Saturday, October 25, 2014

The Paving Episode

I sat and watched a regional German network last week (HR) on a curious development with taxation.  Here was a community where the mayor and city council had signed onto a paving contract  to fix up a significant street in this smaller town.  This was likely planned out in 2013 (they left this part out of the story), and I doubt if anyone from the town attended the meeting, heard the whole story, and grasped what was coming down.

Anyway.....the road project is nearing an end.  They showed the pavement and it's a nice piece of work.

The way that things typically work in Germany for city paving episodes....there is a balance of three inputs of cash.  You the property owner, pay a certain amount of money into the city via property taxes.  The city takes a portion of that money, along with a state portion, then comes to you with a bill.  Your personal contribution....if this is a side street along your house and not a full-up city part of the deal.  So, typically, your bill for the paving along your house goes from a couple hundred Euro to maybe three thousand Euro.

Germans typically view the new pavement as an infrastructure thing, which adds value to the house, and makes the whole neighborhood look better.

In this case here?  The city came to property owners and handed a general bill of roughly 20,000 Euro.  Yeah, kinda shocking.  Unbelievable was the term used by some folks meeting with the news team and talking over this.

They didn't have this kind of money, and just couldn't see how they'd ever afford this.  20,000 Euro equals roughly $24,000.

The news team went around, and found a couple of other villages in the region....who'd done the same thing.  One gal speaking for her elderly parent....noted their paving bill was closer to 50,000 Euro.  The parent was totally frustrated and it was harming their health to even discuss the matter.

The city mayors involved?  Generally, they just say that state money didn't come as they wished....and the private resident has to make up the money.

Germans get by with a marginal property tax when compared against Americans.  The place I live in....has a yearly property tax of 650 Euro ($800).  For what is a half-million dollars in's a fantastic deal when compared to what you'd pay in Miami or Atlanta.  But the other side of the coin is that the city relies greatly upon state money, and if it's not there.....the city can assess some fee down upon you.

From what I could figure out of the options were being pursued, and the city expected legal challenges over these fees.  In the case of the guy owing 50,000 Euro.....I'd take a guess that he'll be forced to sell his house....just to cover the bill.  The folks owing 20,000 Euro?  They might be able to take loans, but if they are over the age of sixty.....I don't see German banks offering up this type of situation.  So they might be forced to sell.

This brings me back around to city hall meetings, and why it's of absolute importance to attend these, and grasp what the idiots there are going to do.  In this group of cases.....they proceeded with a contract....when they did not have the state funding guaranteed and in place.  Someone should have stopped them and noted that no one in the village can afford a personal bill of 20,000 Euro for paving their street.

Down the road?  I anticipate that when city elections come around next time.....everyone is fired, from the whole city council, and the mayor himself.  The new folks?  They will likely raise property taxes drastically, and use that to pay for the paving project. This will make ninety-percent of the village hostile because their measly 300 Euro a year for property taxes, has now gone to 1,200 Euro.  The odds of any new paving projects in this type of town?  Zero.  It'll be ten years before they agree to the next type project.....that's my humble bet.

From an American prospective......this would make an entire community hostile, and really destroy the political career of some mayor.  I'm guessing Germans might feel the same way.

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