The Future of Sidewalks

Alright, as promised here is the latest and greatest info regarding the notorious 2008 sidewalk tax. I originally made this post at 3:30 this morning, and by the time I opened my computer again at 8:30, I had 2 emails saying I got it wrong! I left the city council meeting early and failed to verify what went down. Purely amateur blogging. I have since corrected my errors, and here we are.

As you know, the city council last October enacted a $25 tax on each resident in the city in exchange for the city doing general maintenance on sidewalks, taking the burden away from property owners. The tax was set to raise $500,000, but generate over $17 million in liability! Even if the city council didn't know those exact numbers, they certainly knew that they were drawing the short stick in that deal. So why do it? Well, my guess is to set a precedent. There is a ton of property in this city that is property-tax exempt for one reason or another, and this sidewalk tax would have avoided that by taxing everyone. If you set a precedent by taxing everyone $25, it's a lot easier in the future when you want to hit everyone up for $1000.

The public and the media largely ignored this issue until residents began receiving their bills for $25 a couple of months ago. People without sidewalks realized that they were being charged for sidewalks. Others were concerned with the city taking on so much liability. The city council began to hold hearings on the matter, and the tide began to turn towards repealing the tax. As if that weren't enough, the tax was unconstitutional, and word came from the Attorney General's office that the tax wouldn't pass muster.

Alarmingly, the issue didn't die there. In a recent work session, Mayor Moyer asserted that the unconstitutionality of the tax was only established in an advisory opinion--rather than case law--implying that she was willing to run with the tax until the city actually got sued and the tax could be invalidated in a more formal manner!

This brings us to Monday's city council meeting. The council considered O-21-08, which would have repealed the tax. But, that's not all it did. The bill went on to define the process by which sidewalks are to be repaired from now on:

-private property owners are responsible for sidewalk maintenance and upkeep.

-the director of public works, at his subjective whim, can determine that a sidewalk is "necessary for public convenience and safety", and compel a person to fix or install a sidewalk.

-after being notified, a person has 20 days to obtain a building permit and make the repairs. Or, they can file an appeal which must be done no later than 30 days after notification.

-design specifications for the sidewalk must be approved by the director of public works in accordance with standards that he designs.

-a 'Sidewalk Assistance Revolving Fund' is to be established, funded with 5% of the city's allocation of the State Highway User Fee.

That bill was better than the $25 tax, but not by much, and it failed. What did pass was R-34-08, a bill which suspends collection of the $25 tax but leaves the original O-12-07 intact. More importantly, it enumerates a laundry list of nearly 20 things that the city must due in regard to sidewalks--things that should have been considered before O-12 was enacted in the first place.

The result is as follows. Property owners are still responsible for first-time installation of sidewalks, but the city is on the hook for repairs. This is halfway to the solution that makes sense to me, which is to have the city be responsible for it all and pay for it out of normal funds. Speaking of funding, R-34 is not good. While it repeals the fee, it leaves the provision requiring a Sidewalk Fund. So, there is a mandatory fund without a source of funding, and mandatory spending without a source of funding = structural deficit. This is easily resolved by removing the fund and creating a capital program for sidewalks, but the fact is R-34 does not do this.

So in summary:
1. no more $25 tax
2. city taking more liability for sidewalk maintenance
3. no established funding source for said maintenance
4. further study needed

Sidewalk Tax To Be Struck Down On Constitutional Grounds

I heard a comment from someone in the VIP crowd Monday night that the Attorney General was reviewing the sidewalk tax on constitutional grounds. I wasn't going to post about it, but then one of the Aldermen said something out loud about it, which makes it public record, and here we are.

So, Alderman Israel has been in contact with some of his old mates over at the AG's office, and the word is that the infamous sidewalk tax doesn't pass Constitutional muster. I will tag this as a rumor alert, but the word is that the tax has already been struck down.

The constitutional issue in question is the authority of municipal corporations (such as the city of Annapolis) to levy taxes. The charter of the city of Annapolis deals specifically with the taxation of real property. This is for a reason--the Maryland Constitution expressly grants that authority. Section XI-E deals with the taxation powers of municipalities:

No such municipal corporation shall levy any type of tax, license fee, franchise
tax or fee which was not in effect in such municipal corporation on January 1,
1954, unless it shall receive the express authorization of the General Assembly
for such purpose, by a general law which in its terms and its effect applies
alike to all municipal corporations in one or more of the classes provided for
in Section 2 of this Article.

