downtown ypsilanti.jpg

Downtown Ypsilanti.

(Ann Arbor News file photo)

A majority of the Ypsilanti City Council favors an annual five year "tax" on residents that would help pay off some of the city's nearly $14 million in Water Street debt.

And at least one council member says it's time to consider requiring residents to pay all the debt.

During an informal vote at a City Council goal setting meeting on Monday night, Mayor Amanda Edmonds and council members Dan Vogt, Nicole Brown and Anne Brown said they would support a proposed annual fee to run the city's streetlights.

Council members Brian Robb and Pete Murdock opposed it, though the informal vote was not taken on a resolution. Instead it was a way for City Manager Ralph Lange to gauge whether he has support for his plan to make residents pay for Water Street debt. Mayor Pro Tem Lois Richardson was absent.

The latest draft of the streetlight plan would require the city's 4,148 residential parcel owners in a new citywide special assessment district to pay $71.92 annually, while the 677 commercial, industrial and non-profit parcel owners would pay $126.12 annually. Included in the latter group are parcels that hold structures with four more residential units.

Vogt said the city has no other options but to go to residents for money and address the Water Street debt problem once and for all. He said he would even be in favor of a higher fee to pay down all the debt.

"This is the time for political courage," he said. "We have to solve the problem, we cannot kick this down the road another year ... we have to buck out of this. We can't worry about ten people out of (20,000) who are going to (complain) no matter what we do.

"We have to do it. Yes, it's tough, but we have to do it."

The city bonded to purchase the 38-acre Water Street property, which sits just east of downtown, in 2003. Officials envisioned mixed-use developments that would essentially extend downtown east, and the tax revenue would pay down the $30 million in bond debt.

But the real estate market crashed, development never came and Ypsilanti is paying around $1.4 million annually toward the bonds. Those payments will soon increase to $1.7 million and sink the city if they aren't addressed.

Generating an estimated $347,000 through the streetlight "tax" is part of a larger plan officials are discussing to address Water Street debt. Other options and pieces of the package include refinancing $8 million in debt, selling $1.8 million worth of Water Street property, and asking the state to forgive a Water Street loan. There is also discussion of cuts to police, city staff and the fire department.

While the fee isn't technically a tax and doesn't require voter approval, like an income tax, the money will go into the general fund. In past discussions on the issue, residents told City Council they feel the fee is a tax in essence, if not name.

Council will be required to go through a series of formal votes to approve the district and fee, a process that could take months.

Anne Brown previously said she would prefer to delay approving a streetlight fee for another year, then assess where the city stands, but on Monday she changed that position and said she supported it. However, she added that she received emails from ten constituents who strongly opposed the fee and requested meetings with her.

Edmonds said she's in favor of the plan when it's viewed in pair with 4.5 mills dedicated to local roads coming off the books in 2017 and 2019. With residents no longer having to pay the road millage - road repairs will covered by new funding from the state - residents will actually be paying less taxes than they are now.

But Robb said that isn't necessarily true as residents continue to pay more each year for increasing police and fire pension costs, and he added it's too soon to ask residents to chip in for the debt payments.

"There are still many moving parts in the solvency plan. We need to bring stability to those variables before we go asking residents for more revenue," he said.

Still, Lange contends the city can't cut its way out of the situation. It has already reduced its staff to a near minimum and is struggling to field a responsible number of police officers and firefighters.

"Balancing the budget with cuts makes the city's service level unacceptable," Lange told Council.

Residents, however, weren't happy with the idea of paying to run it the city's streetlights the last time Council considered the idea.

In 2013, Council planned to set up a citywide special assessment district to charge residents to cover the cost of converting the city's streetlights from mercury vapor to LED. As part of the plan property owners would have continued paying between $67 and $84 to power the lights over the next 18 years.

Ultimately, Council chose not to charge residents for operating costs, but instead approved two annual assessments of $58 to pay for the conversion expenses. Those were assessed in 2014 and 2015, and the city found significant savings by switching to LED.

But Ypsilanti is approaching dire financial straits, and the new proposals are largely a result of its inability to sell Water Street property in recent years. It would have a budget surplus if it weren't for the payments.

In June 2014, Lange presented a plan in which he proposed stabilizing the city's budget in part by selling $4 million worth of Water Street land.

A year later, with no new developments cooking, he presented an updated five-year plan to stabilize the city that was contingent on selling 7 acres of property at over $300,000 per acre by July 2016.

That won't likely happen, so Lange is now developing a new plan that includes the streetlight tax.

But Robb said he still isn't sold on the need for a new fee quite yet.

"Special assessment districts need to be used to guarantee residents something. With the streetlight assessment district, we guaranteed them the most energy-efficient lights available and reduced energy costs. Asking residents to pay for operating costs won't make them feel like they are getting something for their investment," he said.