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HomeMy WebLinkAbout09-17-01.4 CITY OF LAKEVILLE COUNCIL MEETING SEPTEMBER 17, 2001 A complete video tape of the City Council proceedings is retained for one year, Mayor Johnson called the meeting to order at 7:0.0 p.m. Opening remarks were provided by Pastor Bill Bohline, reflecting upon the recent tragic events that occurred in .New York City and Washington DC. Mayor Johnson lead..the pledge of allegiance to the United States flag and asked those present to observe a few moments of silence in remembrance of those who lost their lives in the. recent tragedy. Roll call was taken. Present: Council Members Bellows, Mulvihill, Rieb, Luick and Mayor Johnson. Also present: R. Knutson, City Attorney; B. Erickson, City Administrator; K. Nelson, City Engineer; D. Morey, .Acting Community & Economic Development Director; D. Feller, Finance Director; S. Michaud, Parks & Recreation Director; D. Martens, Police Chief; D. Volk, Director of Operations & Maintenance; R. Mulfenbach, Planner; J. Hennen, Assistant to City Administrator; C. Friedges, City. Clerk. MINUTES The minutes. of the September 4, 2001 City Council meeting and the August 27, 2001 Council. work session were approved as presented. SPECIAL PRESENTATION State Representative Mary Liz Holberg provided an overview of the 2001 omnibus tax law. She explained the tax rate compression and showed, line by line, how the legislation will affect property: owners' tax statements. She explained that the City of Lakeville lost. approximately $1.8 million in Homestead & Agricultural. Credit Aid (HACA) from the State of Minnesota. '. As a result, the City will be required to raise their tax rate in CITY OF LAKEVILLE COUNCIL MEETING SEPTEMBER 17, 2001 PAGE 2 order to recoupthat loss in state aid. She went on to explain that when the tax figures were calculated earlier this year, the legislature always made the assumption that the local municipalities who lost local government aid (LGA) and HACA would levy back that lost aid. She stated the Governor has pushed to keep local taxes local, rather than having state mandated property taxes, so that the taxpayers .can more easily understand where their money is going. Representative Holberg went on to explain that the formula that was approved for local .government aid was geared more toward .assisting, what the State calls, regional growth centers. These include Minneapolis, St. Paul, Duluth, Winona, St. Cloud, etc. The justification was that these cities provide more regional services and need more relief. She stated that discussion would continue at the next legislative session, as there are pbvious problems with the current formula. Council Member Johnson asked if there is any chance the City of Lakeville would receive additional funding for the I-35/185tn i Street interchange. Representative Holberg stated the best. opportunity to receive more funding for the interchanges in the Lakeville area is to continue to get more money into the system. Council Member Luick asked about the removal of the special taxing district and what it will cost the City of Lakeville in the future for transportation services. Representative Holberg explained that the State assumed the cost of the Metro. Transit .operating levy. The State also assumed the transit operating levy for greater Minnesota. The capital (debt service) transit levy is confined to the metro transit taxing district as of .January 1, 2001. Lakeville is outside the transit district. Representative Holberg explained that a capita) (debt service) transit tax cannot be levied in the City of `Lakeville unless the Metropolitan Council and the City Council mutually approve a service expansion plan agreement. Council Member Mulvihill asked how the State can justify not allowing an additional levy for manufactured. housing to make up for the loss in HACA when, at the same time, the State encourages the development of affordable housing. Representative Holberg explained that the mobile home HACA CITY OF LAKEVILLE COUNCIL MEETING SEPTEMBER 17, 2001 PAGE 3 i has always been treated separate. from other HACA. Mobiie home values were not taken into account when setting the local tax rate and levy. It is an issue that can be brought forward at the next legislative