I have been asking for a review of the City of Helena’s service line repair loan program for some time. On Wednesday, Nov 16, the Helena City Commission was presented this review by city staff. On Monday, Nov. 28, the Independent Record published a story on the city of Helena’s service line repair loan program and I would encourage citizens to read that.
Since late 2018, the city has collected almost $3 million from a charge levied on 8,600 customers’ utility bills to fund this program. To date, approximately $265,000 has been loaned to roughly 30 utility customers. The original vision for the program was to help customers with the significant expense of repairing the failure of water and sewer lines, which are the legal responsibility of the customer, from the city’s mains to their homes. The argument was that the expense of such failure could displace many from their homes. As an aside, I would argue that the same could be said of a home’s need for a new roof or a heating system, yet we don’t have similar programs for such loss. While I have significant concerns about the efficacy of the program, I also have long expressed my belief that the charge should have been voted on by the city of Helena electors as required by state law and the city’s charter. The IR’s recent story briefly touched on my apprehension that the fee “was a tax disguised as an assessment.”
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At least three times in recent years the question of whether a fee is a tax or an assessment has come before the city of Helena. The first was in the mid-1990s, when the city created a “fire service district” and imposed a fee on all property for fire protection. The state of Montana and the Helena school district took exception to that and asked for an opinion from then-Attorney General Joe Mazurek. He found that the city could not assess such fees from state property “since the fees are in reality a tax rather than an assessment commensurate with a specific benefit conferred on the property assessed.” The “fire service district” concept was abandoned. In May 2014, to try to grow the Helena Fire Department to meet existing demand, the Helena City Commission tried to resurrect the idea of the fire service district. City Attorney Jeff Hindoien concluded in his legal review that “the question today is essentially the same question noted by Chief Hurni in 1996, ie, “the issues of the difference between a ‘tax’ and an ‘assessment,’ and the benefits to a specific piece of property versus the general good, are pivotal to the legality of the funding for the City’s fire service area.” Once again, the concept was abandoned. In May 2018, the service line repair loan program was reviewed by the city attorney’s office when the Helena City Commission considered creating the program. City Attorney Thomas Jodoin began his review with “To determine the applicable legal requirements it is important to determine whether such a fee would be considered a tax or an assessment. This distinction is important because if the proposed fee is deemed to be a tax, then the City is required to put the proposed fee up for an election since the City has reached its allowable maximum number of mills that may be imposed without an election. ” He then presented on the distinctions between taxes and assessments and referenced Attorney General Mazurek’s aforementioned opinion as well. The Helena City Commission ultimately made the determination that the fee was an assessment as they later in the year authorized the program with a resolution unanimously approved by four votes.
I am very appreciative of city staff’s transparent and honest review that was recently given. Their recommendation to eliminate the collection of these added fees is very appropriate. Had we not had this review, these fees would have been collected through June of 2030. It appears to have been a well-intentioned program that ultimately was not effective. As the discussion moves forward, I will continue to advocate for rebating the remaining $2.7 million to city of Helena utility customers. I understand the challenges of rebating, but I think it is the fair thing to do given that they did not have the opportunity to approve the program’s funding in the first place.
Sean Logan is a Helena City commissioner.
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