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Attorney proposes diverting LES payment from LPS to city

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BY DEENA WINTER / Lincoln Journal Star

Thursday, Aug 28, 2008 - 01:09:22 am CDT

A prominent Lincoln development attorney wants the city to take $8 million that goes to the school district and county annually and use it to build streets and repeal impact fees.

The city-owned Lincoln Electric System makes payments to the city, school district and county to make up for the fact that it doesn’t pay property taxes.

But attorney Mark Hunzeker thinks the city should get most, or all, of the LES payments since the city owns the utility and accounts for the bulk of the tax base in the county and school district.

Story Photo
Mark Hunzeker

Lincoln deserves a “bigger slice of that return,” he said.  But school officials worry about the loss of revenue.

School board member Keith Prettyman suggested if Hunzeker and others “want to play the game of teachers versus roads,” they might lose.

To redirect the money, Lincolnites would have to vote to change the city charter.

Hunzeker pitched his idea to business leaders, homebuilders and Realtors on Wednesday and said he received a “generally favorable” response.

“The city has these critical infrastructure needs that are huge and they’re growing, and they’re necessary not just to city residents, but to county residents and to LPS as well,” Hunzeker said.

“We’ve got about $200 million worth of street needs that we just have no means of even hoping to build.”

The money could be bonded to obtain upwards of $80 million, he said.

“That isn’t going to fix the whole problem, but it sure makes a pretty good dent in it,” Hunzeker said.

He said in two years state aid could help offset the loss to the school district.

Prettyman and another school official have numbers ready to refute Hunzeker’s idea: The lost revenue over two years would equate to 150 teacher salaries.

Hunzeker said he’s not out to get LPS.

“This is absolutely not an attempt to take a shot at LPS by any means,” he said.

“I think our school system is a very strong part of this community and a very strong selling point for Lincoln. We’re not at all hostile toward LPS.”

However, Prettyman said he doesn’t see how a proposal to take $6.6 million from the schools can be interpreted otherwise.

“I don’t know how you can say you’re not out to get LPS,” he said.

Hunzeker laid out his idea Wednesday for the Lincoln Chamber of Commerce, Lincoln Independent Business Association, Home Builders Association of Lincoln and Realtors Association of Lincoln.

Fred Hoppe, president of the Home Builders Association, said he expects the builders would support such a proposal.

And chamber President Wendy Birdsall said infrastructure funding is a top priority for the chamber and that it’s willing to engage in “tough discussions about a tough subject.”

“It’s an interesting proposition,” she said. “I don’t know if it’s the right way to go.”

Since Lincoln Electric System was formed 42 years ago, the public utility has paid the city, county and schools $169 million to make up for lost property tax revenue when the utility went public.

The city charter requires that 5 percent of LES’s gross revenue from the sale of electricity in Lincoln be doled out to the city, county and school district in proportion to their property tax levy rates.

Last year, that amounted to $6.6 million for the school district, $1.4 million for the county and $1.5 million for the city.

But with the city facing annual budget shortfalls, most of the city’s capital budget being directed toward the Antelope Valley Project, and with a grand proposal to build an arena west of the Haymarket District, Hunzeker sees no relief in sight for infrastructure needs.

“Not only are we standing in the bottom of a huge hole already, we’re still digging,” he said.

If the city took all the money, he figures the county could make do without by cutting its budget or raising taxes.

He said the city might be able to help tide over LPS for two years, until state aid increases, by not requiring it to pay for things like shared parks facilities or school resource officers, for example.

But school officials say there’s no guarantee the state aid formula won’t be changed by lawmakers. And even if it stays the same, state aid would only offset 80 percent of the lost LES revenue, according to Mark Shepard, associate superintendent for business.

Prettyman doubted whether state senators would support a scenario where “the entire state would be funding infrastructure for the city of Lincoln.”

But the idea of getting rid of arterial street impact fees is sure to be a hit with developers and home builders, who blame the fees for a downturn in the construction industry.

