Board Eyes Charging Tax-Exempt Properties For Storm Sewer Projects

The Village may ask tax-exempt property owners – including churches, schools and non-profit organizations – to pay for storm sewer projects.

Currently the funds the projects through a tax levy, but they are looking at establishing a user fee that all property owners pay to fund capital, maintenance, operational and compliance-based projects.

The Village Board approved the concept and has asked a Village staff member to put together a draft request for a proposal to fund a study, which has an estimated cost of $25,000. However, the details would still need approval from the Village Board.

Tony Bunkelman, assistant engineer for the Village, explained that the Village currently has two storm sewer districts, the Lake Michigan District and the Root River District. The Lake Michigan District has 5,633 parcels spread over 5,727 acres and the Root River District has 5,570 parcels spread over 21,800 acres, but 392 parcels are tax exempt and do not fund the district at all.

“Both have a tax levy, but only the properties that pay property taxes fund the district and none of your tax-exempt properties pay into the district in any way shape or form,” Bunkelman said. “Property owners’ pay based on the assessed value of their property. But to my knowledge there is no correlation between assessed value and storm water run-off generated.”

Schools, churches, and property owned by non-profit organizations are some of the largest contributors to water run-off, Bunkelman explained.

“Some of your churches and schools are paved corner to corner and that creates an impervious surface, and they don’t pay into the system,” he said.

Bunkelman proposed replacing the current tax levy and having all property owners pay a user fee based on an equivalent residential unit (ERU) formula.

“Since all properties generate storm water run-off it makes sense,” he said.

Property owners living in the Lake Michigan District currently pay about $85 a year on the storm sewer portion of their tax bill, but if the Village goes to an equivalent residential unit system and requires all properties to pay the user fee, they’ll see that amount reduced significantly.

However, property owners living in the Root River District will likely see a fee larger than the a mount they pay on their property tax bill.

“That increase was going to happen anyway though because there just isn’t enough money coming in to fund those projects,” he said. “But this way there’s more property to spread it over.”

There is also another drawback. User fees aren’t tax deductible while some property owners may have been claiming that storm sewer portion of their tax levy as a deduction on their taxes even though they aren’t supposed to claim, Bunkelman said.

“But I believe this is a fair way of calculating storm water use fees,” he said. “The larger properties have more impervious surface, and they create a larger demand on the system so the larger their fees should be.”

Village Board member Lee Wishau asked Bunkelman what he hoped to accomplish with the study and asked him to come up with a draft RFP before sending it out.

“This study would come up with a way to calculate the ERU and have it still be fair,” Bunkelman said.

Village Board member Tom Weatherston also asked about whether the two districts could be combined into one.

“I do believe the goal of this Board is to combine the districts and have a uniform fee for the entire Village,” he said.