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Home My WebLink About2012-12-07 CorrespondenceDecember 7, 2012 CITY OF IOWA CITY Honorable Members of the Iowa General Assembly: On behalf of the City Council, we wish to express our sincere appreciation for your continued efforts on our community's behalf. Iowa City and our neighboring jurisdictions are fortunate to have an experienced group of advocates that are actively working on our behalf to expand economic opportunities and improve the quality of life in Eastern Iowa and throughout the state. Included in this packet are statements on the City Council's formally adopted 2013 legislative priorities. These statements aim to provide you with the City's position on key issues, as well as inform you of relevant facts and statistics about our community that will help provide local context to these important topics. As always, we are committed to providing you additional information upon request or as these and other issues are discussed during the session. Outside of the City's legislative priorities, we are committed to improving our communication with you. The City Council has approved for a second year the hiring of the Davis Brown Law Firm for contracted lobbying services. Mr. Tom Stanberry and Ms. Kate Carlucci will be working on our behalf throughout the legislative session. Please do not hesitate to engage Tom or Kate at any time. Of course, you may also contact us or the assistants in the City Manager's Office directly at any time. Included in this packet is contact information for our contracted representatives as well as the staff in the City Manager's Office. As needed, the City Manager's Office can connect you with other staff members that may have expertise on a particular issue. On our end, we will endeavor to reach out to you frequently either through direct contacts or through our contracted lobbyists. Again, thank you for your continued representation of the Iowa City community. We look forward to strengthening our relationship and working with you on the key issues in the upcoming session. Sincerely, Matt Hayek Tom Markus / Mayor City Manager City of Iowa City Legislative Contact Directory C4 Staff Tom Markus, City Manager Email: tom- markus()iowa- city.org Office: (319) 356 -5012 Cell: (319) 400 -4018 Geoff Fruin, Assistant to the City Manager Email: geoff- fruinCa)iowa- city.org Office: (319) 356 -5013 Cell: (319) 333 -4823 Adam Bentley, Administrative Assistant to the City Manager Email: adam- bentley()iowa- city.org Office: (319) 356 -5010 Cell: (319) 321 -8053 City Council Representative Matt Hayek, Mayor Email: Matt- Hayek()iowa- city.org Cell: (319) 321 -6598 Davis Brown Law Firm Representatives Tom Stanberry Email: ThomasStanberryCdavisbrownlaw .com Office: (515) 246 -7897 Cell: (515) 720 -3614 Kate Carlucci Email: katecarlucci(a)davisbrownlaw.com Office: (515) 246 -7847 Cell: (515) 802 -6908 City of Iowa City, Iowa The State of Iowa must elect whether to accept a 2010 federal grant in the amount of $87 million, part of a $230 million grant with the State of Illinois, that would establish regional passenger rail service connecting to Chicago. A robust passenger rail network is rapidly growing in the Midwest and it is imperative to Iowa's economic future that it be included in this initiative. Establishing service to Iowa City is the first step in a long -term strategy to connect the major population centers in Iowa. Without this first step, Iowa will be placed at a significant economic disadvantage as the surrounding states will continue to leverage this major transportation network advantage. Over the last decade, Amtrak has experienced record ridership and greatly improved on -time performance. Expanding this transportation alternative will provide a significant economic boost both locally in Eastern Iowa and throughout the entire State. A Critical Statewide Economic Investment The map on the right illustrates the expansive passenger rail network that is being developed in Illinois, Missouri, Michigan, Indiana, Ohio, Wisconsin and Minnesota. If Iowa does not accept this federal grant, we will find ourselves at a significant regional economic disadvantage for decades to come. Leveraging today's available federal funds is the only feasible way to initiate this important project that can be expanded in the future to connect Grinnell, Des Moines, Atlantic and Council Bluffs. As the route develops, bus feeder service can be initiated to serve Cedar Rapids, Cedar Falls, Ames, Fort Dodge and Sioux City. Illinois has begun work to extend the line from Chicago to Moline using their portion of the federal grant. If Iowa rejects the federal funds, those dollars will be redirected to other states and exacerbate Iowa's economic disadvantage. Mrlme3ote . sump Su•„ _ � Midwest Regional Rail System ' ' NSSCansnj 9t CqW SEnm.0 E..es.. M1'bcngae &.PN �mrvm - �a deeorn� ( Li INr : b a w Nebraska L I, �� -'�— • �� .m., ��,rs�q.