Questions raised about the accuracy of feasibility study for Bluff Incorporation
by Bill Boyle
Voters in the Bluff area will head to the polls for the November 7 general election in order to decide whether or not to incorporate as the newest municipality in San Juan County.
The San Juan Record plans to address the issue in depth in coming weeks.
However, questions are being raised about key elements of a feasibility study that investigated the proposal. In an effort to provide the information as soon as possible, the San Juan Record decided to discuss the feasibility study this week.
Bonneville Research completed the feasibility study in June, 2017. It states: “The results of this study indicate that incorporation is feasible for the Bluff Study Area….
“An analysis of the fiscal, demographic and economic issues suggests that the Study Area could become a viable and sustainable Town.”
The results of the study indicate that Bluff could incorporate without increasing property taxes paid by area residents. However, San Juan County Administrator Kelly Pehrson questions if the study is accurate or if the conclusions are correct.
Pehrson questions the expenditure estimates in a number of areas, including the cost of maintaining roads, landfill expenses, fire, emergency services, salaries, liability insurance and building inspection.
Pehrson writes, “if Bluff incorporates, we would treat them the exact same that we treat Monticello or Blanding. That being said, there are some major issues that I think the Feasibility Study does not show.”
The Bonneville Research study looked at demographic trends, household incomes, and growth estimates.
The study states, “The proposed new Town of Bluff will be at breakeven for anticipated expenses and revenues in the first year (2018) at current service levels and five years into the future.
“Not including start-up costs and revenue lags, the ratio of revenues to expenditures in Bluff’s budget in 2018 is 100 percent if the community contracts for essential services including police, solid waste, and roads.
“Those property tax revenues, along with the estimated sales and use taxes and the Class C Road Funds from the State of Utah, appear to be sufficient to maintain the current levels of services to the Town of Bluff.”
Pehrson questions the estimated cost to provide many of these services.
Regarding roads, Pehrson said the feasibility study budgeted $25,000 to maintain roads within Bluff City limit. However, Pehrson said there is a huge need for reconstruction of roads, and the budget is just for maintenance. He added, “The county could contract for $25,000 of work, but it would roughly be a half a block!”
Regarding law enforcement, the feasibility study budgeted $30,000. However, Pehrson said the Sheriff’s Department currently spends roughly $56,000 a year for a part time deputy in Bluff.
Pehrson added, “Not sure how that will work when the budget is less than half of the cost of a part time deputy.”
Regarding the landfill, Pehrson said Bluff would “need to find their own land and provide their own transfer bin.” The service costs Blanding roughly $25,000 a year, which is partially offset by $8,738 in revenue.
The feasibility study does not list start up costs for fire or emergency equipment. Pehrson said, “All the equipment and building in Bluff is currently San Juan County’s equipment. We do not provide any equipment or buildings in Monticello or Blanding. So they either will need to purchase their own equipment and building or buy ours.”
Pehrson questions the feasibility study estimate that shows $30,000 in annual wages. He added that it costs around $45,000 a year for an employee earning just $10 an hour because benefits are required for any employee working more than 29 hours a week.
Pehrson said the cities need general liability and workers compensation insurance and there is no line item in the feasibility study for this.
Finally, Pehrson said the feasibility study did not include a line item for building inspections, which are provided by the county.
The study stated that if incorporation is approved, the Bluff Special Service District would close, and the new Town of Bluff would need to adopt a tax rate equal to the current Certified Rate for the Service District.
“This action will allow the new Town of Bluff to maintain current service and budget levels while keeping property taxes at their current level without reducing levels of service,” according to the study.
It adds, “The heart of this incorporation analysis is assessing the cost of the County providing municipal law enforcement and road maintenance services to the newly incorporated Town at similar quality and level of service.”
According to the study, the proposed town of Bluff would comprise 24,350 acres or 38 square miles. Of the proposed incorporation area, SITLA and BLM lands comprise 16.5 square miles.
In contrast, Blanding is roughly eleven square miles, while Monticello is about 4.5 square miles.
The proposed incorporated Town of Bluff would have an initial population of 265 persons and 25 current businesses employing 167 persons.
Anticipated Bluff future population growth is based on historic trends and an estimate of approximate 2-3 new residential/commercial building permits per year.
Currently, the Bluff special service district generates about $19,500 a year in property tax revenues. By comparison, property taxes generate about $260,000 per year in Blanding and $265,000 per year in Monticello.
Compared to the rate currently paid by property owners in Bluff, the rate property owners pay is approximately 12.3 percent higher in Blanding and 13.8 percent higher in Monticello.
As a result, the property taxes for a $150,000 property (not a primary residence) would be $2,483.40 in Monticello and $2,450.25 in Blanding.
Under the current rates paid by property owners in the Bluff Service District, the taxes for the same property in Bluff would be $2,181.
The study estimated approximately $80,000 a year in general sales tax revenues for the first year. Blanding and Monticello both charge a sales tax of 6.6 percent.
The study estimated $72,000 in annual collections if Bluff were to institute a resort sales tax. This is authorized for communities that meet a certain threshold of motel-related revenues. A number of smaller communities institute a resort sales tax, including Boulder, Escalante and Tropic.
The study also estimates that Bluff could generate approximately $20,000 a year in Transient Room Tax (TRT). The study did not include TRT revenues.
The study also looked at surrounding communities and similar communities in other areas of the state, including Castle Valley, Torrey, Tropic, Dutch John and Boulder.
A copy of the study and the email in which Pehrson outlines his concerns can be downloaded at the San Juan Record website at www.sjrnews.com.