Elkader Council listens to concerns, explains choice to raise property taxes
By Willis Patenaude | Times-Register
There was a public hearing for Elkader’s proposed property tax levy for the coming fiscal year on March 24, but likely sensing it to be a fait accompli since property taxes in Elkader have gone up every year since 2020, the meeting was sparsely attended.
One longtime resident in attendance was Matt Herman, who was looking for answers as to why Elkader’s property tax levy rate is “substantially higher” than surrounding towns in northeast Iowa. Herman also noted property taxes “have gone up every year for the last number of years,” and questioned recent purchases of vehicles, including the police car, fire truck and snowplow. He suggested that, like any business—which the city is in Herman’s view—“some thing’s have to wait.”
While Elkader’s combined levy rate was higher than surrounding areas, so was the basic levy rate. Compared to Guttenberg’s $15.24 proposed levy, Elkader’s proposed rate is double that at $30.458.
The numbers were concerning for Herman, and despite the fact he considers Elkader a “nice town,” it’s not significantly nicer than Guttenberg or McGregor, begging the question “why is the need so much higher in Elkader” than those towns.
Elkader City Administrator Jennifer Cowsert cautioned against doing an apples to apples comparison of levy rates, mostly because Herman’s overall numbers included school and county levy rates. But Elkader’s near $49.03 rate, according to Herman’s numbers, was still higher.
Cowsert said comparisons are difficult because of the number of variables involved, like how many hours the library is open, does the community operate a pool, how many parks does it have, how many staff and what are they being paid, does public works staff do water and sewer or is that contracted, does the city have a cemetery or opera house to maintain, among countless other factors, that all impact the budget.
Council member Tony Hauber took the lead in responding to Herman’s concerns, while also expressing his own concerns over higher property taxes. Hauber pointed out the increase is due, in large part, to the debt levy, which is over $254,000 more than last year. Within that number are recent capital projects undertaken by the city, including the Keystone Bridge, High Street and Carter Street, and expenditures related to the vehicle purchases, which necessitated a loan well over $400,000.
“We are, right now, sitting at the end of two really huge capital projects,” Hauber said. “I’m not saying that makes it right. I’m just saying I understand your frustration.”
Hauber offered more reasons for the increase, including rising insurance rates. Cowsert later confirmed this through email, citing increases in FICA/IPERS and other employee benefits, which combined to cost almost $19,000 more than last year. Cowsert also brought up recent legislative decisions that have negatively impacted local budgets, including Elkader’s.
Among the notable decisions was a change in classifications of multi-family housing from commercial to residential and the associated rollbacks for residential and commercial property and a recent removal of some options for tax levies, such as one the city used for the opera house. That is no longer available, losing the city $6,000. Not to mention the exemptions for seniors, which removed around $1 million from Elkader’s total assessment.
Hauber stated Elkader is “dealing with a lot of debt” and is in a “tough situation” that could see projects like fixing Davis Street, the Keystone Park wall, sidewalk repairs and a pedestrian bridge on hold for years. The newest cost estimate for the pedestrian bridge put it at almost $2 million, while fixing the storm water and sewer needs on Davis Street was estimated at over $1 million a few years ago. Without large sums acquired through grants or fundraising, both projects are unlikely in the near future.
Council member Daryl Bruxvoort offered another take on the current budget situation, pointing to inaction by previous councils and suggesting that, over the last 30 to 40 years, they too often took the approach to “shove, push things down the road.” All that pushing has made the “problem get worse and worse.”
Seemingly concurring with Bruxvoort at the meeting was council member Bob Garms, who served as mayor from 2004 to the end of 2015. He said the city was playing “catch up,” but he offered no clarification when reached for comment. Nor did he respond to Bruxvoort’s claim that projects were pushed for decades, including during his tenure as mayor.
In a separate interview, Bruxvoort elaborated that “the city has traditionally approached infrastructure such as streets, water and sewer on an emergency basis. A better approach might be to try to get ahead of ‘crisis management,’ but it is difficult to appropriate money only as absolutely required to fix what’s ‘broke.’”
One thing that broke was the Keystone Bridge, and despite fundraising efforts to cover costs associated with the lengthy repair, the city was still on the hook for an additional $2 million, and the bridge payment of $164,700 will consume over half the estimated $259,800 in revenue that will be generated from the tax increase.
At the meeting, mayor Josh Pope said, “We all know it’s a concern. We have the same concerns. We’re paying the same things. We’re seeing the same thing.”
Pope did not respond with comment as to whether he supported the increase or ways the city could work to stabilize the situation.
Council member Deb Schmidt responded in support of the increase, stating, “I have to support the tax levy with my yes vote…too many times in the past we haven’t said ‘yes.’ Rolled things off to another day. That can’t happen any longer.”
Schmidt added that, while the debt levy is high, the city’s debt is higher than most, but for good reason. That reason being the “historic bridge that no one else has,” and it needed to be fixed because “it’s our history,” she said.
Schmidt said she hasn’t received much criticism toward the tax increase, commenting that most “understand it” and it is time to stop the “band-aid” strategies of the past. These council members are simply the “lucky ones who get to implement the not so popular decisions,” she added. Despite rising property taxes, Elkader is always “booming.”
When it comes to solutions, the city is in a waiting game for debt to be removed. The only real solution mentioned at the public hearing and in previous council meetings is annexation. Though it is supported by the council, it comes with its own set of problems and costs, notably getting people to agree to be annexed voluntarily, as opposed to involuntarily.
Annexation will lead to a short-term property tax increase to extend city services to the annexed properties, and according to data provided by Cowsert dated from 2009, the last time a study was done on annexation, the largest area would generate an additional $138,000 in property taxes. However, at the time, the estimated infrastructure costs were $2.4 million and the city would have two to three years to install water and sewer.
Problems are obvious with this solution, starting with the infrastructure cost—money the city does not have and a cost that has surely gone up since 2009. It would also take well over 15 years for the generated tax revenue from annexation to pay for infrastructure costs.
With limited options, wanting to keep the current level of services and few public concerns expressed at the hearing, the budget will include a property tax increase that would raise taxes, resulting in residential property owners with an assessed valuation of $100,000 paying $338 more this year, or 27.02 percent over last year. Commercial property owners with $300,000 assessed valuation will pay $1,581, or 28.64 percent.
During an interview, Hauber addressed the concerns over the increase once more. “I am truly sorry if these costs are putting a burden on your budget. We understand that and consider it often when planning our future. It is a great concern of mine,” he said. “We are not just ‘paying to live in Elkader.’ We are paying for things. They have a market value. The fact that our bridge will stand for another 50 years as opposed to toppling into the river and potentially killing people is a good investment, but it is not a cheap one.”