The city began collecting impact fees on new developments and expansions in 2003 to offset some of the cost of providing infrastructure, and has since seen building permits plummet.

Hunzeker represented Lincoln home builders in an unsuccessful lawsuit challenging the legality of impact fees.

“It’s time to recognize that we’ve kind of done ourselves some damage and try to find a way to undo it,” he said of impact fees.

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


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Sarah wrote on August 28, 2008 2:40 am:
" Why not divert the money back into the pockets of those who are paying a high basic charge on their electric bill? The money will do the most good when citizens determine where they spend their dollars. The city has no legitimate claim to the funds and the schools may also not. Also, I dislike the mention of equivalent teachers, why not put it in terms of equivalent administrators? "

 Terry wrote on August 28, 2008 5:41 am:
" There it is again from LPS: “want to play the game of teachers versus roads.” How about keeping teachers and getting rid of a couple of overpaid Assistant Superintendents and a bunch of "administrative staff" that do nothing but collect a pay check? "

 grandpaD wrote on August 28, 2008 6:30 am:
" The developers don't seriously think the inpact fees are the main driver of the housing downturn do they? Houses are overpriced, period. "

 joey wrote on August 28, 2008 6:32 am:
" Sounds like the developers again want the taxpayer to line their pockets. Now that they have to pay impact fees on new developements the same way that those who build houses on lots in the older parts of town do, they seem to be looking for a way to get a free meal ticket. The Grand idea for Haymarket west should be scrapped to use the money for the repair of existing streets. Let the POOR real estate developers pay for the roads in their projects that they think the need the tax payers to pay for. Get a life, pay your own way or get out of the business. "

 Concerned wrote on August 28, 2008 6:48 am:
" While I agree our streets and infrastructure need work, it should not be at the expense of our public school system. In case you haven't noticed, our teachers salaries are not that great, our schools are in desperate need of funding, community programs within schools are being cut, and yet you want to take away more money? There are plenty of other ways to generate funds, education cuts are NOT the answer. "

 Dee wrote on August 28, 2008 7:57 am:
" We should not think of it as schools vs. roads but maybe administrators vs roads. of course thats not the way it will go, the teachers/students would be the ones to feel it. This fall when my kids went to school we received home a list of things suggested to bring for the class. It included pencils, crayons, paper, erasers, hands soap, klenexes, paper towels, construction paper etc. so we know the families of the students are already paying for all the supplies, the teacher is not being paid what they deserve, so where is that money going? "

 CS wrote on August 28, 2008 8:08 am:
" And LPS administration is any different about the lining of pockets? There are many districts in NE that have administrations that collectively don't make what the superintendent of LPS makes in a year. Paying that kind of money for the 'idea' that competitive pay brings success in an arena where the benchmark is whatever they want it to be doesn't make a lot of sense. CEO's usually head companies that produce something that others don't;Education can produce award winning students on either a shoe string budget or caviar-I think its time LPS finds something in the midddle. "

 Lincoln Taxpayer wrote on August 28, 2008 8:10 am:
" As someone who has worked for LPS I can say that the loss of a few million would not hurt them at all, it needs to be 10s of millions. They could cut 25 % of their administration people and it still would not effect the performance of LPS.
If LPS wants to play the teachers vs roads game I am sure they would lose. Like everyone else in the community LPS has to start cutting back and doing with less. "

 JoBeth wrote on August 28, 2008 8:13 am:
" Let the builders pay the impact fees. They will reap the rewards. Let's see those figures cutting administrators instead of teachers. Bet it would be 35 administrators vs. 150 teachers. Cut the fat LPS. "

 russell wrote on August 28, 2008 8:19 am:
" Mr. Hunzeker is paid by the development community so naturally he will promote ideas that pleases his bosses. The true questions should be WHAT BENEFITS LINCOLN IN THE LONG RUN and WHY IS LINCOLN IN THE INFRASTRUCTURE HOLE? I suggest we are in the infrastructure hole because the necessary tax increasing choices were not made 10-20 years ago when road construction was cheap. If impact fees had been initiated in 2003 at its true level (which is $10,000 and not $4,800) there would have been more streets built and paid by the persons causing the need.