•wP. Ixmo� L ,�.w vwP.1.. I * a 41 •� s�Je�n � � oom _ ,... .! � m� Im:sr.aE� I we... W '\ ' cmclmnl ElwmYglm� s.a.x. ,Mp___e,n, .�i LmW �� _- L u• wl�e � mPnwP•V ... - •EevnrllY _ FI IEmegYMd � IM'le^ �- Fwga6�c PwA1w 1 _�^ �SPA�np ,RAUq Mz�LO•�r�. eY� Benefits to Eastern Iowa • Expansion and diversification of the regional transportation network (including the Quad Cities and Cedar Rapids areas) • Enhanced tourism opportunities for the region • Aid in the recruitment and retention efforts of the University of Iowa, the region's largest economic driver • Provide safe, reliable and affordable business and personal travel options • Infill transit oriented economic development catalyst in Iowa City's Riverfront Crossings Area A rapidly growing affordable, transportation option for Iowans Passenger Rail Success in other Midwestern University Communities: Carbondale, IL Southern Illinois Univ. 114,000 riders 310 miles to Chicago 6 Trains Daily Average Fare: $42 Ann Arbor, MI University of Michigan 138,000 riders 243 miles to Chicago 6 Trains Daily Average Fare: $36 Normal, IL Illinois State Univ. 209,000 riders 124 miles to Chicago 10 Trains Daily Average Fare: $21 Note: the distance from Iowa City to Chicago is approximately 220 miles Champaign, IL University of Illinois 140,000 riders 129 miles to Chicago 6 Trains Daily Average Fare: $27 East Lansing, MI Michigan State Univ. 62,000 riders 208 miles to Chicago 6 Trains Daily Average Fare: $30 Amtrak Ridership Growth • 49% increase in ridership FY2000- FY2012 • New annual ridership record set in 9 of the last 32,000,000 - 10 years 33,000,000 • All -time record of more than 31. 2 million 59,000,000 J9000,000 passengers in FY2012 G aa,o0a,0ao • 25 of 44 routes set ridership records in FY2012: d n,000,000 o Chicago to St. Louis 20,0001000 o Chicagoto Milwaukee $ 25,000,000 o Chicago to Port Huron F 2a,noo,oan /°— o St. Louis to Kansas City 23,000,000 22,000,000 Amtrak's on -time performance is 83%, which 2,000,000 m is the highest level in 12 years and rivals the 20,000,000�p air industry. On -time performance on regional ,1O' �p ,y q ,y le ,�Ary ,1B"' l ,�6, ,ld 11( l ,l0' ldQo 1105~ 4� routes such as the Chicago to Council Bluffs/ Fiscal Year Omaha line is often considerably higher. o • Regional routes have fewer delays than cross- country routes Passenger Rail Success in other Midwestern University Communities: Carbondale, IL Southern Illinois Univ. 114,000 riders 310 miles to Chicago 6 Trains Daily Average Fare: $42 Ann Arbor, MI University of Michigan 138,000 riders 243 miles to Chicago 6 Trains Daily Average Fare: $36 Normal, IL Illinois State Univ. 209,000 riders 124 miles to Chicago 10 Trains Daily Average Fare: $21 Note: the distance from Iowa City to Chicago is approximately 220 miles Champaign, IL University of Illinois 140,000 riders 129 miles to Chicago 6 Trains Daily Average Fare: $27 East Lansing, MI Michigan State Univ. 62,000 riders 208 miles to Chicago 6 Trains Daily Average Fare: $30 r � o "OWa City, Iowa : W. .� ®g, Iowa City is an advocate for property tax relief that does not impact the ability of local governments to provide necessary services and infrastructure or that necessitates a tax shift to residential taxpayers. Iowa City is strongly opposed to the reclassification of multiple family residential units from commercial to residential. This change will have a disproportionate impact to Iowa City and other university communities and will not yield significant savings to renters in those areas, where vacancy rates are consistently low. If tax reform is pursued in a manner that impacts local governments, then consideration should be given to alternative revenue sources that would give cities flexibility to protect against service cuts or tax shifts. Additional