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HomeMy WebLinkAbout09-14-99 • CITY OF LAKEVILLE SPECIAL COUNCIL MEETING SEPTEMBER 14, 1999 Acting Mayor Sindt called the meeting to order at 8:00 a.m. Roll call was taken. Present: Council Members Ryan, Sindt, Mulvihill, Luick. Absent, Mayor Zaun. Also present: B. Erickson, City Administrator; D. Feller, Finance Director; B. Kempa and D. Lang, Accountants; K. Nelson, City Engineer; M. Sobota, Community & Economic Development Director; S. Michaud, Parks & Recreation Director; D. Martens, Chief of Police; D. Volk, Director of Operations & Maintenance; G. Abbott, Building Official; B. Visnovec, Acting Liquor Manager; J. Hennen, Administrative Assistant; C. Friedges, City Clerk. City Administrator Bob Erickson presented the City of Lakeville proposed 2000/2001 budget. (See attached Budget message dated September 10, 1999) Finance Director Dennis Feller then provided a detailed overview of the proposed 2000/2001 budget. (See attachment dated September 14, 1999) • 99.164 Motion was made by Mulvihill, seconded by Luick to approve the following preliminary budget resolutions: • Resolution No. 99-205 adopting the preliminary 2000 General Fund Budget • Resolution No. 99-206 adopting the preliminary 2000 Cable TV Fund Budget • Resolution No. 99-207 adopting the preliminary 2000 Environmental Recycling Fund Budget • Resolution No. 99-208 adopting the preliminary 2000 Drug Enforcement Fund Budget • Resolution No. 99-209 adopting the preliminary 2000 Employee Benefit Fund Budget • Resolution No. 99-210 adopting the preliminary 2000 GIS Fund Budget • Resolution No. 99-211 adopting the preliminary 2000 Surface Water Management Utility Fund Budget • Resolution No. 99-212 adopting the preliminary 2000 Oak Wilt Suppression Grant Fund Budget • Resolution No. 99-213 adopting the preliminary 2000 E-911 Fund Budget • Resolution No. 99-214 adopting the preliminary 2000 Economic Development Revolving Loan Fund Budget • Resolution No. 99-215 adopting the preliminary 2000 Downtown Special Service District Fund Budget CITY OF LAKEVILLE SPECIAL COUNCIL MEETING SEPTEMBER 14, 1999 PAGE 2 • • Resolution No. 99-216 adopting the preliminary 2000 Municipal Reserves Fund Budget • Resolution No. 99-217 adopting the preliminary 2000 Equipment Fund Budget • Resolution No. 99-218 adopting the preliminary 2000 Building Fund Budget • Resolution No. 99-219 adopting the preliminary 2000 Park Development Fund Budget • Resolution No. 99-220 adopting the preliminary 2000 Liquor Fund Budget. • Resolution No. 99-221 adopting the preliminary 2000 Water Operating Fund Budget • Resolution No. 99-222 adopting the preliminary 2000 Sanitary Sewer Operating Fund Budget. Roll call was taken on the motion. Ayes, Ryan, Sindt, Mulvihill, Luick. 99.165 Motion was made by Luick, seconded by Mulvihill to approve Resolution No. 99-223 approving the preliminary 2000 payable tax levy. Roll call was taken on the motion. Ayes, Sindt, Mulvihill, Luick, Ryan. • 99.166 Motion was made by Mulvihill, seconded by Luick to approve Resolution No. 99-224 setting the budget (Truth in Taxation) public hearing dates. Roll call was taken on the motion. Ayes, Mulvihill, Luick, Ryan, Sindt. Council Members decided to set the budget work session dates at their next regular City Council meeting on September 20, 1999. Acting Mayor Sindt adjourned the meeting at 8:47 a.m. Respectfully submitted, Charlene Friedges, ity Clerk ~ r~ Be y Si t, Acting Mayor ~ , ~ r~ Bli DGF,Z' MESSAGE DATE: September 10, 1999 TO: Mayor Duane Zaun Council Member David Luick Council Member Lynette Mulvihill Council MemberTom Ryan Council Member Betty Sindt FROM: Robert A. Erickson, CityAdminiatrator The proposed 2000-2001 budget was prepared to ensure that the sewice deliver; exr~ectations of residents and businesses are achieved in order to maintain the excellert ~;.tali.t~/ o,life the co:tirr:~:ility enjoys, despite the restraints imposed by state levy i_imits and the. ;:1~ail~.F~ge of meeting uttfi.:nded mandates by tr:e State Legislature. We are pleased t: ~ r:tsort that L~•e are • reco~nmending_ a budget that should enable Lakeville-for the Eighth strair,lit ;ear-~-to have the ;t,west tax c;tpacity rate of any City in Dakota C'otir,ty. 7'he predict~~bilEty o,~`'I.aldf~dille's tar levy is drre,rrimarily to taking a multi yeur,~~Nrspective in planning; anr' latc~~'geairtg resurirces, ¢~tilizing the Capital Y~rrprovemerrt Plan for 1998-2003 and tlr~~ ldeport