Not only has the general assembly not approved the sidewalk tax, but reportedly they have considered such a matter in the past and have voted it down. Translation: don't pay your sidewalk bill because it's not going to stick.

What's more, is that the city failed to learn from its past. Mayor Hopkins, back in 1995, created a Revenue Authority for the city and asked for an opinion from the Attorney General. In his opinion, the AG addressed the tax/fees issue:

Of course, the revenue authority must operate with Article XI-E and with public
general law. To take but one example, a municipality may not levy any tax
or fee without authorization by the General Assembly in a generally applicable
law. Thus, for example, Attorney General Sachs advised that a municipality
could not create a special taxing district without legislative authorization,
because "a municipality has the power to levy a tax only to the extent granted
by the state."

So whatever they say about the best laid plans of mice and men, add this to the list.

City Council Meeting 7/14/08

Reporting here, from the newly frigid city hall, it’s me. While the air conditioner now works, there is still no wireless internet at city hall, and my efforts to “borrow” an internet signal from a nearby wireless router have all come up dryer than my sense of humor.

The VIP crowd is large, with many luminaries hurrying to make appearances before the city council goes on August break. Smartly, I arrived 34 minutes early to leave plenty of time for myself to obtain a proper seat and a diet coke.

7:37

All aldermen are in attendance. During roll call, six say “here”, and two say “present”.

7:38

I have never seen anything weirder than what is happening now. A local historian Arthur something-or-other is the first speaker, and he is having a dialogue with Alderman Shropshire in French. I have no idea what they are saying, because it’s in French. I gather that they are talking about something related to France, because they are speaking in French.

7:39

A representative from the Key School, a private school located outside of city limits, is speaking before the council requesting that the city issue a $9.7 million bond on the school’s behalf. The city, according to the man speaking, would not be on the hook for repayment of the bond; rather the school would make the bond payments and pay all city fees incurred by the issuance. Such an action would render the bond payments tax-deductible for the school. The justification is that the school has many ties to the city.

Finance director Tim Elliot informs us that this is called conduit debt. He also says that the school comes to the city because it's cheaper—the city merely asks that the school pay the related fees, whereas the county charges an additional fee for the process. Such a fee would of course be appropriate, since the city would be burdened with paperwork and other mundane tasks associated with the tactic.

If the city grants such a request, I will instruct my legal and financial braintrust to immediately move forward with a request for conduit debt on behalf of my company, because tax-deductible principal payments would be fabulous.

7:53

Even though this is a legislative meeting, people can speak about whatever they want, if they want. I favor restricting free speech in this matter, because it can be after 9:00 before we get to the legislation, then everyone gets tired, then items get postponed, and pretty soon there is a city council meeting every Monday instead of every other Monday, and Mrs. Politics begins to wonder if “5-4 vote” is my code word for a secret girlfriend.

The mayor hates these people too, and reminds people that there are public hearing meetings. Today many people are here to gripe about the sidewalk tax, and the mayor has hinted several times that there is no vote on the matter today, nor is the public hearing today, plus there is a special work session for this next Monday. But this is sure to fail, and I may need another diet coke.

8:03

City roads are maintained by the city. City sidewalks, which border city roads, are currently maintained by private citizens. Am I the only person that finds this odd? Why is having homeowners maintain their own sidewalks less ridiculous than having them maintain their own roads? The city’s mistake, in my view, was to tie their responsibility to this silly $25 fee. Develop a comprehensive sidewalk plan, with enough room for parents to push strollers by trees, figure out how much it costs, and pay for it out of the general fund. If you don’t have enough money, cut some other nonsense and free up some money.

8:16

Alderman Finlayson verbally engaged with a citizen! Betters in Vegas received a 50-1 payout for that rarity. The VIP crowd is frantically searching for a teleprompter that she may have read.

8:25

People are still testifying. Maybe we need to have 2 public hearings a month. More frustrating is the fact that there is no wireless internet in here. I demand accountability….where is Ray Weaver…….

8:28

Ray Weaver just walked in! Amazing. He is kind of far away though….I’ll just send him an email.

8:32

The mayor has admitted that the communication of the tax and the implementation of it were flawed. She has thus far stuck to her guns that the public had their fair shot at the bill, and she certainly has not hinted that she favors repeal of the tax.

9:04

Voting--at the legislative meeting that started at 7:30--begins.

