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Residents to vote on Headlee renewal, street and park bond

By: Joshua Gordon | Woodward Talk | Published April 23, 2015

 The city of Ferndale is asking residents to vote on a $45 million street and park improvement bond proposal May 5 that would be used to maintain residential streets for the next 15 years.

The city of Ferndale is asking residents to vote on a $45 million street and park improvement bond proposal May 5 that would be used to maintain residential streets for the next 15 years.

Photo by Joshua Gordon

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FERNDALE — Ferndale residents will vote on two ballot proposals May 5 that would allow the city to levy nearly 11 mills for residential streets and city parks, and continue the same city services.

The first proposal is asking residents whether or not to approve a renewal of the 2011 Headlee override that currently levies about 5.4 mills and is set to expire Dec. 31. The Headlee renewal would bring in about $2.6 million annually for the city, or about 15 percent of the city’s revenue.

The second proposal, or the street and park improvement bond proposal, seeks to levy nearly 5.5 mills to raise $45 million. A majority of the revenue would be used to maintain the city’s streets, but $1.9 million would be used for park updates.

“As we survey the streets in Ferndale, 60 percent are in fair or poor condition. And we know if we want them to be in good shape, we are going to have to invest in them, but there is no money at the state or federal levels for our local streets,” Mayor Dave Coulter said. “Eventually, over 15 years, every street in Ferndale would be touched by the funds raised by this bond, and additionally, there are projects to repave Pinecrest and Hilton that would be included, as well.”

The street and park improvement bond proposal would replace the infrastructure bond that voters approved in 1994 for the same amount, $45 million, at 6.5 mills that is set to expire next year.

Residents would pay about $82 less per year if the new proposal is approved compared to the previous bond proposal, but a homeowner with a $75,000 taxable-value home would still be paying about $408 per year for the 15-year life of the bond, if approved.

“We literally don’t have funding today to repair our residential streets,” Coulter said. “We would have to take that money from other programs or not do the work if not approved, and neither of those options would be acceptable.”

With the Headlee override renewal, a homeowner with a $75,000 taxable-value home would pay about $409 per year for 10 years, which is same amount as the current Headlee override. If neither proposal is passed, the homeowner would save more than $800 per year compared to the past four years.

“Renewing the Headlee allows us to provide the same level of great services we have today at the same cost that we are paying today,” Coulter said. “If we don’t renew it, we would have to find more than $2.5 million worth of cuts in our budget, and that would significantly impact services we are able to provide. It is our general fund, so a majority of that goes to police and fire services, and also our (Department of Public Works) and City Hall staff.

“Not passing the Headlee would require reducing employees.”

Ferndale currently levies nearly 31 mills per year; as of 2014, it has the second-highest levy in Oakland County after Oak Park, which levies just more than 37 mills.

Ferndale Assistant City Manager Joseph Gacioch said the mill rate may be high, but the city has one of the lowest mill values in the county. For comparison, Gacioch said the value of 1 mill in Ferndale is about $493,000, while 1 mill in Royal Oak  is worth about $2.2 million because of higher property values.

“What goes into a mill value is the reflection of the tax base in the city, so the values of our residential households, commercial and industry,” he said. “We have to charge a higher (millage) rate to make up the right revenue dollars and get the same productivity out of our mills. If our property values went up considerably, our mill rate would be able to be reduced.”

Ferndale resident Tom Gagne said he does not support the Headlee override proposal, as he feels the city didn’t do enough in the past four years since the last Headlee approval to put it in a good place to not need more tax money from the residents.
“When we passed the Headlee override a few years ago, the promise City Council accepted was it would expire in 2015, and that was made to the citizens by the city,” Gagne said. “It was temporary and to get them through the rough patch as they took the necessary steps to get them through 2015. Voting against it is living up to the bargain and agreement to let it expire in 2015. It is a straightforward response to the request.”

For the city, property tax revenue has not increased at the same rate as housing values after both took a hit between 2007 and 2010. Proposal A, passed in 1994, caps the potential for revenue growth from increased property assessments to 5 percent or the rate of inflation, whichever is less.

“Our biggest source of revenue is property taxes, and property values have fallen in Ferndale 25 percent since 2007, and there is no way for the city to budget for a 25 percent decrease,” Coulter said. “Even as the housing values start to improve, we are only able to raise taxes at the rate of inflation, which is less than 2 percent. We lost about $2.5 million of revenue in the Great Recession, and our projections are that 10 years from now, if we renew the Headlee, we will recover about $1.5 million.”

Gagne’s wife, Tiffani Gagne, said that while the city did lose tax money in recent years, residents also lost money on their properties.

“All of us took a hit with our properties back in 2009, and so tax values dropped because property values dropped,” she said. “We are one of the highest-taxed cities in Oakland County, and I think they should have done something within the last five years to figure out how to fix it. I am quite convinced this isn’t going to fly and then they have to figure out what to do, and they should have been doing that for the last five years.”

Tiffani Gagne said she feels the city has other options it could explore for the street and park improvement bond proposal.

“I am a green person, but when we have so many other issues in this city and you want to worry about the parks and be vague on the streets, that is crap,” she said. “I do believe the city has options not explored yet. I am all for forcing their hand.”

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