Lincolnites need to unite and vote in council persons that care about the whole city and not just developers. "

 Mona wrote on August 28, 2008 8:24 am:
" So students at LPS have to provide their own pencils, crayons, paper, erasers, hands soap, kleenexes, paper towels, construction paper etc? Gee, parents of parochial schools have been doing that forever. If teachers are so underpaid and the schools need so much updating, where are our proeperty taxes going to? I think we should have Mike Foley come in and audit LPS, to see where the negligent and wasteful spending is happening. Perhaps they should start with the main offices of LPS. The money from LES should go to the city. After all, it is Lincoln Electric system, not Lincoln Public shools electric system. The money should be used for the betterment of LINCOLN, including streets and parks. "

 Vern wrote on August 28, 2008 8:34 am:
" The schools already get way too much money. They don't need new computers every year. They don't even need new books every year. Does someone invent some new kind of math every year or just exactly HOW do the lessons change? The City needs the money and LPS has plenty to spare. "

 Go Hunzeker wrote on August 28, 2008 8:34 am:
" It is time LPS realize they can not continue to suck money out of the Lincoln business community without serious back lash.

Our pockets are not bottomless and we are sick of LPS acting as if we are an open checking account!! "

 I suppose wrote on August 28, 2008 8:39 am:
" I suppose impact fees kept Yahoo from coming to Lincoln? Yeah right "

 sickofschool wrote on August 28, 2008 8:42 am:
" "Prettyman and another school official have numbers ready to refute Hunzeker’s idea: The lost revenue over two years would equate to 150 teacher salaries." There it is .....Pettyman would cut teachers before he would cut administration, I am positive that there is a lot of middle men at the District Home office and "extra" in admin at schools that could be cut before teachers. Why does every Public high school need 3 "Associate Principals"??? Every time I would call my daughters high school to talk to one of them, they were never in the "office", nor was the Principal, ended up talking with a "Coordinator", if the Coordinator can do the Associate Principal's or Principal's job why do we need the extra over head????? "

 Get your facts straight wrote on August 28, 2008 8:43 am:
" Developers are suffering because they overbuilt homes and sold overpriced homes to people who have no way to pay for them. We have a record number of homes in foreclosure. Credit markets are tightening because lenders and underwriters finally realize not everyone should qualify for a low mortgage rate. Lincoln schools should not be asked to fork over money to solve the nation's housing and lending disasters. Developers and lenders are responsible for making the mess and they should bear the consequences of their poor business practices. "

 sippycup wrote on August 28, 2008 8:50 am:
" This guy is a development attorney? Makes sense that he would want to keep the money train rolling. Builders and development attorneys are going to have to face up to the fact that the housing boom from a few years ago has ended. Housing starts and home prices are down. You are not going to be able to endlessly expand the borders of Lincoln, expecting the city to pick up the infrastructure tab everytime you want to develop a new subdivision - especially when the demand isn't there. "

 Dave wrote on August 28, 2008 8:51 am:
" So the City Charter is written to penalize the ones that are more efficient with the tax payers money and reduce their levy rates (City has reduced their levy by 50% in the last 12 years)....because those that reduce their levy rate end up with less of a cut of the 5% from LES...and those that are less efficient and keep taking and taking the taxpayer money (LPS has increased its levy rate over the last 12 years) end up getting rewarded for their inefficiency.....that can only happen in a tax payer funded operation.....they have no financial responsibility....it isn't their money, so they don't worry about how much they spend/waste. I was on the UNL website yesterday and saw that the cost of a year of tuition and fees at UNL runs around $6600 per student.....LPS fees are running over $8000 per student.

Q: Why is it less expensive to attend UNL than LPS?
A: Administrative Staffing is out of control at LPS.