session. She stated she feels very strongly that the levy limit formula and. some of the issues as a result of the legislative session illustrate some of the problems growth communities are facing. Council Member Luick asked ifi the City of Lakeville is being penalized because of recent moratoriums that the City put in place to help slow down growth. Representative Holberg explained that the levy limit formulas factored a snapshot in time when Lakeville was under a moratorium, which is hurting Lakeville.. When levy limits had been .previously lifted, there were communities across the state, unlike Lakeville, that levied to the. extreme. Mayor Johnson stated he was disappointed that the State was not more up front with taxpayers in explaining that while State taxes were being reduced, the difference would need to be made up through local taxes. STAFF ANNOUNCEMENTS ATTORNEY: None ENGINEER: Mr. Nelson provided an update on the Pilot Knob Road reconstruction project and detour. ADMINISTRATOR: Mr. Erickson provided a revised resolution for agenda item 10. He also asked the Council to consider, under New Business, a gambling permit for the VFW Auxiliary and an Encroachment Agreement with Greg and Nancy Smith for afree-standing business identification sign. Mr. Erickson also asked the Council to consider, under Unfinished Business, . the final plat of Dodd Marsh Highlands. Mr. Michaud presented the August monthly report of the Parks & Recreation Department.. ® Chief Martens presented the August Police Department monthly report. CITY OF LAKEVILLE COUNCIL MEETING SEPTEMBER 17, 2001 PAGE 4 • PRESENTATIONS/INTRODUCTIONS Chief Martens honored six citizens and one business with a Chief's Award of Merit, recognizing their roles in assisting public safety. Those. receiving the honor were Laurie Burge, Judeen Limbeck, Daniel Kirby, Anita Doll, Lisa and Matthew Lokensgard and Jeff Tuthill,. representing Dick's Valley Service. Donna Patton, Chair of the Lakeville Women of Today, asked. the City Council to proclaim September 23-29 as Lakeville Women of Today Week. Mayor Johnson read. the proclamation. 'Mayor Johnson recessed the meeting at 8:25 p.m. and reconvened at 8:30 p.m. CITIZENS' COMMENTS None CONSENT AGENDA Council members added items 11 and 13 to the consent agenda. 01.115 Motion. was made by Mulvih-ill, seconded by Luick to approve the consent agenda items as follows: a. Claims for payment. b. Receive minutes of the following advisory committee meetings: Planning Commission, September 6, 2001 Arts Center Board, September 6, 2001 Park & Recreation Committee, September 5, 2001 Hunting Subcommittee, September 5, 2001 Environmental Affairs Committee, September 4, 2001 c. Resolution No. 01-1b3 approving a gambling permit for the Bloomington Lions Club to hold a raffle at the Chart House on December 3, 2001., CITY OF LAKEVILLE COUNCIL MEETING SEPTEMBER 17, 2001 PAGE 5 d. Resolution No. 01-138 approving a gambling permit for the Lakeville Lions Club to sell pull-tabs at Babe's Sportsbar Grill. e. Resolution No. 01-139_.accepting a donation from VFW Post. #210 to the Police Department Mutual Aid Assistance Group (MAAG) Program. f, Easement Agreement with McLeod USA for 0utlot B, bonnay's Valley Park 5t" Addition. g. Special assessment/easement agreements for 192nd Street utility and street improvements with: Lawrence A. & Carole G. Shafer, 9880-192nd Street W. Edwin J. & LeEllen Hammer, 9940 - 192nd Street W. Joseph T. & Judith A. Foley. 19300 Iteri Avenue h. Agreements with the Minnesota Department of Natural ,' Resources for cross-country .ski trail and snowmobile. trail grant-in-aid maintenance funding. i. Receive Planning Commission's .Findings. of Fact and Recommendation and approve a variance and interim use permit to allow 'the installation of a satellite dish greater than three meters in diameter, located north of 185tH Street and west of Kenwood Trail. j. Receive application from Twin Cities Avanti Stores, LLC, for off-sale 3.2% malt liquor licenses at two Budget Mart stores, located at 20180 Dodd Boulevard and 8333-210t" Street West, and call a public hearing to be held on October 15, 200.1. k. Resolution No. 01-.140 accepting adonation from UtiliCorp United to the City's Economic Development Department. I. Authorize purchase of a new Caterpillar 9506 wheel loader in the amount of $142,429.52. 