Sewer Repairs Likely to be Financed With Fees, Not Just Taxes

The Whitefish Bay Village Board is considering borrowing $105 million to improve aging sewers in the village, but village trustees don't think all of it should end up on property tax bills —some of it should also be recouped through user fees.

At a Monday night meeting, Whitefish Bay trustees hashed over the basics of funding $105 million in storm sewer repairs. Based on the input gathered, Whitefish Bay Village Manager Pat DeGrave will forward the information to the village's financial consultant, who will further refine the financial impact of funding the 10-year capital improvement plan.

"We are looking for parameters and comfort levels, not hard and fast policies," DeGrave said.

Why a storm water utility

The trustees unanimously expressed their willingness to create a storm water utility in the future. In addition to charging homeowners, a storm water utility would also charge non-profit entities — like churches, government buildings and community organizations — that do not pay taxes.

"The logic of the storm water utility is that the rain doesn't discriminate where it falls," DeGrave said. "If it falls on a school, municipal building or a home, ultimately it is directed into a system that the municipality has to take care of."

Storm water utility rates are based on the total impervious footage of the property. Some properties that have detention ponds, such as and , could receive a discount due to the reduced storm water impact of those properties.

If the village were to create a storm water utility, the village would be able to lessen the amount borrowed through general obligation bonds, which are borrowed through debt. With a storm water utility, a portion of the money would also be obtained through revenue bonds, which are recovered through user fees.

In making the motion in favor of combinining general obligation bonds and revenue bonds, Trustee James Roemer said the board has a "high level of comfort" in using revenue bonds, not just taxpayer debt.

Resident Michael Utzinger said the board should be careful in how much it charges in fees, as opposed to taxes.

"I can deduct taxes, but I can’t deduct fees," he said.

Possible tax rate cap

In its conversations, the trustees also talked about the size and scale of future general obligation bonds. A previous Patch article showed the level of , rising from a rate of $0.80 to $2.83 at its peak.

On Monday night, trustees said the village's financial consultant should cap the level of tax rate dedicated to debt service at $2.

Normally, under state levy limits, the village would be restricted from raising the tax levy higher than the value of any net new construction, but state statutes also exempt principal and interest on general obligation debt from those levy limit requirements.

The board also voted to pace its borrowing, without meeting the statutory ceiling on general obligation debt borrowing. The trustees decided not to issue bonds totaling more than 3.5 percent of its total equalized valuation.

DeGrave said the 3.5 percent rate suggested by the village's financial consultant would give the village the capacity to borrow a significant amount of money, while maintaining the village's AA1 bond rating.

"When you get further out, we don't know what we're going to need or what's going to occur," DeGrave said. "You don't want to bump up to your ceiling without having some kind of flexibility to borrow to address that emergency."

The board also reaffirmed that it would like to stick with the 10-year timeframe for carrying out the capital improvement plan, but said it would like to look at the fiscal estimates of extending the project beyond 10 years.

Last month, village officials were presented with three levels of sewer upgrades ranging in cost from . The $104 million price tag currently facing trustees is based on the least expensive repair option, which would protect most homes from 3.8 inches of rain in a 24-hour period and prioritizes the six most flood-prone areas of the village.

DeGrave said the timing and scale of the sewer work could be revisited in the future.

“It’s a plan, not a blue print," he said. "It needs to be revisited every year to find out what is the most advantageous approach to take on the next year or next two years worth of projects."