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Legislative Priorities for City D~~~E ~<Æ~ MEMORANDUM June 16, 2004 TO: The Honorable Mayor and City Council Members FROM: Michael C. Van Milligen, City Manager SUBJECT: City of Dubuque Legislative Policy Suggestions to Iowa League of Cities - 2005 Legislative Session Assistant City Manager Cindy Steinhauser has worked with City staff to develop a recommended set of State legislative priorities. I concur with the recommendation and respectfully request Mayor and City Council approval. IlL tu 0 Li (è 'I !lU{YY7í Michael C. Van Milligen j (]'f)) MCVM/jh Attachment cc: Barry Lindahl, Corporation Counsel Cindy Steinhauser, Assistant City Manager '--.- -~ , I - , '. ( ,-. City Of Dubuque Legislative Policy Suggestions to Iowa League of Cities 2005 Legislative Session State Budget In response to a revenue shortfall in 2003 the State of Iowa implemented across- the-board cuts in expenses. Some of these cuts reduced revenues to cities, with no relief to cities for state-mandated programs. Concerns remain over the impacted of the reduced revenue to cities and that similar action will be taken in the 2005 session. Requested Action: The state should restore revenues to cities that were cut in an effort to make cities whole. Property Tax The current tax structure for state and local governments is an antiquated mix of tax laws, rates and policies that do not provide for a fair and consistent tax system. Requested action: Establish a committee to review and recommend a comprehensive and equitable approach to reform of the property tax system. Grow Iowa Fund With the recent Supreme Court decision ending the Grow Iowa program, fewer economic development tools exist for cities to retain, expand and recruit business and industry to Iowa. Requested action: Support legislation that would restore funding to that important economic development tool. Bed and Breakfast classification The Iowa Court of Appeals recently held that bed and breakfast inns should be classified as "single-family dwellings" for purposes of property tax under the rules of the Iowa Department of Revenue and Finance. The Iowa Supreme Court had denied the application for further review. The Court of Appeals decision opens the door too much wider implications because it implies that any property built as a single family home that still has a residential component should be classified as residential. Requested action: Implement legislation to change the definition of commercial property in the State Code to include any former residential structure now partially or fully used for a commercial purpose. Right of Way Section 480.a.3 of the State Code allows cities to manage public right of way and to charge a management cost back to users of the right of way. However, no fees are charged to telephone companies, which were grandfathered in under State law. While the State Code allows cities to charge a management fee, there is no definition in the Code to define management fee. In addition, the State Code should be amended to prohibit other telecommunications operators, such as cable and Internet providers, from falling under the definition of telephone. Requested action: Implement legislation to provide for a definition of management fee and to prohibit other telecommunications operators, such as cable and Internet providers, from falling under the definition of telephone. Bank Franchise In the 2004 session, the State removed bank franchise payments to cities. Bank Franchise fess are still collected by the State, however they are no longer distributed back to the cities from which they are collected but are retained by the State in an effort to deal with State shortfalls. Requested action: Restore bank franchise payments to cities. Funding of Major Transportation Projects The State of Iowa has used a strategy of allocating funds for completing the major transportation projects in the state as opposed to using a piecemeal approach. This strategy has been successful with extensive work being completed on major corridors. The same strategy should be used for major projects in larger cities, which require significant funding commitments for completing the projects in a reasonable amount of time. Examples include the Southwest Arterial, the Julien Dubuque Bridge and U.S. 20/Dodge Street. Requested Action: Support efforts to continue the strategy for funding major transportation projects throughout the state. Tax Increment Financing Tax Increment Financing (TIF) is an important economic development tool that has been used by cities to revitalized downtowns and older parts of the city. The ability to use TIF to assist private economic development projects in urban renewal districts has become a very useful financing tool and incentive for private investment in urban renewal districts. TIF projects generate new value and new taxes, as well as create new jobs. TIF provides a source of funding for significant public improvement projects and provides the impetus to revitalize older areas of a city. Over the twenty years that Dubuque has approved private TIF projects, the 21 private projects directly assisted with TIF invested over $105,400,000 in our community. The TIF assistance accounted for 15%, or $15,756,000 of the total investment, a 1:1 private to public dollar match. 2 Requested action: Oppose efforts to modify TIF, as proposed in HF 686 during the 2004 legislative session. Enterprise Zone Incentives The Enterprise Zone legislation was written to promote private investment in economically distressed areas of a city or county. To assist new employees of companies locating in enterprise zones, the legislation provides for employers to establish a capital fund for down payments or rental subsidies. The business funds this program through a credit from state withholding taxes, based on the wages paid to the participating employees. An amount equal to 1.5 percent of the gross wages paid by the employer is credited from the payment otherwise withheld, and used to capitalize this fund. This feature of the legislation has not been utilized to date. One reason is that the credit produces so little capital for the housing assistance program. For an employee earning $10 per hour, the credit equals approximately $300. Typically, down payment assistance programs offer $3,000 to $5,000; rental subsidy programs average $2,500 to $3,000 annually. In order to make this program effective, the credit for withholding should be increased. Another option is to allow the credit to be "pooled," to be made available to all eligible employees. As the legislation currently is written, the 1.5 percent credit is made available on the basis of withholding from individual employees - for the benefit of only that employee. If the credit could be aggregated, a larger capital fund could be established, from which all employee purchasing or renting housing in the enterprise zone could access funds for their housing needs. Another reason for lack of employer participation in this program is that the legislation requires the employer to choose between use of the tax credit for job training or for providing a housing assistance program. Employers to date have chosen to use the credit to pay for training new employees. Requested action: The legislation should be amended to provide the credit for both job training and employee housing assistance and to "pool" the funds. This will increase the tax credit and increase interest in the program by employers. 