11. Receive Planning Commission's Findings of Fact and Recommendation and-approve a conditional use permit to CITY OF LAKEVILLE COUNCIL MEETING SEPTEMBER 17, 2001 PAGE 6 allow the expansion of an existing non-conforming single- family-dwelling at 10052 - 199th Street West. 13. Approve the 2001/2002. Hunting Map and authorize publication. Roll call was taken on the motion. Ayes, Bellows, Johnson, Mulvihill, Rieb, Luick. ITEM 8 Mr. Feller presented .the 2002/2003 budget.- (See attached Budget Narrative dated September 17, 2.001.) Mr. Erickson provided an overview of projected revenues and expenditures. He also provided specific examples of how City staff works to help minimize spending. He explained that the City's levy limit for 2002 is $865,000. The City levied $1.2 million last year. Mr. Erickson stated it will take 22% to cover the loss of HACA and an additional 17% to meet the needs of the community for one more year. 01..116 Motion was made by Mulvihill,.seconded by Luick to approve the following budget documents: Resolution No. Oi-141 adopting the preliminary 2002 General Fund- Budget Resolution No. 01-142 adopting the preliminary 2002 Cable TV Fund Budget Resolution No. 01-143 adopting the preliminary 2002 Environmental Recycling Fund Budget Resolution No. 01-144 adopting the preliminary 2002 Employee Benefit Fund. Budget Resolution No. 01-145 adopting the preliminary 2002 GIS Fund Budget .:Resolution No. 01-:146 adopting the preliminary 2002 Surface Water Management Utility Fund Budget Resolution No. 01-147 adopting the preliminary 2002 Enhanced 911 fund Budget Resolution No. 01-148 adopting the preliminary:-2002 Economic Development Revolving Loan Fund Budget CITY OF LAKEVILLE COUNCIL MEETING SEPTEMBER 17, 2001. PAGE 7 Resolution No. 01-149 adopting the preliminary 2002, Downtown Special Service District Fund Budget Resolution No. 01-150 adopting the preliminary 2002 Municipal Reserves Fund Budget Resolution No. 01-151 adopting the-preliminary 2002 Equipment Fund Budget Resolution No. 01-152 adopting the preliminary 2002..Building Fund Budget Resolution No.01-153 adopting the preliminary 2002 Liquor Fund Budget Resolution No. 01-154 adopting the preliminary 2002 Water Operating Fund Budget Resolution No. 01-155 adopting the preliminary 2002 Sanitary Sewer Operating Fund Budget Resolution No. 01-156 adopting the preliminary. 2002 Tax Levy, Roll. call was taken on the :motion. Ayes, Johnson, Mulvihill, Rieb, Luick, Bellows. ITEM 9 Karl Gill, representing Dakota County Community Development. Agency (DCCDA), requested Council approval of a sketch plan of 40 attached townhouse units known as Lakeville Family Housing Third Addition. She explained that the project is not scheduled for construction until some time in 2003.. Approval of a sketch plan is being requested at this time. due to the pending acquisition of Outlot A, Gilb Fitzpatrick Addition. Mr. Mullenbach presented the proposed sketch plan for Lakeville Family Housing Third, Addition, which is located west of Iberia Avenue and south of 203rd Street, adjacent. to the CP Railroad. In conjunction with this request, City staff is recommending approval of a resolution relinquishing the City's interest in a 30-foot stripe of Outlot A, Gilb Fitzpatrick Addition.... The CDA is also .pursuing acquisition of the Krejce. property at 20487 Iberia Avenue. The CDA will also. be pursuing a rezoning.. of the property from RM-1, Medium Density Residential District, and RST-1, Single and Two Family Residential District, to Planned Unit Development to allow additional modifications from the performance standards of the RM-1 District. These modifications would include the use of a private street in lieu of CITY OF LAKEVILLE COUNCIL MEETING SEPTEMBER 17, 2001. PAGE 8 a public street. The other modification would be to allow a portion of the guest parking requirement to be met. by each townhouse unit. The Planning Commission considered the sketch plan and unanimously recommended approval, subject to the stipulations contained. in the August 31, 2001 planning report. 