VALPARAISO | In what seems like a case of deja vu all over again, the city on Monday held the first of the required three public hearings on forming a fire protection territory with Center Township.
The city did the same thing a year ago and thought everything was approved and it would be collecting its first property taxes this year. But officials found out late in the year that the tax rate was not properly published and the state's Department of Local Government Finance had rejected it.
City officials tried to correct the mistake during the fall budget process, but that did not comply with the March 1 deadline for approving the fire territory. This time, officials are trying to make sure everything is done correctly, even hiring a law firm that has handled the formation of fire territories in other communities and making sure everything is properly advertised.
"If we don't do this, we have to think about cutting service to the township," City Administrator Bill Oeding told the City Council prior to the public hearing, adding that the problem is being created by the property tax caps. "This will provide a stable funding source."
Fire and ambulance service still will be handled by the city. The only change is the required appointment of a five-member fire territory board — made up of two representatives appointed by the council, two by the township board and one by the mayor.
Board members will serve four-year terms without compensation. The board will meet quarterly to oversee the operation and budget of the fire department and make recommendations to the city.
Oeding said a board was appointed after the city and the township approved the formation of the territory last year. The board met once to look over the budget, but it became moot after the DLGF decision.
The proposed fire territory budget for 2014 is $6.7 million, which includes a contingency fund of $335,358 and money for three additional full-time firefighters at a cost of $240,000. Fire Chief Dave Nondorf said the three new positions will not be filled in 2014. With other reductions, the estimated levy will be $5.9 million with an estimated tax rate of 26 cents per $100 of assessed value.
The law also allows for an equipment replacement levy of up to 5 cents per $100 of assessed value, but the proposal is to seek only a 2-cent equipment levy, for a total levy of 28 cents. That's a 1-cent increase for city residents, but a 13.7-cent increase for those in the unincorporated area.
Financial consultant Carl Cender said the impact on the owner of a $100,000 home in the city will be an increase of about $3.36 a year, while the owner of a home worth $135,000 or more will not see any change because of the tax caps. In the township, the owner of a $100,000 home will see a $42 increase and a $150,000 home will result in an $83 increase.
Additional increases of $2 to $4 a year will be seen in those homes in subsequent years, Cender said. Creating the territory will reduce the city's income by about $248,000, while the township will lose about $122,500. The county will see a drop in tax revenue of $9,200, the Valparaiso Schools will lose $20,200, the library $1,750 and the airport $175.
Councilman Bob Taylor said he was concerned about the impact on the schools, but Mayor Jon Costas said, "It is hard to do anything without impacting the other entities, but we've chosen a scenario to minimize the impact. The benefits we've given the schools in recent years far outweigh this impact."
Oeding and Nondorf said the territory will equalize what residents in the city and the township pay for fire protection, and the fire territory is needed to maintain the current level of service to both.
The City Council will hold public hearings on the proposal at its Feb. 25 and March 25 meetings, and the ordinance must be adopted by both the council and the township board in order to take effect. It would become effective July 1, if approved, but the tax levy would not start until Jan. 1, 2014, with the first funds received at the midyear collection.