[Board] Arguments for and against

Marcus McAskin mmcaskin at wmcattorneys.com
Thu Sep 18 21:13:18 EDT 2014


Thanks – my initial thoughts below.  Tried to underline my proposed additions.


From: Board [mailto:board-bounces at chnorthmetro.us] On Behalf Of keith.bierman at chnorthmetro.us
Sent: Thursday, September 18, 2014 11:26 AM
To: District Board of Directors+District Manager
Subject: [Board] Arguments for and against

I don’t have anyone signing the argument against.

Arguments For

1.      The District has provided vital sewage service since the inception of Cherry Hills North. The District inspects the main lines on a regular basis, removes obstructions, replaces or repairs damaged main lines on an as-needed basis, and implements other preventative measures when appropriate.  In addition, the District has agreements with neighboring Districts for regional outfall lines and pays annual treatment fees to the Metro Wastewater Reclamation District for sewage treatment costs.  Adjusted for inflation, the District collects far less tax revenue on an annual basis now then when the Cherry Hills North neighborhood was new (back in the mid 1970’s and early 1980’s).  The District’s costs have increased – while tax revenues have declined.  This is not a sustainable model.  The District needs to be proactive in order to ensure that our sanitary sewer infrastructure remains in top operating condition and able to serve the neighborhood.
The District’s continued responsibility requires closing the current existing gap between revenue and expenses.  District revenues have decreased due to multiple factors including substantially reduced investment income.  The District’s fixed annual expenses have increased in recent years and are projected to continue to increase.

All members of the Board of Directors of the District are residents of Cherry Hills North.  The Board has the best interests of the community in mind.   In addition, the Board of the Cherry Hills North Homeowners Association unanimously supports the proposed tax increase.

2.     The District has historically been funded by a mill levy that is tax deductible to the residents, and has virtually no collection overhead.  The proposed increase in the mill levy will result in a net increase to residents of approximately $22/month.

3.     The District is obligated to close the revenue gap. Most Districts employ a user fee model, which results in higher overhead and the resulting monthly, quarterly or annual fees are not tax deductible. A failure to raise the mill levy to a level sufficient to cover annual expenses will result in user fees being imposed.
The proposed tax increase is designed to ensure that the District is able to meet annual expenditures with annual revenues in order to continue providing important services to the neighborhood without continuing to deplete the District’s existing cash reserves.  The District’s cash reserves must be maintained in order to make sure that the District is able to implement its annual maintenance and long range capital improvement plans.
 For background about the District, finances, and document archive, http://chnorthmetro.us/
Argument Against

1.      Most Districts employ a user fee model, wherein residents that are served by the District receive a monthly, quarterly or annual bill. The mill levy approach results in very modest tax savings to residents and the cost of elections is nontrivial. The residents of the District would be better served by adopting a user fee model.
The increase in the operating budget of the District may allow the District to assume other services, including the continued maintenance and upkeep of the Cherry Hills North entryway signs.  The signs should not be maintained by the District.

$38,600/140/12  .. I have not taken into account likely tax credit value.  I don’t recall the precise number of homes.  FWIW I don’t propose that we include this footnote.

It’s actually 144 homes; so closer to $22/month – I made the change above
Keith Bierman
Cherry Hills North Metropolitan District
keith.bierman at chnorthmetro.us<mailto:keith.bierman at chnorthmetro.us>

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