and peeomjrrendatiorrs oftl:e 1998Strate;ie Crowtlr 16lanagement Task ~'c~rce, ~lf,~,~r~,• it~ith the visirrn and goals developed by the Ctv Council at its recent retreat. In 2000, the City will enter its third year of State Legislature-imposed ie~~~ limps. Unfortunately, the continuance ol'levy limits necessitates the issuance of Certificates oil Indebtedness to purchase vehicles and equipment. Interest on Certificates of Irae^=edness is an expens:, taxpayers would not ha:~e to pay if lew limits were repealed. The L,egislature's allocation of state aids for property tax relief clearly favors older out-stag a.nd core cities, with growth cities being penalized. As a result, 1.b°.~o of tine incr. eas in the City's share of pr:,perty taxes x$93,000) is directly attri!~utable to the Legislature's inequitable allocation of state aids for property tax relief..4lthough Lakeville has been one of the fastest growing cities lr! the state for the past decade, this growth is not adequately accoutlt4d for in the LGA distrbution formula. • City of Lakeville 20195 Holyoke Avenue • Lakeville, MN 55044 • (612) 985-4400 • FAX 985-4499 Ka,cr(crl paper: ao}' ink Unfunded mandates continue to plague us, and 2000 will be no exception. For example, without allocating appropriate funding, in 1999 the Legislature mandated the upgrade of bleachers and special police training. Anticipated costs for bleacher upgrades alone are budgeted at $11,000. Also, for the first time in history, the Legislature is dictating the amount of license fees that can be collected regarding amusement devices. On a more positive note, the City continues to maintain a strong tax base as the result of continued commercial industrial development, the increasing value of new residential housing, and the continued strength of real estate market valuations. Even though the net tax levy increased 12.9%, the estimated net tax capacity value (tax base) increased 11.6%, which results in an approximate 1.2% increase in the tax capacity rate (the equivalent of implicit price indicators-the inflation index for government). Also, this budget includes a commitment to: • enhance and augment our communications efforts • purchase vehicles and equipment (valued at $626,858) • provide seven new positions • Public Information Specialist (part time) Arts Center Coordinator Two Patrol Officers Community Service Officer (part time) Communications Technician (dispatcher) Manager of Parks Operations Information Systems Technician Adding the latter position will continue the City's emphasis on meeting the technological needs of the expanding wide area network and providing support for our information systems. The proposed budget will also facilitate the transfer of Lakeville Liquors proceeds to allow for the expansion of City Hall in 2000-2001 ($700,000) and construction of Fire Station No. 4 in 2003 ($900,000). The financing of these major capital improvements is consistent with the City Council's 1995 directive to become debt free for general government buildings by 2003, following the final payment on Fire Station No. 3 bonds. The expansion of the Water Treatment Facility from 10 mgd to 15 mgd and the addition of atwo-million gallon reservoir will be financed by cash on hand in the Water Trunk Fund. Finally, the budget as presented does not increase charges for water, sanitary sewer, street lights or surface water management in 2000. Incidentally, Lakeville has the lowest water rates in Dakota • County for any City that provides treated water. -2- . + • In closing, Dennis Feller and I want to thank Brian Kempa, Senior Accountant, and David Lang, Accountant II, for their in-depth (micro) analysis of each departmental budget. Their efforts enabled the Finance Director and I to focus on (macro) short-term and long-range fiscal issues. The final budget recommendations were reviewed with each department director and/or supervisor. We are providing you with a copy of the questions and answers, along with the adjustments addressed during the budget review process. Also included are 54 attachments that lend support to many of the complex issues that surfaced during this extensive critique. ~4 ~ ~ h 1 , , ~ ~ ~ ~j,,, .a _ ~.1 . Dedication The 2000-2001 budget is dedicated to members of the Building Inspections Department for their professionalism and timeless efforts in processing more than 4,856 permits in the first eight months of 1999 and ensuring that construction meets or