Town, City incorporation costs nearly half a million

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BELOIT - Town of Beloit and City of Beloit officials have each spent more than $200,000 on the incorporation process.

Since 2013, the Town of Beloit has spent $227,503.95 on incorporation, which mostly includes legal fees from town attorney Brooke Joos, the town's contracted incorporation attorney Stan Riffle and the west side committee's attorney Al Reuter, along with consultation fees from town engineer Frank McKearn's firm Batterman and the $25,000 fee to the Wisconsin Department of Administration (DOA) for submitting the incorporation petition, according to interim administrator Gene Wright and finance director/treasurer Sara Regenauer.

Since the summer of 2016 to date, the City of Beloit has spent $216,911.15 on outside expenses, which includes legal fees and fees from financial, engineering and planning consultants, City Manager Lori Curtis Luther said.

Rock County Administrator Josh Smith said the county didn't contract or otherwise pay any outside consultants to assist county staff with the incorporation proceedings. Since all of the work was done by county staff and board members, Smith did not provide a figure, stating tracking actual cost is difficult.

The incorporation process has come to an end, unless town board members choose to revive it. On Dec. 20, the state blocked the Town of Beloit's petition to incorporate into the Village of Riverside.

The Wisconsin Incorporation Review Board decided to dismiss the town's petition, but stated an amended petition could be submitted if certain conditions were met. The board stated the Wisconsin Department of Administration will waive the incorporation review fee for an amended petition if one is filed within a year. In its findings, the state board declared the town's petition only met two of the six statutory standards for incorporating.

Leaders from both municipalities said the funds going towards incorporation were within the municipal budgets with no shortfalls.

In the Town of Beloit, the town spent $3,365 on incorporation in 2013, $1,175 in 2014, $65 in 2015, $33,876.34 in 2016, $74,189.37 in 2017 and $89,833.24 in 2018 (plus the $25,000 DOA petition fee submitted in 2018).

Regenauer said most of the expenses were legal fees. Other larger expenses were to Batterman in 2018 for about $53,000 to construct maps for the incorporation petition, as well as about $2,000 for financial consulting. She said there were other minor miscellaneous costs, such as fees for printing and mailing out information to residents.

Wright said the town hired two outside legal consultants: Riffle, who was brought in because Wright said Riffle is an expert when it comes to the incorporation process, and Reuter, a third-party lawyer who represented a committee of west-side residents during the incorporation process.

In the city, Luther said about $190,000 of funds were spent went towards legal fees, which includes paying attorneys and mediators.

She said the rest of the funds went towards hiring expert consultants in what the Luther called an "ultimately successful" undertaking from the city's perspective.

While Luther says she trusts her staff's professional expertise, she believes consulting experts made for an unbiased analysis of the town's petition. From a time management standpoint, Luther said hiring consultants also made it easier to produce a high level of analysis without limiting city staff's to keep up with existing workload.

"The reason why the city invested funds in this opposition to the incorporation petition is because if the town had been successful, that decision is permanent," Luther said. "There is no mechanism to undo that action. We continue to support the position that the town's incorporation as it was submitted had significant negative impacts on the region."

She said those negative impacts include the potential Alliant Energy revenue swap between the county and proposed village.

Currently, the township receives one-third of the shared revenues from the Alliant Energy plant, while the county receives two-thirds. However, if incorporation would've been successful, the ratio would be reversed.

The county currently receives about $1.7 million annually, while the town receives slightly less than $1 million. However, Alliant is currently constructing the West Riverside power plant. When the new energy center is operational, and if the town were to incorporate, the new village would receive approximately $3 million, while the county would receive $1.8 million. During the incorporation process, town officials pledged not to make the ratio swap until the new plant is operational.

"If the incorporation effort had been successful it would've resulted in a financial windfall for the town and would've made significant regional cooperation efforts unlikely," Luther said.

The Incorporation Review Board disagreed. In the board's eyes no party was able to identify any specific governmental problems from the new Alliant Energy payment structure. The board ultimately found that the impact on the metropolitan community standard for incorporation was met in its findings.

Luther also believes the division of assets and liabilities between the village and remnant town weren't adequately addressed in the town's petition. The Incorporation Review Board agrees with this assessment, as it found the statutory standard for the impact on the remainder of the town not met.

If incorporation would have occurred under the town's dismissed petition, land to the east of Afton Road would become a new village, while land to the west would've remained a township.

The town has a deadline to the decide whether to commit to round two. Rock County Circuit Court Judge Barbara W. McCrory has ordered the town to notify the court by March 15 if the town intends to file a new petition. Town officials plan to put together a committee to investigate whether the town should submit an amended petition.

Wright said the town is currently in the process of building the committee, which will for the time being be comprised of town staff. However, he plans to eventually involve community members if the town decides to move forward with another petition.

"We plan to elicit input from citizens. We just want to make sure we want to move forward before we end up wasting their time," Wright said.

In a statement released on Tuesday, Wright said the township plans to meet with the City of Beloit and neighboring communities to better understand their positions in regards to incorporation. He said the ultimate objective is to reach agreements beneficial for all municipalities.

Town and city officials met once in December in an effort to resume negotiations regarding the 208 Sewer and Water Project. City officials wanted to discuss a comprehensive boundary agreement, which would include a new 208 agreement. However, town officials previously said they're only interested in discussing the 208 project at the time.

The City of Beloit sent a letter to town officials in late November, asking for negotiations to begin again while responding to threats of litigation from the town.

In letters sent back and forth between town and city officials late last year, the town contends the city is not living up to its end of the 2008 sewer agreement. Town officials said they reached out to the city with no avail, and the city isn't allowing city or town residents to hook up to this new system. Because of this, the town felt the only recourse was litigation.

However, the city argues the agreement isn't valid and doesn't speak to technical issues such as payment for services, reimbursement of infrastructure costs via a special assessment, hook-up fee or another mechanism. They believe a separate agreement is required to address these issues.

Negotiations between the town and city have stalled once more, with the town taking time to consider its path forward regarding incorporation. Wright said though the town currently is focused on deciding its next move regarding a possible petition, he said "we are open to any discussion with any of our neighbors at any time." Luther said if the town isn't going to pursue incorporation, she believes a sewer agreement can be resolved quickly.

"However, the city having an agreement with the existing town that may become a future village is problematic. We need to know who we're making an agreement with," Luther said. "If they are going to continue to pursue incorporation, the only way for us to having a binding agreement regarding sewer and other issues, is for that to be part of a comprehensive boundary agreement. That way, regardless of the current town or future village, we have an enforceable tool."

Though Luther said "the city remains committed to being a good neighbor," she believes it would've been more ideal for a boundary agreement to have been worked out before the town submitted its incorporation petition.

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