01.117 Motion was made by Rieb, seconded by Bellows to approve a sketch plan of 40 attached. townhouse units known as Lakeville Family Housing Third Addition and Resolution No. 01-.157 authorizing the transfer of certain real property. Roll call was taken on the motion. Ayes, Mulvihill, Rieb, Luick, Bellows, Johnson. ITEM 10 .Terry Wensmann, Wensmann Realty, requested Council. approval of the final plat of Village. Creek First Addition.. Mr. Mullenbach resented the Villa e Creek First Addition final p 9 plat, which consists of 22 single-family lots on five blocks and four outlots on 99.37 acres of land. The subject property is located east of downtown Lakeville, west of Hamburg Avenue and south of Aronson. Park. He explained that the. development contract includes a stipulation whereby the 207t" Street connection between downtown Lakeville and Village Creek wil( be constructed with future phases of the Village Creek preliminary plat and barricaded until 100 of the single-family homes are completed. or in three years, whichever occurs first. He stated the final plat is consistent with the preliminary plat approved by the .City Council on August 20, 2001, with .the exception of one additional requirement. The State of Minnesota Attorney: General's office requires approval of an easement agreement with the State of Minnesota, due to the fact that 2071h Street will cross. State property. Staff' recommends approval of the final plat of Village Creek First Addition. Council Member Luick asked when he developer expects to complete the curb, gutter and. sidewalk in the existing residential areas. Mr. Wensmann stated they would be working CITY OF LAKEVILLE COUNCIL MEETING .SEPTEMBER 17, 2001. PAGE 9 with. the City-and residents and expect to complete this. work some time next summer. Council Member Bellows asked about the configuration of the trail with the three lots being moved further to the north. Mr. Mulkenbach explained -that the developer has relocated the outlot to come out directly adjacent to the entrance to the neighborhood parka 01.118 Motion was made. by Luick, seconded by Rieb to approve Resolution No. 01-158 approving the final plat of Village Creek First Addition. Roll call was taken on the motion. Ayes, Rieb, Luick, Bellows, Johnson, Mulvihill. ITEM 12 Mr. Knutson presented a proposed ordinance amending Section 11-15-5 of the Lakeville Zoning. Ordinance concerning non- conforming uses. The ordinance, he explained, .brings the City's zoning ordinance into compliance with new state legislation changing .the discontinuation period for non- conforming uses from. six months to one year. 01.119 Motion was made-by Luick, seconded by Bellows to adopt Ordinance No. 693 amending title 11, Chapter 15 of the Lakeville City Code concerning non-conforming uses. Roll call was taken on the motion. Ayes, Luick, Bellows, Johnson, Mulvihill, Rieb. UNFINISHED BUSINESS Mr. Erickson requested Council approval of the final plat. of Dodd Marsh Highlands.. He explained that City staff and advisory committees have worked closely with .the developer on this plat for over. a year, as it is an important part of thee. greenway system. The plat is consistent with the preliminary -plat approved by the City Council and includes the elimination. of two townhouses adjacent to the trail. CITY OF LAKEVILLE COUNCIL MEETING " SEPTEMBER 17, 2001 PAGE 10 01.120 Motion was made by Luick, seconded by Mulvihill to approve the following: ^ Resolution No. 01-159 approving the final plat of Dodd Marsh Highlands. ^ Resolution No. 01-160 vacating public easements ^ Resolution No. 01-161 authorizing transfer of certain real property. within Dodd Marsh Highlands Roll call was taken on the motion. -Ayes, Bellows,. Johnson, Mulvihill, Rieb, Luick. NEW BUSINESS 01.121 Motion was made by Rieb,: seconded by Mulvihil! to approve Resolution No. 01-.162 approving. a gambling permit for the VFW Auxiliary to Post 210. Roll call was taken on the motion. Ayes, Johnson, Mulvihill, Rieb, Luick, Bellows. Mr. Knutson presented an Encroachment Agreement between the City of Lakeville and Greg and Nancy Smith. The agreement involves an existing free-standing business identification sign that encroaches into the City's right-of-way. Mr. Erickson explained that this agreement would allow a sign. that. is three feet higher, six square feet larger, and a foot closer to the sidewalk than the previous sign. He stated there has been some