local taxing authority has been granted to home rule cities in other states with success. Such authority may include increased flexibility in hotel /motel taxes and sales taxes, or it could include new sources such as food and beverage or liquor taxes. Local taxing decisions can reduce property tax burdens, while allowing for a greater portion of taxes to be captured from out -of -state visitors. Iowa City General Fund by the Numbers: • Property taxes make up over 60% of the General Fund revenue • Approximately 75% of the General Fund expenses are personnel - related costs Service cuts prompted by propertytax revenue loss will negatively impact personnel levels within the City or cause costly tax shifts to residential property owners. Financial Impact of Property Tax Reform ■ Rollback of Commercial Rates A multi-year phased rollback approach that reduces the commercial rates 3% per year equates to an annual loss of property tax revenue totaling approximately $620,000. Note: Any phased rollback approach would lead to a compounding of these numbers, exacerbating the need ford ramatic service cuts or tax shifts. $620,000 equates to the equivalent of approximately 8.5 newly hired police officers. ffffIffftl Without service cuts, the City tax rate would have to increase approximately $.20 per year of the rollback to compensate for the revenue loss. The owner of a house assessed at $200,000 would pay approximately $21 more in City taxes each year. After five years, the homeowner would be paying over $105 in additional taxes each subsequent year (assuming FY2013 tax rates and rollback figures). ■ Reclassifying Multiple Family Buildings Reclassifying multiple family buildings from commercial to residential will have a devastating effect on Iowa City and necessitate deep service cuts and tax shifts without providing any real benefit to renters. A fully implemented reclassification would result in property tax loss of $2.6 million to the City of Iowa City and approximately $6 million to the community when considering other local taxing jurisdictions (e.g. school district and county). $2.6 million equates to nearly one third of the Iowa City Fire Department budget. In FY2013, the Iowa City City Council reduced the property tax levy by $.57, which was the largest reduction among the ten most populated cities in the state. It is estimated that the FY2014 budget will include another reduction in the levy. Combined, these rates will produce a significant savings for commercial property owners without any mandated tax reform. The Iowa City City Council is committed to property tax relief through well - planned local decision - making. L , City of Iowa City, Iowa -�� Cities depend on road use tax funding to support a healthy road and bridge infrastructure that serves the local taxpayers and businesses. Due to increased fuel economy, lower vehicle ownership rates and the expansion of alternative travel options, growth in road use tax revenues have not kept pace with the rising costs of labor, materials and construction costs. As a result, cities are deferring more maintenance projects and are shifting the financial burden to property taxes. Without an increase in the road use tax there will be continued deterioration of our road and bridge network and increasing pressures on propertytax paying residents and businesses. This issue directly impacts Iowa's ability to maintain and expand our local and statewide economies. The increases in road use tax revenue have not sufficiently kept up with the costs of labor and construction. As a result, an increasing number of projects are deferred or funded with property taxes through general obligation bonds. While it is not fiscally prudent to sell general obligation bonds to perform maintenance work, the alternative — deferred maintenance — is by no means in the tax payer's interest. Deferred maintenance significantly shortens pavement life and ultimately increases lifecycle cost. Iowa City Pavement Condition Trend Pavement Condition 2005 % of System 2009 % of System %Increase or Decrease Excellent 2% 4% +2% Good 32% 23% -9% Fair 34% 33% -1% Poor 22% 25% +3% Very Poor 1 10% 1 16% 11 +6% Iowa City's pavement management data (collected by the IDOT) shows that conditions are trending from the "fair & good" categories to the "poor & very poor" categories, confirming the impact of