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Thread: Municipal water and property taxes

  1. #1
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    Municipal water and property taxes

    A heated battle over municipal water has enveloped my small rural NYS town for the past two years. The Town government has tried to jump-start a water project several times, and residents are evenly split on the issue. A referendum defeated their first proposal, but now the project has been revived and the town is proceeding without voter approval, something that is allowed by town law.

    One of the biggest arguments in favor of this project is the claim that public water would spur commercial and residential development, and that this would in turn increase our tax base, thereby reducing property taxes and offsetting the high cost of the project (currently projected at about $1000/year/household). Opponents claim that studies show that increasing population in rural communities does not in fact lower per-capita tax rates; residents of new housing developments tend to pay for the resources they themselves consume and in fact can raise overall tax rates by creating the need for projects like school-system expansions and infrastructure improvements.

    I realize that this question is far more complex and subtle than I describe above, but I'd like to find some definitive studies that might help resolve it one way or the other in our town -- or at least provide a reality check that might result in a better-educated debate. Our Town fathers seem to have no background whatsoever in urban planning (or even in project management -- the current effort is being conducted without competitive bidding or even a requirements analysis).

    Can anyone direct me to an appropriate resource?

  2. #2
    moderator in moderation Suburb Repairman's avatar
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    Are ya'll going to assess impact fees for new developments? Your citizens are probably concerned that existing taxpayers would be subsidizing the pocketbooks of the new developers.

    "Oh, that is all well and good, but, voice or no voice, the people can always be brought to the bidding of the leaders. That is easy. All you have to do is tell them they are being attacked and denounce the pacifists for lack of patriotism and exposing the country to danger. It works the same way in any country."

    - Herman Göring at the Nuremburg trials (thoughts on democracy)

  3. #3
    Cyburbian Mtn Woman's avatar
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    Quote Originally posted by Suburb Repairman
    Are ya'll going to assess impact fees for new developments? Your citizens are probably concerned that existing taxpayers would be subsidizing the pocketbooks of the new developers.
    New York State doesn't allow "impact fees" but through the environmental review, the developer may offer to mitigate the project's impact with specific actions (i.e. new traffic light at entrance to development).
    Living and dreaming are two different things-but you can't do one without the other."
    -Malcolm Forbes

  4. #4

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    No easy answers will be forthcoming. Too much depends on your specific local set of revenue generators, service demands, etc.

    As a general rule, new residential development doesn't pay for itself, but that is not a given.There are exceptions. As a general rule, new commercial development will pay for itself, BUT not in a rural community that has a minimal infrastructure and has to make major investments in new services for the commercial project/s.

    You need a specific analysis of your town and its situation.

  5. #5
    Cyburbian Cardinal's avatar
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    While I do not have any specific studies for you, my past research into industrial location has shown that overwhelmingly, there is a direct correlation between public infrastructure investment and new industrial development. This is especially strong with municipal water supply systems - likely due to fire insurance ratings among other issues.

    As Lee mentions, though, there is a less clear answer to the question of whether this new development will raise local taxes or lower them. A rule of thumb may be that if a community is not going to grow, then the investment may not be worthwhile unless there is a water supply or water quality issue to be addressed. When a community grows, its residents begin to demand new and better services. A farmer is not going to care if the road serving him is paved. A rural subdivision is going to demand it, and then expect it to be plowed as soon as it begins to snow. Once a critical mass is hit, people begin to want a library, a community center, a senior center, a pool, a new school, etc. These cost money to build, and even more to run. If this is going to happen regardless of whether or not you have a water utility, then go with the utility and try to diversify your tax base, or it will all need to be funded by homeowners.
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