment.
“It isn’t typical for a small community such as Delphi to invest $2.5 million in downtown improvements,” said former Mayor Randy Strasser. “That’s a big number. We had to create a comfort level for the public and council members who have never invested at this level. Umbaugh led the council through how our cash balances would be affected. They calculated our future revenue and showed that even if we have no growth, we will have higher cash balances at the end of the Stellar Community projects, even after spending $2.5 million. It showed them we’re not spending our way into the poor house.”
Since the Stellar Program will bring millions of dollars of investment, each dollar having a specific purpose and tied to a specific project, everyone knew it was essential to manage the projects correctly. Umbaugh has been an ongoing resource to help manage the financial communication among engineers, local stakeholders, the common council, the mayor, the clerk-treasurer, the State of Indiana and the federal government.
Local officials know the projects will add value – and assessed value—to the community over time. “The downtown renovations are filling a gap in the area destinations. Tens of thousands of people come into the community for heritage tourism to the nearby 1860-era village and museum to experience what Indiana was like during the Wabash and Erie Canal days. Our downtown project will protect historic downtown buildings and make them suitable for unique shops and other new businesses.”
Umbaugh’s mission is to help clients resolve complicated financial issues they face as they improve the quality of life in their communities. Delphi’s Stellar Project is an excellent example of Umbaugh’s fulfillment of our mission.
We say thank you to the City of Delphi for allowing us to be part of an endeavor so important to your local community.
If you travel near Carroll County, make time to take a slow drive through Delphi and notice all the improvements.