Alderman Israel moves to postpone CA-01-08, the City Administrator charter amendment, in favor of further deliberation including a possible change to a city manager form of government. Alderman Shropshire jumps on the city manager bandwagon—that will be an interesting vote if/when it comes up because the mayor will oppose it but there are clearly Democrats that support it.

CA-01-08: POSTPONED.

O-59-07: Amending the configuration of harbor lines: PASSES. Vote 6-2 (Cordle, Stankivic, I think. Didn’t hear Paone.)

O-10-08: Banning the sale of phosphorus lawn fertilizers: PASSES (didn’t hear the roll call).

O-12-08: Requiring Fiscal Impact Notes For All Legislation: PASSES. (8-0, Arnett abstained).

O-15-08: fails to receive a 'second'.

R-20-08: fee schedule for lawn fertilizer ordinance: PASSES. (9-0)

R-25-08: Waiving Fees for West Annapolis Octoberfest: PASSES. (9-0)

R-29-08: NEW SISTER CITY IN BRAZIL! PASSES. (6-3..Paone, Cordle, Stankivic). Let me tell you something that is not a joke: Alderman Shropshire just justified this sister city through possible reciprocal benefits including the development of bio-fuels.

R-30-08: Supporting State Financing of Admiral Oaks Rehabilitation: PASSES (6-2..Paone, Stankivic. Finlayson abstains.)


First Reader Passages:

O-20-08: Updating Lease for Chesapeake Marine Tours.

O-21-08: Repeal of Sidewalk Tax: PASSES.

O-22-08: Modifying Residential Parking District.

O-23-08: Requiring non-profit grant recipients to file quarterly reports.

O-24-08: Lease of City Dock For 2008 Kunta Kinte Festival. Note: even though the council has not allowed through ordinance the use of the city dock as a location, it is already set in stone according to the Annapolis 300 web site. Don’t count your chickens!

O-25-08: Limited Additions for Non-Conforming Duplexes.

O-26-08: Requiring non-profits to file BIANNUAL reports. THIS IS THE SAME AS THE BILL JUST PASSED 3 BILLS AGO, EXCEPT TWICE A YEAR INSTEAD OF 4 TIMES A YEAR. Everyone in the room is confused, especially after the mayor just said there is already a law requiring them to report.

R: 32-08: Enhancement of the Chesapeake Children’s Museum

R-33-08: Amending Sidewalk Fees

R-34-08: Sidewalk Improvements and Fees

Sidewalk Liability

Maybe I have a lot to learn about sidewalks, but it strikes me that maintaining sidewalks should be the government's responsibility. In response to citizen outrage, most of the Aldermen are holding public-meeting-type gatherings for the dual purposes of discussing the issue and eating cookies. One of this blog's operatives at one such meeting obtained the fiscal note that accompanied the bill, and I find it appropriate to reproduce the text:

The fiscal impact this legislation produces is an estimated
$510,000 for FY 2008 and has already been provided in the Adopted Budget.
The fees have been set at $25 residential and $150 non-residential annually along with a $10 inspection fee under section 14.04.080/090.

The city has roughly 125 miles of sidewalk or 2.64 million sq. feet.
It is estimated that 25% is brick or 660,000 sq. feet and the balance of 1.98
million sq. feet is concrete. Repair and replacement cost is $12 per sq.
foot for brick and $5 per sq. foot for concrete. Under this legislation
the city is taking responsibility for sidewalks with an estimated replacement
value of $17,820,000.

This is certainly an interesting issue. Here are the main components of citizen response to this issue as I see it:

-some citizens are angry because they have to pay for sidewalks when there aren't any in front of their house

-some citizens are wary that the city is taking on an additional $18 million in construction liability

-some citizens are concerned that the cash we be used for purposes other than fixing sidewalks

-some citizens believe that sidewalks are a priority at any expense

Here is my view. Sidewalks are important, and they should be taken care of by the government. Take downtown--nobody would argue that people need the sidewalks to patronize the stores. It does not make sense to have the stores themselves maintain their own sidewalks, because some might be red brick, some white brick, some cement, some dirt--who knows. It would be ridiculous. Sidewalks promote non-motorized-vehicle transportation and make such pedestrian travel safer.

Even so, the manner in which this issue was handled probably still deserves criticism. As is so often the case, the city seems to operate in a bubble that considers only the face of the issue at hand and fails to consider neither the long-term consequences nor the ambient economic situation. We all know that 2 budgets are tight right now: the city's, and also everyone's. Heck, I had to cancel the monthly replacement of my solid gold toilet seats just so I could afford my monthly massages! Usually, the financial well-beings of the city and its taxpayers have an inverse relationship. Incredibly, this bill actually places an economic strain on both the taxpayer AND the city at the same time.

