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Sunday, Dec. 21, 2014

City works on PILOT ordinance

Thursday, October 17, 2002

SIKESTON - An ordinance which would present to Sikeston voters the chance to amend the Home Rule Charter to establish a means of transferring funds from the Board of Municipal Utilities to the city's general revenue fund is on the city's agenda.

During a special meeting Wednesday morning, council members Jerry Pullen, Philip Boyer and Sue Rogers directed city staff to prepare the ordinance and have it reviewed by attorneys in time for a first reading on Oct. 28 during the council's work session. Council members Michael Harris and Michael Marshall did not attend Wednesday's meeting.

The ordinance is slated for its second reading and consideration by the council during the next regular session Nov. 4. If approved by the council, the ordinance puts the amendment option before voters at the February (primary) election. Certification for the February election is Nov. 19, according to City Clerk Carroll Couch.

"We'll put it on the ballot and let the voters say yea or nay," said City Manager Doug Friend.

If approved by voters, the Payment in Lieu of Taxes, or PILOT, would consist of an amount equal to 3 percent of the BMU's gross revenues from electrical sales which would be transferred to the city's general revenue fund. "We don't really care where that 3 percent comes from," said Boyer.

Bill Green, director of the department of economic development, said the way he understands it, if a PILOT is imposed, rates for all the BMU's customers should be raised proportionately.

Green predicted BMU officials will repeat their claim that due to the long-term "hell or high water" contract, cities can't have their rates raised because a PILOT is not a component of monthly power cost and may seek to offset the PILOT with a retail rate hike. "I think that would be a terrible mistake," said Green. He explained higher retail rates would erode Sikeston's competitive edge in attracting business.

Green advised council to "hold the line" and not approve an increase in just retail rates.

Friend said the last time BMU raised its retail rates was in the late '80s.

Boyer said he believes the long-term wholesale customer cities are subsidizing retail sales, resulting in "artificially low" retail rates.

"This is very similar to what Springfield has," said Charles Leible, city counselor. "This is a provision out of their Charter."

Friend said Springfield is a good model as they also have a municipal-owned power plant and Charter form of government.

City officials predicted the PILOT, if approved by voters, would bring in around $1.6 million each year using current BMU revenue figures.

Couch said the transfer was conceived as a means of funding "special projects over and above what the capitol improvement tax pays for."

A PILOT has long been discussed by city officials as a means of funding construction of a new police headquarters, new fire stations and trucks, and a community recreational center, among other projects.

Friend suggested the funds could also be used to accelerate projects such as economic development and park improvements.

"We're certainly not going to waste it," said Pullen. "This money is going to benefit the city."

Friend advised, however, if the transfer is not approved, the city council will have to decide where to cut services within a couple years. Last month, each of the city's departments cut their maintenance and operations budgets by 10 percent to offset an increase in workers' compensation insurance.

Couch noted the city's expanding infrastructure without a corresponding increase in revenues. "We're just having growing pains," he said.