7/29/2019 Statement from Mayor Moore's news conference http://slidepdf.com/reader/full/statement-from-mayor-moores-news-conference 1/6 46516 574.294.5471 Fax: 57;+.293.7964 City of Elkhart, Indiana The Honorable Office of the Mayor the at)' with a heart Dick Moore 229 S. Second St Mayor = ..... :=Eu=-:: Elkhart, Indiana March 22, 2013 This morning I met with the final group to complete my study on the Compact issue. began by meeting with one of the authors of the Compact Agreement and had very interesting discussion and was educational. I advanced my education by reading the letters and memos pu t forth,by Mayor Perron in 1998. I then called in so'me of my supporters, a group of businessmen and told them of the cities past and current position on the Compact. This morning I entertained a group of outside the city property owners wh o are concerned about what they see as a negative impact upon their business relative to implementation of the Compact. I talked of the history of the Compact and addressed what I had heard as their questions during the Council meetings and listened again to their concerns. It was as expected a financial concern. Hearing nothing new, I proceeded to announce this Press Conference. The History, Benefits, Challenges, and Solutions Culminating in the Elkhart Compact Agreement Over the last 30 years, the federal, state and local governments as well as insurance companies and financial institutions have urged communities to master plan community growth using land-use plans and utility master plans. They have also collectively encouraged communities to require municipal sewer and water fo r medium/high density housing, commercial/retail projects, and industrial development fo r environmental purposes. In the 1990's, the State of Indiana passed legislation making the annexation of property contiguous to the city boundaries very difficult. Since that time annexation rarely occurs and when it does, it is usually either vacant land or property that is in need of city water and sewer due to the failure of well and/or septic. '. Prior to 1998, the City of Elkhart in order to promote business growth, job creation and community progress allowed property owners outside the Elkhart city limits to connect to city sewe'r and water. In exchange, property owners would agree to and be required to pay three times the sewer rate that Elkhart city property owners pay and agree to be annexed by the City of Elkhart without opposition when annexation occurred. As industry and Elkhart grew, this 1
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7/29/2019 Statement from Mayor Moore's news conference
City ofElkhart, IndianaThe Honorable Office of the Mayor
the at)' with aheartDick Moore 229 S. Second St
Mayor = ..... :=Eu=- : : Elkhart, Indiana
March 22, 2013
This morning I met with the final group to complete my study on the Compact issue.
began by meeting with one of the authors of the Compact Agreement and had very interesting
discussion and was educational. I advanced my education by reading the letters and memos put
forth,by Mayor Perron in 1998. I then called in so'me of my supporters, a group of businessmen
and told them of the cities past and current position on the Compact. This morning I
entertained a group of outside the city property owners who are concerned about what theysee as a negative impact upon their business relative to implementation of the Compact. I
talked of the history of the Compact and addressed what I had heard as their questions during
the Council meetings and listened again to their concerns.
It was as expected a financial concern. Hearing nothing new, I proceeded to announce
this Press Conference.
The History, Benefits, Challenges, and Solutions Culminating in the Elkhart Compact Agreement
Over the last 30 years, the federal, state and local governments as well as insurance
companies and financial institutions have urged communities to master plan community
growth using land-use plans and utility master plans. They have also collectively encouraged
communities to require municipal sewer and water fo r medium/high density housing,
commercial/retail projects, and industrial development for environmental purposes.
In the 1990's, the State of Indiana passed legislation making the annexation of property
contiguous to the city boundaries very difficult. Since that time annexation rarely occurs and
when it does, it is usually either vacant land or property that is in need of city water and sewer
due to the failure of well and/or septic.'.
Prior to 1998, the City of Elkhart in order to promote business growth, job creation and
community progress allowed property owners outside the Elkhart city limits to connect to city
sewe'r and water. In exchange, property owners would agree to and be required to pay three
times the sewer rate that Elkhart city property owners pay and agree to be annexed by the City
of Elkhart without opposition when annexation occurred. As industry and Elkhart grew, this
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7/29/2019 Statement from Mayor Moore's news conference
arrangement promoted mainly business growth in unincorporated areas outside the city in
industrial parks and commercial developments. The Elkhart community was able to grow and
expand the work force and business was able to operate with city sewer and water.
