Larry Kline
Havre Daily News
lkline@havredailynews.com
A portion of a paving project Havre Mayor Bob Rice hoped would be paid for by property owners will instead be paid for by the city, using state-allocated fuel tax money specifically set aside for road maintenance.
Rice had said he had agreements from property owners along Third Avenue West to pay about $13,000 of the $16,800 project.
At the July 5 Havre City Council meeting, council member and mayoral candidate Pam Hillery asked that the bill from Bill Baltrusch Construction be left unpaid until the city found out whether Rice's agreements were written or verbal.
Rice said Tuesday the agreements were verbal and that the city has long worked on nothing more than a handshake for such projects. He said he will ask for written agreements in the future.
The city will use fuel tax money it receives from the state to pay off the bill. City finance director Lowell Swenson said today the city receives that money from the state each year in monthly installments, based on the miles of streets within the city limits. For the fiscal year ending in June, the city received about $180,000, he said. Those funds roll over each year, he added. Last year, the city used $346,000 for road maintenance, and still has about $350,000 in the account, Swenson said.
Havre public works director Dave Peterson said the money can be used to pay for the costs and materials associated with street maintenance, whether it be paving in the summer months or sand for city streets in the winter.
Third Avenue West runs between Pizza Hut and the Golden Spike. Four other property owners have land fronting on the street. Rice had hopes of receiving $4,500 each from the businesses and $1,000 each from the other property owners.
The city has received one $1,000 check from a property owner and a $2,250 check from Pizza Hut, Swenson said.
High Plains Pizza Inc. region manager Jeff Knowles sent a letter to Rice, dated July 5, that explained the business' position on paying for the project. He wrote that the business was "not involved up front" in discussions about the project and could not include the expenditure in its planning process. Pizza Hut would contribute half of what Rice wanted, he wrote.
"In that way, each of us, Pizza Hut and the City of Havre, will face an equal amount of unexpected expense," Knowles wrote.
Pizza Hut management has said another property owner, not Rice, approached the restaurant about the paving project.
Rice said Tuesday he wanted the street paved, regardless of whether the property owners paid for a portion of the costs.
"That street deserved to be paved," Rice said. "We went in with the intention of getting that street done. If we had to pay for that whole street, so be it."
Rice also said the city has done several paving projects since he took office that were paid for in part by the property owners. The other option, Rice said, is to create a special improvement district, in which bonds are sold to finance the project and property owners are assessed.
There are extra costs in doing an SID, which can take 10 to 20 years to pay off depending on the cost of the project. A bond attorney, who will ensure that all of the correct procedures are followed, can cost about $6,000. Interest also accrues over the life of the bonds.
Rice added that he now expects Golden Spike owner Tammy Farmer to contribute only $2,250 to the project. Farmer was unavailable for comment.
He said he will no longer involve the city in such projects without a written agreement.
"We'll have them sign a mutual agreement, a letter of understanding," Rice said. "Just to alleviate any skepticism by anybody, so that everybody's on the same page."
He added that he would have to speak to the city attorney to find out whether such an agreement would be legally binding. It costs money to do a formal contract, Rice said.
Rice said no one on City Council has asked him any questions about the street since the July 5 meeting. Pam Hillery was unavailable for comment.