The only way LPS staff will get the message and be responsible to the tax payers is to cut off the money supply (all future School Bonds) and force them to make the changes. If they cut teachers rather than administrators, then they need to go....all of them....Superintendents, School Board Members, all of the ones standing in the way of efficiency.

Whenever LPS has extra money available due to shifting tax formulas (state)...they always find ways to spend it (laptops this year)....never give back to the tax payers and try to provide some relief for the people who are paying their salaries. Expect to see additional increases in the school levy rate....they will have to replace those laptops plus add more in the following years.....and probably add a few more administrators to manage the laptop distribution....and a few more assistant principals to supervise the laptop administrators.....ad nauseum. "

 RIck wrote on August 28, 2008 9:46 am:
" Roads vs. schools? Settled.
Mr. Hunzeker obviously doesn't care that Lincoln ALREADY VOTED ON ROADS VS SCHOOLS. In just the last few years a $200 million dollar roads bond was DEFEATED and a $200 million dollar school bond was APPROVED. He doesn't like the result, but we have spoken. "

 Go Mark wrote on August 28, 2008 9:53 am:
" Although I am usually on the "other side of the fence" regarding many of Mr. Hunzeker's views and those of his developer clients, I have to say I couldn't agree with him more on this one! I believe Lincoln taxpayers need to wake up and figure out where their tax dollars are going, especially when it comes to the top and middle-heavy administration at LPS. I can't believe how much heat the mayor and city council take in setting their budget, but Lincoln taxpayers seem to just hand it over to LPS, no questions asked. Time for answers, Prettyman, not "threats" of taking teachers jobs away...... "

 CS wrote on August 28, 2008 9:55 am:
" I don't know what school in LPS your kids go to-I provided all that and folders, and more for mine and his teacher sent it all home with a note blathering on about how LPS provided all of those materials so nobodies feelings were hurt. My son was so embarrassed that day. My daughter started kindergarten this year and my son, in 3rd grade now, went through her bookbag to make sure she didnt have ANYTHING so her teacher wouldn't have to tell her the same thing. How sad that one of the last few enjoyable things about school-supplies shopping and trading folders/pencils/pens has gone the PC route because some parents can't or won't provide for their kids. "

 Wow wrote on August 28, 2008 10:08 am:
" Are you kidding me? Mr. Hunzeker must not have children in the LPS system. How can he possibly think that taking this money away from the schools and our children is a good thing. I would rather drive on badly maintained streets than have my children suffer. NO WAY would I even vote for this. "

 y not wrote on August 28, 2008 10:11 am:
" just put a toll both on the new antolope valley before it opens next week with all the ppl that will be confused on game days with the o street bridge out we should toll out of towners and remind them not to drive like idiots, there are one ways every where and we have what we like to call crosswalks for traffic flow, that would bring in some of the money that they need to do a crap job on the streets and not take away from our teachers who already aren't paid enough........... "

 Start wrote on August 28, 2008 10:18 am:
" Start off by realizing no one needs or wants or even cares about a new arena in the Haymarket. "

 Under no circumstances wrote on August 28, 2008 10:22 am:
" can this community afford to get rid of impact fees, however, getting this money for the city to use is a great idea. "

 Jack H. wrote on August 28, 2008 10:25 am:
" 1) Hunzeker has always been "out to get" the schools. 2)The roads are behind because the city kept putting off the work to cut taxes (Thanks Johanns, Wesley, Seng, Beutler, and Rick Hoppe). 3) LPS is one of the most efficient school districts in the state and the country in regards to cost per student. "

 Sorry Dave wrote on August 28, 2008 11:05 am:
" Dave, your facts are wrong. Check the county assessor's website - http://www.lincoln.ne.gov/cnty/assess/levyrates.htm. The LPS levy in 1996 was $1.625998, last year it was $1.271939. LPS has lowered it's levy 35 cents in the last 12 years. In fact, LPS officials said at the board meeting on Tuesday they plan to lower the levy another 1/2 cent because valuations came in higher than expected. It sounds like LPS found "extra money" and will "give (it) back to the tax payers and try to provide some relief for the people who are paying their salaries", something you claim they never do. "