discussion about this sign in relation to the C- CBD provisions of the sign ordinance and the Historic Fairfield District Downtown Design Guidelines. Council Member Luick asked if`Dakota County would also need to be a party to this agreement. Mr. Erickson explained that the County has chosen to avoid any regulatory. involvement, dueto the. fact that County Road 50 will be turned back to the City in the fall of 2002. The City Attorney pointed out that this situation is unique, in light of the property owner's pre-existing right to encroach. CITY OF LAKEUILLE COUNCIL MEETING SEPTEMBER 17, 2001. PAGE 11 Council Member Luick stated he is hesitant to replace a bade situation -with another bad situation. Motion was made by Rieb to approve an Encroachment Agreement with Gregory J. Smith and Nancy Papatola Smith. The motion died for lack of a second. At the requested of Council Member Luick, the City Attorney suggested the following language could be added to the agreement under Section 2, ~~If the business identification .sign, or any portion of it, is to be replaced or rebuilt, it may be done so at the Trust's sole expense, and it shall comply with all terms of this Agreement as well as all applicable ordinance requirements in effect at the time of replacement or rebuilding of the sign." 01.122 Motion was made by Rieb, seconded by Luick to approve an Encroachment Agreement with Gregory J. Smith and Nancy Papatola Smith with the additional language in Section 2 as recommended by the City Attorney. Roll call was taken on the motion.. Ayes, .Mulvihill, Rieb, Luick, Bellows, Johnson. ANNOUNCEMENTS: Next regular Council meeting October i, 2001 Mayor Johnson. adjourned the Council meeting at 10:.20 p.m. Respectfully submitted, Charlene Friedges, y Clerk Robert D. John n, Mayor Finance Director's Budget Narrative September 17, 2001 The City' operating plan grants the City Council full authority over the financial affairs of the City. The City Administrator is charged with the responsibility of proposing the budget and for the enforcement of the provisions, which you adopt by resolution. • The City has a number of funds, the largest and most significant of which is the General Fund. The General fund accounts for all revenues and expenditures necessary to provide a full range of services including general government administration, community and economic development, public safety, public works, and parks and recreation. General fund 2002 estimated revenues are $14,561,550. The largest single revenue category is taxes in the amount of $8,762,117, which represents 60% of the total. Other revenue sources include intergovernmental revenues, licenses and permits, charges for services, other revenues and State-aid. 2002 GENERAL FUND REVENUES TOTAL $14,561,550 Other Taxes (6.6%) (60.2%) $956,448 $8,762,11 Other ' ~'~~' Charges/ Services (10.5 %) 1,530,243 Licenses/ Inter- State Aid - Permits government) LGA (13.6%) (3.7%) (3.4%) $2,280,838 $532,808 $499,096 • PER CAPITA STATE AIDS FOR PROPERTY TAX RELIEF $80 73 $70 67 64 62 60 58 57 $60 56 a. $50 U $40 :, w $30 $ZO $10 11 $- 1994 1995 1996 1997 1998 1999 2000 2001 2002 Year As a result of the 2001 Omnibus Tax Law, Lakeville and many other metropolitan growth cities will see significant decreases in state aids in 2002.. In 2001, Lakeville received 498,808 of LGA and $1.748 million of HACA from the state for property tax relief. For 2002, the LGA only increased 288. The greatest loss however was HACA, which was totally eliminated by the legislature. As such Lakeville per capita state aids have decreased dramatically. Lakeville received the 14 largest loss of state aids accounts Minnesota's 208 cities. Lakeville's .