exceeds the appropriate standards for protecting the health, welfare and safety of our citizens. • -3- • 2000/2001 Budget Overview Finance Director Dennis Feller September 14, 1999 The City's 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 enforcing the provisions adopted by resolution. The City has a number of funds, the largest and most significant of which is the General Fund. The General Fund provides a full range of services including General Government Services, Public Safety, Public Works and Parks and Recreation. The estimated 1999 General Fund revenues are estimated to be $11,683,378. The largest single revenue category is Taxes in the amount of $5,330,680, which represents 45% of the revenue sources. The second largest revenue source is State Aids for Property Tax Relief in the amount of $2,247,000, or 19% of the total General Fund budget. Other revenue sources include intergovernmental revenues, licenses and permits, charges for services and other revenues. Revenue projections take into consideration the City Council's approval on September 7 of an interim ordinance prohibiting approval of residential development. • Of the major city functions, Public Safety includes the largest proposed expenditure in the amount of $5,047,000, or approximately 41 % of the expenditures. General Government Services $3,264,000 Public Works $2,169,000 Parks and Recreation $1,576,000 Other $78,750 The estimated expenditures are, therefore, proposed to be $12,136,877. The City does not receive the two largest revenue sources, taxes and state aids for property tax relief, until July of each year. Therefore the City must operate for the first six months with funds on hand or other revenues to pay for its operating costs. The estimated ending fund balance for 2000 is approximately $4,658,665, and that represents about 38.4% of the total operating expenditures. That proposed fund balance is adequate and sufficient but is not excessive. The City also has a number of Special Revenue Funds, which have been established to account for specific revenue sources that are appropriated to specific legally designated activities. Revenues from Cable TV franchise fees finance the Cable TV fund operations that, of . course, provide services for Channel 16 and the live cablecasting of Council meetings. 1 • The Environmental Recycling Fund accounts for grants that the City receives from Dakota County for its citywide recycling efforts. The Drug Enforcement Fund accounts for one patrol officer assigned to the South Metro Drug Task Force. The primary revenue source is property taxes and a state grant. A transfer from the General Fund is included in the proposed budget to finance the Employee Benefit Fund, which accounts for severance pay for City employees. The City also has a GIS Fund for its geographic information computer system, which accounts for all the specific parcels of property within the City of Lakeville. The primary revenue sources are property taxes and GIS fees, which are collected as new lots/parcels of record are created. The Surface Water Management Fund was created several years ago to account for resources to help manage the City's water sources. Fees are collected with the quarterly utility bills. The Oak Wilt Fund accounts for grants received from the Department of Natural Resources. The Enhanced 911 Fund accounts for the revenues from telephone tariffs that are • specially designated for the E911 operating costs. 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 accounts for a special service charge collected from the commercial properties in the Downtown Business District for the purpose of financing budgeted programs and activities within the District. The Municipal Reserves (Internal Service) Fund accounts for the City's general liability, excess liability, property, and casualty and workers compensation insurance costs. Due to the favorable claims experience of the last three years, the City's net workers compensation costs are approximately 25% lower than what it would incur had it not enrolled in the Plan. The Equipment Fund accounts for the purchase of public safety, street and park maintenance equipment. The budget anticipates the issuance of approximately $640,000 of Certificates of Indebtedness in 2000. The Building Fund accounts for construction or improvement activity related to public buildings. Transfers from the Liquor Fund provide vital revenue resources that enable the City to build