In 1998, the City of Elkhart under the leadership of Mayor Jim Perron moved to annex
an industrial area south west of the city limits. The industrial park was developed under the
three times tool and city sewer and water was extended to the industrial park. During
construction, when a property owner asked the city to connect to the sewer and water lines the
city required the property owner to sign the three times agreement. The city would provide
sewer and water at three times the city rate and the property owner would not oppose
annexation when the city chose to annex the property.
It was a good deal, but one side failed to honor their agreement with the City. When
the plans to annex the property were announced one large-company calculating the cost to be
annexed and feeling sticker shock, the company hired lawyers to protest the annexation eventhough the company had agreed not to do so. The company broke its word to the city. This
move prompted the administration to declare it would no longer provide city water and sewer
to new industrial parks and commercial development areas outside of the city limits. This in
turn stopped growth and shutdown expansion of industry along the perimeter of the city. A
compromise was needed. Business on one hand needed municipal sewer and water to build
and operate (due to the environmental positions taken by federal, state, and local
governments) but was overwhelmed with the immediate increase in property taxes when
annexed. The city, on the other hand, wanted to continue to grow outside the city limits,
encourage industry, and employ its citizens. The Mayor invited a group of major landdevelopers in our area to serve as a committee to study the issue and a compromise was met
and the Elkhart Compact Agreement was established. While there were many things to
consider, the main objective was to be sure the city did not provide utility services outside of
the city in a manner and at a cost that put industry inside our city at an unfair advantage. The
goal of the Compact was that no matter where you chose to locate inside or outside it would
remain financially neutral.
The Elkhart Compact Agreement
The main issues facing the authors of the compact agreement were:
1. How to avoid sticker shock to companies that would eventually be annexed by the city.
2. What would be a fair formula to apply to property owners outside the city both and still
be fair to the citizens of Elkhart whose taxes help maintain the sewer and water system?
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day to day operation based on usage. That is a monthly sewer service rate that all of us pay and
that money goes directly to the utility. All of us who live or operate a business inside of our city,
the same people who own the utility pay the monthly usage fee and then also pay the city tax.
The PILOT was deSigned to assist the people of Elkhart by supporting a portion of the city's
operation. We also are reminded that the intended PILOT from the beginning was to makeyour choice of location inside the city or out financially neutral. And the city simply must not
lend itself to any situation that creates a financial advantage to locate outside of the city limits.
Finding Mayor Perron's notes and documents and meeting with one of the authors of the
Compact I finally discovered why 75%. That seemed to me to be the problem today. 75% today
did not seem to be getting us where the authors of the Compact wanted us to be. After the
committee in 1998 made their decision that the Compact was of necessity to level the playing
field they took into consideration the fact that those industries outside of our city do not
receive 100% of our programs. They determined by calculating that what they do not receive
would equal about 25% of the total budget. Therefore, they came up with a 75% factor. Sowhile the Compact is not total ly financially neutral, they felt it was fair to reduce the city tax
portion by 25%.
It is also quite evident that there was no Circuit Breaker in 1998. As I continued to gather
information and run the calculator what became evident was the 75% of yesterday now
equaled hundred percent today because of the Circuit Breaker. Using the 75% factor today and
factoring in the Circuit Breaker those industries outside of our city will be paying the same taxes
as those inside. That was not the intent of the founders of the Compact. Again, the premise that
they worked with was to make it as finanCially neutral as possible and yet recognize that those
in industry outside of our city do not receive all the tax supported benefits. The Circuit Breaker
has to be considered today. It is obvious that there needs to be a change in the formula. We
then looked at various percentages, knowing what our target must be to continue to support
our Great Elkhart Fund and have come to realize is that the new factor in the formula will be
500..6. That puts 3 of the 4 major cities in the region at the same level, South Bend, Goshen, and
Elkhart. Mishawaka does not extend utilities unless the property is annexable. This achieves
another level playing field.
The current PILOT will be reduced for all who are willing to stay connected which includes
those who have been our customers over the last15
years. Collectively, all of our industrialcustomers outside of our city will realize an annual reduction of $787,162 with the 50% factor.
The city's expected PILOT revenue will be $1,574,328 down from the 75% rate which was
expected to generate $2,361,492, but sufficient to maintain our Great Elkhart Fund, supporting
some very important programs. I have said over and over that any changes in the formula must
be in the best interest of the owners of the Public Utility. They are the people of the City of
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7/29/2019 Statement from Mayor Moore's news conference