$1.748 million loss of HACA will result in a 22 percent increase in .the City tax levy. 2 Cities with Greatest loss of State Aids 2002 Increase/ State (Decrease). City Aids State-aid BLOOMINGTON CITY OF ..107,290 (3,726,129) COON RAPIDS CITY OF 2,803,980 (2,976,134) BURNSVILLE CITY OF 396,606 (2,971,665) ST LOUIS PARK CITY OF 1,911,731 (2,940,461) BROOKLYN PARK CITY OF 2,385,013 (2,852,075) APPLE VALLEY CITY OF 403,875. (2,591,012) RICHFIELD CITY OF 3,274,447 (2,449,106) MAPLE GROVE CITY OF 179,762 (2,149,215) MINNETONKA CITY OF 63,141 (2,100,794) BLAINE CITY OF 1,170,321 (2,014,974) ROSEVILLE CITY OF 41,381 (1,891,874) PLYMOUTH CITY OF 74,570 (1,852,030) GOLDEN VALLEY CITY OF 44,535 (1,759,621) LAKEVILLE CITY OF 499,096 (1,748,903), EAGAN CITY OF 71,425 (1,710,270) MAPLEWOOD CITY OF 717,295 (1,634,571) COTTAGE GROVE CITY OF 965,845 (1,531,704) WOODBURY CITY OF 45,942 (1,332,753) BROOKLYN CENTER CITY OF 2,330,075 (1,317,513). WEST ST PAUL CITY OF 1,118,800 (1,227,558). FRIDLEY CITY OF 1,556,948 (1,221,673) Manufactured home HACA was also eliminated. Unlike the regular HACA, manufactured home HACA cannot be recovered with the property tax levy. Lakeville has approximately 1,100 manufactured homes; ranking second in the state for the total number of manufactured homes. The elimination of manufactured home HACA results in an approximate $50,000 net loss of revenues for Lakeville. • 2002 State Increase/ (Decrease) City Aids State-aid Cities with Greatest Gain of State Aids DULUTH CITY OF 29,635,152 3,170,290 MINNEAPOLIS CITY OF 112,055,596 2,810,960 WINONA CITY OF 9,869,101 2,515,746 MOORHEAD CITY OF 8,453,547 2,468,624 ST CLOUD CITY OF 12,622,996 2,208,333 MANKATO CITY OF 9,688,318 2,038,202 ST PAUL CITY OF 73,826,248 1,962,666 FARIBAULT CITY OF 6,501,802 1,797,929 AUSTIN CITY OF 7,581,983 1,242,116 ALBERT LEA CITY OF 6,400,498 1,191,696 RIBBING CITY OF 8,897,029 1,125,115 BRAINERD CITY OF 4,095,302 1,047,605 WILLMAR CITY OF 4,423,235 1,027,693 BEMIDJI CITY OF 3,849,770 978,018 FERGUS FALLS CITY OF 4,248,291 871,321 OWATONNA CITY OF 5,129,230 724,522 NORTHFIELD CITY OF 3,205,757 698,497 FAIRMONT CITY OF 3,721,192 664,622 The 2001 Omnibus Tax Law penalizes growth cities while outstate communities and first class cities reap the benefits. First class cities such as Minneapolis, St. Paul and Duluth will receive 102.5 percent of their 2001 LGA and HACA. Larger outstate cities with a population of more than 10,000 will also see a substantially increased aid base. If the City of Lakeville received the same per household state aid as the City of Winona, Lakeville. residents would not have to pay any property taxes. Of the major city functions, public safety has the largest proposed expenditures in the amount of $5,822,615 or approximately 40.So/o of the total expenditures. In addition, General Government Services are estimated to be $2,131,712, Community Development and Inspections $1,332,252, Public Works at $2,715,347 and Parks and Recreation and Arts Center at $2,051,402 and Contingency $331,592. Over the years, actual expenditures have been under budget as departments have done exceptional work to continue providing services at desired levels and below budgeted expenditure levels. r~ U 4 CITY OF LAKEVILLE EXPENDITURES PER CAPITA $200 $150 $100 $50 $- According to the State Auditor's office, Lakeville's per capita expenditures are significantly less than those of other Minnesota cities. Lakeville is able to maintain below average expenditures due to prudent fiscal management and the fact that Lakeville will continue to have a 3.2 employees per thousand. The General fund balance represents the amount of funds required to operate during the first six months of the year. The City's most significant revenue sources--taxes and intergovernmental revenue--do not provide appreciable revenues until the second half of the year. The ending fund balance is $6,040,765 which is 42.0% of the expenditures. The projected fund balances are adequate and sufficient but not excessive. Special Revenue Funds are used to account for the proceeds from specific revenue sources that are legally restricted to expenditures for specific purposes. Establishment of such funds also enables the City to more effectively manage its resources and minimize tax levies. Special Revenue Funds 2002 Expenditures Cable TV $476,475 Environmental Resources 36,590 Employee benefit 45,000 GIS Fund 138,069 Surface Water Maintenance 384,470 Enhanced 911 (E911) 20,680 Economic Development Revolving. Loan - Downtown Special Service District 27.534 Total $1.128.818 5 GENERAL GOVERNMENT PUBLIC SAFETY PUBLIC WORKS PARKS & RECRATION Revenues from Cable TV franchise fees finance the Cable TV fund operations, which of course provides services for Channel 16 and the live cablecasting of City Council and planning Commission meetings. The Environmental Recycling Fund accounts