Riverview studies options to replace revenue when landfill closes in 10 years

Photo by Sue Suchyta The Riverview Land Preserve, or landfill, will reach capacity in the next 10 years. It is currently Riverview's largest revenue source. While the city will be able to sell gas from the landfill, it is likely to be used to fund the city's pension liabilities.

Photo by Sue Suchyta
The Riverview Land Preserve, or landfill, will reach capacity in the next 10 years. It is currently Riverview’s largest revenue source. While the city will be able to sell gas from the landfill, it is likely to be used to fund the city’s pension liabilities.

Sunday Times Newspapers

RIVERVIEW – City officials are studying ways to replace the income it will lose when the landfill — it’s largest source of income — closes in a decade, including selling the city golf course.
The mayor and City Council met in a study session Jan. 14 to review the options available to the city when its land preserve reaches capacity in 10 years. Nearby cities have opposed its expansion, and county and state government have indicated that approval of expansion in an urban area is unlikely.

City Manager Doug Drysdale reported that when the land preserve capacity is reached in a decade, a significant source of revenue for city services – including police, fire, public works, rubbish collection, equipment purchase and capital improvements to city-owned buildings and equipment — will disappear.

The latest annual budget adopted by the City Council received $3.5 million from the land preserve, of which $2.6 million went into the general fund, $351,000 went into the city rubbish fund and $500,000 went into the city’s capital improvement fund.

The $2.6 million transfer to the city’s general fund represents 25 percent of the city’s annual budget. The land preserve’s 2018 taxable value, $305.5 million, represents 11.5 mills of property tax revenue, Drysdale noted in the report.

Drysdale presented a plan to city officials with different options, which includes selling the city’s 48.5-acre golf course to private developers, on which 160 single family homes could be build, each with an estimated taxable value of $75,000, which could generate about $195,000 per year in city tax revenue.

Other city land which could be sold for private housing development include 9.5 acres on Grange Road south of Pennsylvania, across from Homemeister, where 30 single family homes could be built; 22.7 acres on Sibley, where 40 single family homes or 175 multi-family housing units could be built; and acreage on Riverview Street and Jefferson Avenue, where an estimated 20 single family homes could be built.

The estimated annual city tax revenue from the Grange Road site is $50,000, while the Sibley frontage site tax revenue estimate is $50,000 for single family homes, and $140,000 for multi-family housing units. The Riverview and Jefferson parcels are estimated to have the potential to generate $13,000 annually in city tax revenue.

City officials would need to research zoning, engineering, legal and environmental issues before selling the parcels of land to private developers, Drysdaled noted in the report.

The city currently has a sewer levy and road bond debts outstanding. The 2018 tax levy for the road bond payments is 2.75 mills, and the final payment will be made in November 2025. The 2018 sewer tax levy, 1.47 mills, has its final payment scheduled for the 2019-20 fiscal year.
The city’s pensions are 82 percent funded, and it is estimated that in 10 years, the unfunded portion will be paid off.

The city’s other post-employment benefits obligation, other than pensions, including health care, prescription drug coverage, dental and vision care, life insurance, disability and long term care, and other services, which have a total $47.2 million liability. As of June 30, 2018, the city did not have assets in a trust to cover the obligations.

In the past, the City Council passed a resolution that allocates all of the natural gas revenue from the landfill to go into the OPEB trust fund. However, the City Council has the option in the future to allocate some of the natural gas revenue to other city funds.

Drysdale reported different options for the City Council to consider, including a separate millage for the city library, which would relieve the city’s general fund of $325,000 in annual expense.

The city could also eliminate 0.75 mills from the city operating millage which it uses for the local street fund, which in 2018 represented $230,000 in tax revenue. Road maintenance could instead be funded from State of Michigan Act 51 money, which is funded by fuel taxes, vehicle registration fees and other miscellaneous auto-related taxes. The city could also put a separate road millage on an upcoming ballot.

The city currently subsidizes trash collection costs, but could opt to levy 1.15 mills now to cover the $351,000 cost of disposing of trash at the city’s land preserve, and raise it to 2 mills in 10 years when the city’s trash must be trucked to another landfill outside of the city.

Riverview’s police and fire department costs are $5.9 million annually, which is 53 percent of the city’s general fund. The city fund gets its money from the land preserve, taxes, state shared revenue and fees.

A dedicated public safety millage could be enacted to pay for police and fire services under Public Act 33 of 1951, which would create a special assessment district, which would create a tax levy. The option would require a legal review to ensure that this option is available to the city.

The city could override the Headlee Amendment, which limits property tax rates. The city is authorized by its charter to have an operating millage up to 20 mills. The city is currently at 16.2600 mills, leaving only 0.0752 mills available for an increase under the amendment.

A measure would need to be approved by a vote of residents to raise the millage to 20 mills, as allowed by the city charter. This would add 3.6648 mills in property tax revenue, and generate $1.1 million a year based on 2018 taxable value.

The city also can receive a one-time cash infusion by selling city-owned property to a developer, once it is determined that such a land sale is legally permissible.

Drysdale said in the report that not all of the options listed for consideration will be needed, adding that the City Council should consider how timing will impact the implementation of any of the proposals, especially the timing of millages.

Drysdale said city employees are continuing to look at ways to save the city operating expense costs.

(Sue Suchyta can be reached at sue.suchyta@yahoo.com.)