The first Wisconsin city to implement a transportation utility has not faced legal ramifications because of it—a concern that has been floated during Janesville City Council discussions on creating such a utility.
Neenah Finance Director Michael Easker said his city has not faced any legal challenges because of its transportation utility, which was created in 2019, despite having been the first city to have one.
In Janesville, city council members have expressed concern about potential legal challenges if the city next year creates a transportation utility, which would change how the city pays for road maintenance.
Concerns were heightened by a statement from Wisconsin Manufacturers & Commerce, the state chamber of commerce, claiming that the city does not have solid legal ground to move forward with the utility.
City Attorney Wald Klimczyk said the organization has taken an extreme position on the issue, saying that because state statute does not explicitly outline the idea of a transportation utility, then it is not allowed.
Municipal governing bodies have the power to make many of their own decisions, including implementation of a utility, under the state’s home rule and empowerment statutes, Klimczyk said.
“We have solid ground to proceed,” he said.
Neenah was lucky to fly relatively under the radar in the year or so it spent planning for and creating a utility, Easker said
However, its transportation utility differs from Janesville’s proposal.
In Neenah, the concept stemmed from a desire to eliminate special assessments that were charged to property owners for road reconstruction, Easker said. Neenah still borrows money for roads in tandem with the utility. The city does not have a wheel tax.
By contrast, Janesville is considering a utility primarily to reduce debt and create more sustainable revenue for its annual 12-mile road rehabilitation program.
In Neenah’s transportation utility, each property is charged a fee based on how many equivalent runoff units it has. Equivalent runoff units are a measurement commonly used with stormwater utilities.
Under Neenah’s program, a single-family home is considered to be one equivalent runoff unit. Larger commercial properties are more equivalent runoff units depending on their size and land use, Easker said.
Each equivalent runoff unit equates to a fee of $23 per year, he said.
Janesville’s transportation utility would be based on the average daily trips generated at a property. Trip data and averages are determined by a national standard often used in construction.
Under a transportation utility, Janesville businesses would pay much more than they do now for road maintenance. Tax-exempt entities such as churches also would have to pay for roads as they do for water and trash collection.
Easker said Neenah’s implementation process included several conditions that helped ease concerns from residents and businesses. They included:
- Capping the maximum equivalent runoff unit amount for a property at 90, making the maximum possible annual charge $2,070.
- Freezing the utility fee for the first five years.
- Allowing residents who had to pay special assessments for roads in the last five years to be waived from paying the utility for five years.
- Communicating frequently with the community leading up to approval.
Neenah’s utility generates lower fees across the board than Janesville’s would, which Easker said created an easier approval process than Janesville might have.
Janesville officials have pitched the utility as a way to shift the burden of road reconstruction onto businesses, which generate larger traffic volumes than residential properties.
However, the fees could have unintended consequences for some residents, especially those who are low income, council member Paul Benson said last week.
Landlords and business owners could offset their higher utility payments by charging more for rent, goods and services, which could mean a higher cost to live for Janesville residents, Benson said.
The Gazette reached out to representatives from ECHO, Community Action and the Wisconsin Housing and Economic Development Authority, all of which help low-income households, to see if they had studied the impact a transportation utility could have on their clients.
Representatives from all three said the issue was not on their radar and declined to comment because of a lack of background knowledge.
For residential property owners to see true savings from the utility, the city would need to ensure more spending or debt issuance would not replace the savings from cash-funding roads. Council members have identified that caveat but have not yet fully explored it.