 Stop the LPS Money Pit wrote on August 28, 2008 11:20 am:
" Remember LPS already gets at 60% of the property taxes to operate the schools not to mention the enormous bond issue that passed to build new schools, renovate a few oh - and close existing schools as well. I seriously doubt 8 million is going to impact them. Maybe cuts should start at the Admin. office building on "O" Street that is always full of cars. The threat of cutting teachers is getting old and is narrow minded. If the school board and LPS Admin. Staff cannot get more creative than that - they should be the first to go. "

 Tammy wrote on August 28, 2008 11:59 am:
" It's an age old argument between the City and developers as to who should pay for infrastructure into new neighborhoods. Developers need to pay thier fair share. As others have said, if developers believe impact fees are the reason for the decline in the market, they need to read a newspaper now and then. The housing market is in bad shape everywhere right now. It has nothing to do with impact fees. Mike Foley cannot audit LPS, he is a STATE auditor and LPS is a CITY entity. I certainly agree though that LPS needs someone to come in and audit them. They are seriously heavy in the administrative area. CS...my daughter also brought home a "list" this year of things needed for the classroom that included pencils and tissues. While LPS does provide basic needs for all elementary students, anything "extra" in the classrooms has been provided by teachers. It's tough economic times for all of us, and I think teachers just can't continue to supplement thier classrooms as they have in the past. I, for one, am happy to assist where I can for her classroom needs. (Although I also agree that it's too bad that supply shopping and such is no longer part of the yearly ritual. I fondly remember getting my folders and pencils and such, with whatever the "hot" thing was that year on them. You are also right that it's all pretty much PC motivation...if they can't all have it then the rationale has become none should, so no one "feels bad"). "

 Alan wrote on August 28, 2008 12:02 pm:
" This article brings three very important facts about the city of Lincoln and LPS to the fore front of discussion.

1. The schools receive a massive subsidy through our electric bills on top of the millions of dollars they receive from our property taxes and from state subsidies. It’s way past time for a tough, line by line, audit of LPS. Many LPS insiders have told of bloated staff, top heavy administration and out-right waste for years. It’s time to get down to hard numbers. Why is it Nebraska ranks in the top 10 in spending per pupil but in the bottom 10 in teacher salaries?
2. We have a hard number on how far behind we are on roads and related infrastructure. It’s clear that we will be unable to fund, through taxation, the repairs and improvement needed to keep our cities infrastructure in good working order.
3. Finally, in print, we acknowledge where the money has gone. Antelope Valley and the Arena are the reasons out streets are falling apart. It may be too late to do anything about Antelope Valley other than to say “we told you so” but there is plenty of time to rein in the arena plans. Take notice of the streets when you drive to the polls to vote on the issue, now imagine how bad they will be in another 5 years without repairs.

Over the last decade the city leadership has focused our resources on a few projects benefiting the downtown area and UNL to the detriment of the city as a whole. Now instead of making the hard decision to tighten the belt and take care of the nuts and bolts of the city our “leadership” is focusing on grandiose, pie in the sky plans for a new arena. Will there at least be a breadline on the way to the Circus Maximus? "

 Mrs. Johnson wrote on August 28, 2008 12:13 pm:
" Building permits didn't plummet because of impact fees. It plummeted because of the mess Mr. Bush and GOP have created. The group Mr. Hunzeker is playing to loves to find ways for everyone including the poor to pay for their high living. They just hate it when they have to foot the bill for anything they do. Damn taxes included! "

 Lois wrote on August 28, 2008 12:22 pm:
" I too agree that our roads need better up keep, but not at the sake of children's educations! I beleive that Hunzeker's children, and anyone who agrees with him, must have attended private schools! "

 green space wrote on August 28, 2008 12:34 pm:
" here's a thought - evaluate city parks & properties. Are there ways to plat part of some parks to sell to developers? This gives the city $$$ from the sale and puts more property back on the tax rolls. "

