FARGO – Special assessments and the horror stories they sometimes generate among Fargo taxpayers would be eliminated under a plan proposed Wednesday, May 2, by City Commissioner Tony Gehrig, but how he’d do it immediately drew fire.

The commissioner, who’s running for re-election in June, said that instead of paying for streets and sewers with specials, he’d use sales tax now set aside for utilities. He said he’d then raise utility rates.

It would be a drastic change, but Gehrig said specials are deeply unpopular with the public because they can be surprised with a huge liability such as the $20,000 some homeowners on Broadway North have seen. “It’s unpredictable. It can be massive. And really we're affecting real families.”

Gehrig gave the example of a homeowner who lives along a part of Broadway that was recently rebuilt. The homeowner complained that his monthly special assessment payments are as large as the monthly mortgage payment he made in the 1970s. The owner of an apartment building told the commissioner her $100,000 specials are a fifth of the total value the city appraised the building at.

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But Gehrig’s plan won’t help them because it wouldn’t affect existing specials.

Mayor Tim Mahoney, who’s running unopposed in June, said that means they’ll pay higher utilities, which pays for the specials of others, even as they continue to pay their own specials. He added that sales taxes won’t be enough to pay for all specials.

Tim Flakoll, one of several candidates challenging Gehrig, called The Forum after learning about the plan. The challenger said nearly a quarter of Fargo property owners have already paid their specials off and wouldn’t benefit. “It seems like he’s robbing Peter to pay Paul,” Flakoll said.

Gehrig had already considered this criticism and acknowledged it in his news release: “Like everything, there must be a starting point and an end point. We cannot ignore a problem like this any longer, and those of us who have assessments will have to take one for the team if this problem is ever to be solved.”

Special assessments, used to pay for street and sewer projects, are levied only on properties that benefit. The city pays for 50 percent, and property owners pay the rest. Sometimes the city pays for the entire project if it benefits everyone.

The Broadway North homeowner, for example, was paying only for the new street not the sewer main, which serves the entire city. But even with the help, many homeowners are facing specials of $15,000 to $25,000.

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Gehrig said he’d wanted to get rid of specials for years but tales of these high specials spurred him to action this year.

Mahoney said city staff are studying ways to reduce the specials for Broadway North homeowners and commissioners are aware of the problems with specials in general. He’s heard many more complaints about high specials since 2014 when the city cut its share of street and sewer costs from 70 to 50 percent, he said, so it may be time to bring back the higher city share.

Flakoll said he’d like to cap specials as a percentage of the total value of the property to keep them affordable. He added that he’d put a greater emphasis on reducing the cost of construction, such as buying construction material in bulk or using recycled material to build roads, a technique used in the United Kingdom.

The sales tax Gehrig wants to use to pay for streets and sewers in lieu of specials is a 1-cent sales tax passed by voters in 2006 to pay for water and sewer utilities, streets and flood control. His plan would use the half of the tax that now goes to water and sewage treatment to pay for streets and sewers. Utility rates would go up an average of $19 a month to make up for the utilities’ loss of revenue.

Gehrig said this would still be less than the $100 a month that a property owner with $2,000 in specials pays. “It’s not just a shift. It really is better,” he said.

Mahoney said utility rates are affordable now and hardly anyone notices them. That won’t be the case if the rates go up as much as Gehrig wants, the mayor said, and that doesn’t include the rate hikes needed to pay for the needed upgrades to the water and sewage plants.

Gehrig’s plan will also affect developers in new areas of town who have relied on specials to pay for new streets and sewers instead of borrowing from banks. He said this is intentional because the city doesn’t need to incentivize “sprawl.”

Mahoney said this would make buying a home harder. Homebuyers would have to convince banks to lend them money for not just the home but also the streets and sewers, he said.