for grants that the City receives from Dakota County for the citywide recycling efforts. The Employee Benefit Fund accounts for severance pay for city employees. The City's GIS Fund accounts for geographic information computer system which contains information relating to all the specific parcels within the City of Lakeville. The primary revenue sources are property taxes and. GIS fees that are collected as new lots/parcels of record are created. The Surface Water Management Fund was created several years ago to help manage the City's water sources Fees are collected with the quarterly utility bills. There are no proposed increases in the surface water management fee. The E-911 Fund accounts for the revenues from the telephone tariffs that are specially designated to operate the police, fire and ambulance dispatch emergency E-911 system. The Economic Development Revolving Loan Fund was created to account for loans to businesses that are either expanding or building with the City of Lakeville. The Downtown Special Service District provides a service charge, payable with property taxes, is levied against the commercial properties in the Downtown Business District for the purpose of financing budgeted programs and activities within the district. Municipal Reserve Fund 2002 Expenditures i Liability, Property and causualty premiums $ 236,937 Claims and deductibles 58,129 Administrative 32.989 Total $ 328,055 The Municipal Reserves (Internal Service) Fund accounts for the City's general liability, excess liability, property, and casualty insurance program. The City's primary insurance carrier is the League of Minnesota Cities Insurance Trust (LMCIT). Revenues are derived primarily by transfers from benefited funds and insurance rebates. Capital Projects Equipment Fund 2002 Expenditures Police $ 327,329 Fire 223,199 Streets 481,102 Parks 77,287 Other 90,586 Total $ 1„199,503 6 The Equipment Fund accounts for the purchase of police, fire, street and park maintenance equipment. The budget anticipates the issuance of short term debt instruments referred to as Certificates of Indebtedness, to finance the acquisitions costs. Property taxes are levied to pay the principal and interest on the Certificates. Building Fund 2002 Expenditures City Hall. $ 53,504 Police Department 17,176 Civil defense sirens 8,800 Fire Station #1 14,533 Fire Station #2 -6,857 Fire Station #3 19,843 Arts Center 103,761 Historical Society Facility 3.,000 Park Maintenance 2,800 Total $ 230,274 The Building Fund accounts for construction or improvement activity related to public buildings. Transfers from the Liquor Fund provide a vital revenue source that enables the City to build and maintain its facilities. 7 Enterprise Funds account for liquor, water and sanitary sewer operations for the City; they are self-supporting from retail sales and user charges. Operations are managed in much the same way as private enterprises. MUNICIPAL LIQUOR SALES $10,000,000 $8,000,000 '~ $6,000,000 $4,000,000 $2,000,000 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 YEAR According to the Minnesota State Auditor, Lakeville ranked third in municipal liquor sales in Minnesota. Sales are projected to increase from $8.79 million in 2001 to $9.05 million in 2002. As a result, net income before transfers is estimated to attain $808,111 in 2002. Transfers are. made from the Liquor Fund to the Building Fund for construction and maintenance of City facilities and to the General Fund for the DARE program. The Legislature entertained the "wine in grocery" legislation that would have authorized grocery stores to sell wine. Although the bill did not pass during the last session, the proposed legislation will likely be reconsidered during the coming year. If the legislation were to pass, the Liquor Fund could experience a $200,000-300,000 loss of net income. The Lakeville HRA will issue Lease Revenue Bonds to finance the construction of Fire Station No. 4. Approximately $179,000 of annual Liquor Fund profits would be pledged to the retirement of the debt. If the Wine in Grocery stores legislation were not approved next year, it is anticipated that $400,000 of Liquor. Fund profits will be available to reduce the debt requirements. • 8 Water Fund 2002 Revenues $ 1,736,886 Expenses (1,396,229) Net operating income $ 340,657 Interfund transfers (70,684) Capital outlay acquisitors (144,082) Net increase in working capital $ 125;891 The water fund accounts for the operation of the water system including supply, treatment, storage and distribution for more than 14,000 customers. Lakeville has the lowest water rates of any city in Dakota with treated water. The affordable water rates are due to the financial management foresight of the City Council whereby infrastructure improvements such as wells, towers and the water treatment plant are funded by connection charges rather than water use rates. Sanitary Sewer Operating Fund 2002 • Revenues $ 2,899,502 MCES sewage treatment (1,909,974) Other expenses (553,804) Net operating income 435,724 Interfund transfers (69,243) Capital outlay acquisitions (28,268) Net increase $ 338,213 The sanitary sewer fund accounts for the treatment and disposal of the system effluent. The largest single expenditure is for the Metropolitan Council Environmental Services Division sewage treatment costs in the amount of $1,909,974, which represents 78% of the total budget. The city does not propose any sanitary sewer rate increase for 2002. The proposed preliminary 2002 tax levy includes $8,690,256 for the General Fund, $94,913 for the GIS Fund, $453,797 for the Pavement Management Program, $872,822 for Certificates of Indebtedness, $466,211. for voter approved debt and $426,591 for improvement bonds for a total proposed preliminary 2002 tax levy of $11,004,590. The 2001 Omnibus Tax Bill approved by the Legislature impose levies that are determined by a state formula based on an increased number of households; inflation and the percentage increase for new construction of commercial and industrial property. The City can also levy special property taxes for debt service, matching funds for grants and increased pension costs. As a result of the 2001 Omnibus Tax Law, Lakeville and many other metropolitan cities will see a significant decrease in state aids. which thereby results in an increase in City taxes. As a result of Lakeville's $1,748,000 loss of HACA, the City's share of property taxes will increase by 22%. The Omnibus Tax Law also made significant changes in property taxation, which will have a dramatic impact on taxpayers including property class rate compression, Homestead Market value credit and a state property tax levy for commercial, industrial and seasonal property. As such the exact impact on various property classes are not known at this time. Due to the late enactment of the Omnibus Tax Law and the massive changes in the property tax system, Truth in Taxation public hearings are not required in 2001. The hearings will once again be required in 2002 and subsequent years. The elimination of the requirement to hold a Truth in Taxation public hearing in 2001 does not prohibit a taxing authority from holding a Truth in Taxation hearing if it so chooses. The Lakeville City Council has indicated they prefer to conduct the hearings in 2001. The County is not required to mail the parcel specific notices until December 14, 2001; however, the Dakota County Auditor/Treasurer's office has indicated they will endeavor to mail the notices in late November. Historically, Lakeville has had one of the lowest tax capacity rates in Dakota County for cities over 5,000 population. Lakeville's low tax rate is due to: • • Prudent fiscal management • Long term and short term debt policies • Investment policy • CommerciaUindustrial growth • Increased value of new residential, commercial and industrial construction • Fiscal disparities • Strategic Growth Management Plan • Economic Development Commission's Strategic Plan • Two-year budget planning process • Five-year Capital Improvement Frogram • Municipal Liquor profits • Effective risk management In spite of the Legislature's imposition of levy limits, elimination of HACA, sweeping changes to the property taxation structure and extraordinary increases in the cost of motor fuels, utilities and health insurance, the proposed 2002 budget and tax levy are consistent with the City's mission statement which states, "The City of Lakeville is committed to providing the • highest quality of services in acost-effective, innovative and responsible manner." io