Mayor eyes little-noticed $10 million pot of city funds

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BY DEENA WINTER / Lincoln Journal Star

It’s not exactly a pot of gold at the end of a rainbow, but Lincoln Mayor Chris Beutler is considering dipping into a little-noticed $10 million pot of money that has been growing quietly over the years, but rarely used.

The money is normally used to pave streets and alleys or build water and sewer lines at the request of property owners who want to create a special assessment district. Such districts were popular in the 1980s and 1990s in Lincoln, but are created much less frequently now.

Beutler does not want to use the money to bridge the remaining $1.5 million gap in the municipal budget — a shortfall that started out at $6 million before budget cuts.

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Chris Beutler

Chris Beutler

It wouldn’t be prudent, he says, to use a one-time bounty to pay for ongoing city expenses.

Instead, he wants to transfer most of the money in the Special Assessment Revolving Fund into a new sort of economic development kitty.

His so-called Fast Forward Fund could be tapped to take advantage of economic opportunities.

After being elected, Beutler was surprised to learn no such fund exists. He had to scramble to cobble together money when the city was asked to kick in $1 million after John Breslow offered $7 million to build a new ice skating complex near the Haymarket.

Beutler said he would use the fund to help with the coming Special Olympics, for example, or to attract tourism.

The idea of tapping the $10 million fund came up while dissecting the budget. City Attorney John Hendry concluded earlier this month the fund could be used for other purposes, with the City Council’s consent. Hendry said the city’s home rule charter allows surplus funds to be transferred elsewhere if all obligations are met.

And because there are no current bonded debt obligations against the fund, he said most of the funds could be used elsewhere.

City Budget Officer Steve Hubka said it’s likely about $8 million could be used.

Beutler pitched the Fast Forward Fund to the Lincoln Chamber of Commerce board of directors Thursday morning, hours before he held a press conference to announce plans to eliminate 45 city jobs, slash StarTran bus funding by more than half a million dollars and reduce new city employees’ retirement benefits.

There are bound to be plenty of other ideas about how to spend $8 million, if the City Council agrees to spend it at all. However, Beutler says it would be a mistake to use the money to shore up the budget.

“That’s entirely the wrong way to go,” he said. “It’s the wrong way to go because it would be doing exactly what’s gotten us into this budget problem in the past.”

He said he doesn’t intend to use any such one-time funding sources to balance the budget. He will release his budget to the public next month.

The special assessments fund dates to at least the 1960s, Hubka said. The city has issued special assessment bonds to build up the fund, which is tapped when property owners want to pave a gravel street or alley, for example. If there’s enough support for the project among abutting property owners, a special assessment district can be created. Money from the special assessment fund is used to pay for the work, and benefiting property owners repay the fund, plus interest.

Normally, such districts are created to bring infrastructure to new subdivisions, but they can be used in older neighborhoods, too.

More than half of the abutting property owners must agree to pay for improvements, and then the City Council must sign off on creating the district. That can be an uphill battle, former Lincoln Public Works Director Karl Fredrickson said.

The special assessment districts have been used less often after the city was burned by a project in the 1980s, Hubka said.

The $10 million left in the fund is almost all interest income, Hubka said. Since 1974, the fund has earned nearly $24 million in interest income.

If Beutler’s proposal goes through, that doesn’t mean special assessment districts could no longer be created. The remaining $2 million could be used to fund them, and the city continues to collect payments for past projects.

Last year, the city collected $1.26 million in special assessments, but that figure has been steadily declining since it peaked at $3.7 million in 1986.

The city could always issue special assessment bonds if the fund needs replenishing, as it has done nine times since the 1970s, Hubka said.

City Councilman Jon Camp was surprised to hear about the $10 million fund, but was initially supportive of the idea to use the money for economic development.

“It caught me by surprise,” he said. “I had no idea the money was there.”

Fredrickson said using the money for other purposes would be a policy shift for Lincoln.

“As long as it’s legal,” he said, “they can do whatever they want.“

Reach Deena Winter at 473-2642 or dwinter@journalstar.com.