 Roger wrote on August 28, 2008 12:50 pm:
" Anything to deprive LPS money is fine by me. Lots of overpaid, do-nothing administrators. Whoever is saying "the schools are underfunded" - what a joke. You obviously don't pay property taxes. "

 New to Lincoln wrote on August 28, 2008 1:27 pm:
" Lois: even if his kids attended a private school he STILL has to pay for that bloated pig that is LPS with his property taxes and electric bill now that we find out that LES is giving them money "

 brian wrote on August 28, 2008 1:46 pm:
" how is it possible the city of lincoln has put the tax payers in this position. The thing people don't understand is the impact fees are affect businesses moving into lincoln as much as people building houses. For a business to build a new building in lincoln it can cost them over 100K in impact fees just to build the building (depending on the size of the building obviously). Some of this can be offset by TIF financing, but my point is, do the Lincoln city leaders understand how much property and income tax is being lost by business being steered away from Lincoln because of these stupid impact fees. "

 Harry the Antenna Guy wrote on August 28, 2008 2:03 pm:
" I like the idea of diverting the money back to the pocket of people. I am sick and tired of the developers wanting the rest of us to pay for their new development. Let the new developments pay their own way - impact fees! I don't really care if Lincoln grows any larger and I sure as heck don't want to pay more to have it grow. I am fine with the size of it as is and I am sick of being taxed to death. "

 What wrote on August 28, 2008 3:40 pm:
" There are so many of you that say that LPS is a money pit and has this huge reserve of money. It seems to me that most of you are basing this on the fact that so much of your property taxes are used for education not on any hard facts that you might have. Can any of you give us proven facts and figures to back up claims that it is such a money pit? Can you tell us exactly what percentage of total budget is spent on salary, infrastructure, supplies, etc. Until you can give us proven numbers please keep it to yourself. And, if you can provide these numbers then maybe you should be running for the school board so that you can make these changes instead of complaining on the net. "

 what... Seriously wrote on August 28, 2008 4:22 pm:
" I really hope something is missing from the description of Mr. Hunzeker's proposal. From what I'm reading this "prominent Lincoln development attorney" wants to give money to the people that pay him- the developers. Next time we complain about crowded schools and ineffective teachers why don't we first call Mr. Hunzeker and he can explain it to us in small words. We'll need it “dumbed-down” since our schools will no longer be a priority. "

 open your mind people wrote on August 28, 2008 6:07 pm:
" Apparently most of you don't understand how development and city growth work. Taking 6.6 million one time from the schools to help finance 80 million worth of infrastructure would benefit the schools 10 time that amount from all the new tax revenue the new infrastructure would create. The only way to increase tax revenue is to increase the tax revenue base ie.. new homes and businesses to tax, or to keep the tax base the same and to increase the amount each tax payer must pay.
And every body should thank the "greedy developers" for helping the city grow, the additional tax revenue new developments create benefits everybody. "

 Go Hunzeker wrote on August 28, 2008 9:32 pm:
" Wake up Prettyman, LPS needs a wake up call!! LPS can cut some administrative jobs and we can all save some money. I am sick of all my taxes going to LPS!! "

 huh wrote on August 29, 2008 1:38 am:
" all you hear is the city has to grow we have to keep building well thats what has been going on in town for the last ten years soooo isn't that the road we took to get into this sink hole we are in now what the city needs is common sense not much of that flowing through city hall and even less being proposed to us, council member and city hall "

 K d J wrote on August 29, 2008 10:16 pm:
" It's sad that so many of you complain rather than get educated. While Property Taxes do fund the schools -- the city has property taxes and sales taxes. the schools are prohibited from getting other resources. The state "drew up the system" -- and the schools play with the rules they were given.

BTW -- six million in lieu from LPS out of their budget - could translate into higher property taxes -- Right now the schools are not taking their entire levy - and lowered it another 1/2 cent --the levy was held FLAT -- "

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