The issue is the liability. Before, citizens had to replace their own sidewalks but were not taxed extra for this. A sidewalk repair can cost thousands of dollars, yet the city is willing to assume that responsibility for the mere charge of $25 per person. So, people are pissed to pay an extra $25 (even though they may be saving thousands), and taxpayers are pissed to have to pay the thousands. Distinction: under the old situation, the city could determine how strict it was going to be when making citizens fix broken sidewalks, whereas now the city must fix sidewalks if the citizens place an order.

Ultimately, I think that the city should take responsibility for the sidewalks. They should not pay for it through a special tax--they should pay for it out of the general fund. If there isn't enough money in the general fund, they should cut other nonsense things like the Department of Economic Affairs or the Sister City Program. Should this happen now? Probably not: it is a major policy shift, it probably should go through a bit more scrutiny, and the timing is crummy. I'm not saying there shouldn't be outrage, but I wonder if it's not misplaced.

Sidewalk Tax

I live a life of luxury, amenity, and commodity* outside of city limits, so I did not receive a $25 or $150 sidewalk bill like many of you folk. However, I am aware of said bill, and have some thoughts on the matter.

(*By life of luxury, I of course mean that only the left side of my basement floods when it rains.)

People are pissed about the tax. The most prevalent argument seems to be "I don't have a sidewalk in front of my house, so why should I have to pay?". This argument is not proper--sidewalks are an appropriate care of a government--i.e. the entirety of the people. Even if there isn't a sidewalk in front of your house, odds are you use one in a public area. Most people believe that having sidewalks, at least on busy streets, is enough of a safety benefit to public health as to warrant public money. Sidewalks are necessary, and since it doesn't make sense to have people individually building sidewalks, it's the government's/the citizens' job.

The problem, for me, is that sidewalks are not taken care of by the 83 MILLION DOLLARS ALREADY COLLECTED EACH YEAR BY THE CITY! Roads and sidewalks are like priority #3 for the city government, yet non-profit grants and the city magazine are funded before sidewalks? Poppycock! Even if you group sidewalks separate from roads, the city priorities look like this:

1. public safety
2. infrastructure (water, sewer)
3. roads
4. sidewalks
5. public works services (trash removal, etc.)

I will not accept that in the entirety of the general budget, sidewalks cannot be funded. But what I am willing to accept doesn't matter--it's what the city council is willing to do. The council passed the tax in October of last year, apparently a time in history when "tax" meant not a forced seizure of money. Alderman Hoyle, in particular, seems confused. The fee "wasn't a big deal", she remarked. Mrs. Hoyle also added "It has gotten racial, with people saying 'The city wants to build sidewalks so Hispanics can walk the streets'", a statement which is more lacking in appropriateness than my choice of bright magenta for the color of tile in my foyer.

Fortunately, the city council is not beyond persuasion if they realize they have made a political error, and reeling has already started. Alderman Cordle, amongst others, seemed to take both sides of the issue, and an article today revels that the future of this tax could involve repeal, amendment, or even immunity from action. The normally solid Alderman Paone, in a move that will surely anger his fan club (though possibly not his ward), suggested that "he also would be open to amending the bill if residents without sidewalks didn't have to pay the tax", handily opposing the point I made in the second paragraph.

More evidence supporting a structural problem with this tax (rather than the idea of the tax itself) comes from Eastport activist and provocateur Bob McWilliams, who researched some data for Los Angeles, which adopted a similar policy:

1) They have 10,750 miles of sidewalk

2) 43% or 4,600 miles are in need of repair (and that's in a climate that doesn't have the freeze and thaw of winter)

3) If not one more sidewalk breaks, Los Angles estimates it will take
83 years to fix what is currently broken

4) Los Angles estimates that it will cost $1.2 billion to fix their 4,600 miles of broken sidewalk.

5) Annually, Los Angles spends $3,000,000 on lawsuits over broken sidewalks.

Bob estimates Annapolis' burden as a fraction of that total, and calculates a total liability created by this law of $7.5 million--not a good cost-benefit analysis when you consider that the measure will generate only about $500,000 in taxes.

Sidewalks should be funded out of the general fund. The city would be forced to trim other budget items that are probably less useful, and can fix the sidewalks without added legal concern. Time will tell if the political winds will sway such a result.