deferred maintenance. This results in more reconstruction and major maintenance projects, financed by general obligation bonds. This shifts the cost of road maintenance and finance costs to the property tax payer and not necessarily the users of the roadways. Distribution of Road Use Tax Revenue Iowa City advocates that additional revenues generated by an increase be distributed by the means that are already in place. Considerable study has gone into evaluating the distribution of Iowa's road use tax revenues. Time and again it has been shown that how the pie is cut is not the problem. The pie simply has not grown as fast as inflation. Altering the distribution method will create winners and losers, making legislative passage more difficult. An increase in the fuel tax will leverage funds from out -of- state travelers and reduce local property tax pressures on Iowans and the business community. Without an increase in this funding source, the deferred maintenance on our trans- portation network will continue to grow and create a tremen- dous financial and economic burden forthe State. Iowa City urges the legislature to explore mechanisms to increase funding for critical road and bridge infrastructure projects. L , City of Iowa City, Iowa : "1 .� ..u_ 1 Cities that are required to participate in the State's Municipal Fire & Police Retirement System of Iowa (MFPRSI) pension program are experiencing rapidly growing costs. Since FY2011, Iowa City's contribution into the pension system has grown by 62 %, or approximately $1,000,000. These rapidly increasing costs are inflating local property tax rates. The State should carefully examine the long -term financial feasibility of this system and consider reforms that protect taxpayers and ensure that our public safety employees have fair benefits that can be sustained and counted on in their retirement years. Without sustainable reform, it is unlikely that communities will be able to continue to meet their obligations to our public safety personnel without significant service cuts or tax increases. Current Pension Contribution Rates: IPERS vs. MFPRSI* FY2014 Projection IPERS I MFPRSI Employee Rate 5.78% 19.4% Employer Rate 8.67% 130.12% *Unlike IPERS, all increased costs in the pension system are the responsibility of cities and not shared with employees. Active members in MFPRSI are less than 50% of all the system participants, with a decreasing trend. With the baby boomer generation retiring, it is likely that trend will continue, forcing even greater financial contributions from cities to support the pension burden. The continued underperFormance of the investment portfolio, relative to actuarial assumptions, will also drive municipal contributions higher in future years. Last year, the MFPRSI rate of return was 1.08 %, far below the assumptions that are generally used. $4,000,000 City of Iowa City $3,500,000 MFPRSI $3,004000 Contributions $2.500.000 $2,000,000 $1,500,000 $1,000,000 $500,000 FY 2011 1 FY 2012 I FY 2013` 1 FY 2014` 1 FY 2015` 1 FY 2016` ■ City of Iowa City MFPRSI $1,653,589 $2,277,292 $2,462,514 $2,677,851 $3,140,553 $3,404,373 Contributions ■ Percent Increase 1 1 38% 1 8% 1 9% 1 17% 1 8% 1 s - estimate based on State of Iowa projections. • Over the six year period from FY2011 to FY2016, the overall increase in Iowa City's MFPRSI contribution is expected to total $1.75 million, an increase of 106 %. • The estimated one -year increase in the FY2014 MFPRSI contribution for Iowa City is $215,000, which accounts for approximately $.07 on the City tax levy. Over the six year period from FY2011 to FY2016, the estimated increase equates to a $.56 increase in the City tax levy. A $.56 increase in the tax rate equates to approximately $58 dollars in additional Iowa City property taxes for a homeowner with property assessed at $200,000 (assuming 2013 tax rates and rollbacks). While Iowa City supports the MFPRSI Board's recommendation to have the State contribute to the pension system, we believe structural reform is necessary to ensure the sustainability of the program and to provide an equitable environment among Iowa cities. lr�W,7 6-,4 llulw6r") Khan Academy Overview of the State of Illinois Pension System Seven minute video available at the following web address: http:// www. khanacademy .orglhumanitieslamerican- civics /vlillinois- pension -obli ate ions