411 Subrogation Currently the State prohibits cities from seeking subrogation against Third Party Claims involving medical and temporary disability payments. This allows the injured party to collect twice for the same injury once from the city and once from the Third Party who caused the injury. Requested action: Enact legislation to allow cities to seek subrogation for Third party claims for medical and temporary disability payments. 3 Military Tax Credit The State of Iowa provides for veterans to receive a military tax credit on their property taxes. The credit reduces their City property tax by the levy rate of the City, which is $10.76 per $1,000 of valuation. The State, however, reimburses the City at a much lower rate, which potentially will be reduced again. This leaves a substantial deficit for other property owners to pay. Requested action: Enact legislation to fully reimburse cities for the State of Iowa's military tax credits. Military Leave The State of Iowa provides for 30 days of Military leave from a city without loss of benefit. Currently this legislation does not define if it is 30 calendar days or 30 working days. Furthermore, there is no definition if this is a one-time benefit or a benefit provided for each incident when an employee is called to active duty. Requested action: Enact legislation to define the 30 day benefit as calendar days or work days and to define as a one-time benefit or each incident benefit. Expand Cities' Extraterritorial Jurisdiction Cities have extraterritorial jurisdiction (ET J) for up to two miles from their corporate limits for subdivision review and approval only if the County has zoning for the rural areas. Extending the cities' ET J to include review and approval of zoning changes would facilitate planned and managed growth. Legislation should provide incentives for governments to voluntarily plan together, and identify recommended land use impact to be considered during the planning process. The City supports legislation that expands land management practices such as ET J of cities to include review and approval of zoning changes. Requested action: Support legislation enabling cooperative planning and effective land management practices. Eliminate the "20% Objection Rule" for Rezonings Section 414.5 of the Iowa Code requires a favorable vote by three-fourths of the City Council members - a 6 to 1 vote - to approve a rezoning request over the written objections of 20 percent or more of the owners of the property being rezoned, or 20 percent or more of the property owners within 200 feet of the subject property. The concepts that nearby property owners have a say in rezoning cases is valid; however, this must be balanced against the needs of the entire community. At 20 percent, a minority of property owners can dictate the outcome of community development, especially when one property owner with a large tract of land can constitute the entire 20 percent. Requested action: Raise the "objection percentage" of owners of property within 200 feet from 20 percent to a simple majority (51 %); or require a favorable 4 vote by two-thirds of the City Council members, or a 5 to 2 vote, when the objection threshold is reached. Property Owners on Historic Preservation Commissions Section 303.34 of the Iowa Code requires that: "At least one resident of each designated area of historical significance shall be appointed to the commission." This requirement is problematic for the City of Dubuque's Old Main Historic District, which is primarily commercial. It would be beneficial for the City in the recruitment and retention of commissioners to be able to appoint property öwners to represent historic districts. Furthermore, since historic preservation regulations apply to the rehabilitation, renovation and restoration of property, allowing property owners to serve on the commission would be appropriate. Furthermore, some Iowa cities are experiencing burgeoning commissions as historic districts are designated and representatives of each district are appointed. To avoid "over-populating" a commission, allowing a majority of the districts to be represented on a historic preservation commission would be appropriate. Requested action: Enact legislation allowing property owners to represent historic districts on the Historic Preservation Commission. Appeal of Actions by Historic Preservation Commission Section 303.34 of the Iowa Code states that an aggrieved party may appeal the action of a historic preservation commission to the City Council, and then to district court. The City Council, like the court, has to consider whether the commission exercised its powers and followed the guidelines established by law and ordinance, and whether the commission's action was "patently arbitrary and capricious." This process places the City Council in the difficult and uncomfortable position of interpreting technical guidelines and determining their appointees "arbitrary and capricious." The City Council would support an alternative process. Requested action: Consider legislation providing an alternative appeals process regarding an action of the historic preservation commission. IPERS deductions The State of Iowa requires that IPERS deductions must be taken from all city employee wages. This includes seasonal employees who are hired on a temporary or on-call basis and meet the earnings or time period for employment tests. Requested action: Enact legislation to lift the requirement to deduct IPERS from all employees hired on a temporary or on-call basis. 5 State Mandates Cities are often faced with implementing mandates from the state and federal governments without receiving the necessary funds for implementation Requested action: Enact legislation that exempts local government from providing any new service or engaging in any new activities mandated by the state if the state does not provide full funding. 6