and maintain its facilities. Financing of the City Hall expansion ($700,000) in 2000-2001 and Fire Station #4 ($900,000) in 2002-2003 from liquor funds is consistent • 2 • with the City's objective of being "Debt Free by 2003" for City general government buildings. The Park Development Fund accounts for revenues derived primarily from developers at the time plats are approved. Grants have been approved from the DNR for the northeast sector park and Kensington Park, respectively. Some of the major projects include: • Northeast Sector Park • Greenridge Park • Kensington Park • Ipava Avenue trails • Playground upgrades The City has three Enterprise Funds, which are self-supporting and are derived primarily from retail sales and user charges. The estimated 2000 liquor sales are $9.3 million. It is anticipated that Lakeville will rank second in municipal liquor sales by 2001. Net revenues are estimated to be $836,000. Water Operating Fund revenues are estimated to be $1,299,000. There is no proposed water rate increase for 2000. Lakeville has the lowest water rates of any city in Dakota County that has treated water. The budget provides for the construction of well #14 to • replace well #4. A Water Treatment Facility expansion is proposed to be financed from the Water Trunk Fund in 2000. The Sanitary Sewer Operating Fund revenues for 2000 are estimated to be $2,547,000 and, again, there are no proposed changes in the sanitary sewer rates for 2000. The largest single expenditure is for the Metropolitan Council Environmental Services Division for sewage treatment costs in the amount of $1,792,000, which represents 80% of the total budget. The 1999 proposed tax levy is $6,588,531. The largest proposed appropriation to the tax levy is to the General Fund in the amount of $5,302,302. Sixty thousand dollars is also proposed to be appropriated to the Drug Enforcement Fund, $44,466 to the GIS Fund and $221,085 to payment of Certificates of Indebtedness. Certificates of Indebtedness are short-term debt instruments that are issued to finance the acquisition of police, fire, streets and park maintenance equipment. Unfortunately, the legislature's imposition of levy limits necessitates the issuance of Certificates of Indebtedness to purchase equipment. Interest on Certificates of Indebtedness is an expense taxpayers would not otherwise have to pay if levy limits were repealed. Of the tax levy, $440,300 is proposed to be allocated for voter-approved debt. The City has three such debt issues currently outstanding. They include the 1986 Park Referendum Bonds, the 1986 Fire Station #3 bonds and the 1994 Park Referendum Bonds. The last • levy for the fire station bonds will be in the year 2003, which is the last voter approved bond issue for the construction of City buildings. Of the proposed 2000 tax levy, 3 $514,378 is proposed to be allocated to debt issued for public improvements that are constructed in accordance with, and consistent with, the five year Capital Improvement Plan. The total tax levy, therefore, is $6,588,531. The tax capacity rate for the City of Lakeville is estimated to be .19342 for the year 2000. This represents a 1.2% increase over 1999. The increase in the tax rate is due in part to the legislative changes in the tax classification rates. It is anticipated that Lakeville will have the lowest tax capacity rate of any Dakota County City for the eighth straight year. There is one tax levy that is based on market value rather than tax capacity values. That levy is for the 1994 Park bonds, which results in a market value tax rate of .0001293. This is a 12% decrease over the previous year. The reason for that decrease is due to the increased values of property citywide and the values on newly constructed homes and businesses in the City of Lakeville. As such the City's share of taxes will increase approximately $16 for a home valued at $110,000, $29 fora $190,000 home. According to the Minnesota Taxpayers Association, Lakeville has one of the lowest taxes in the metro area. A new law requires that all cities over 500 population must conduct a public hearing and pass a resolution if the levy for the subsequent year will result in a tax rate increase. It is therefore recommended that the City Council conduct the public hearing at its regularly scheduled meeting on October 4, 1999. If the City Council adopts the tax levy as proposed, tax payers will receive parcel specific notices in November informing them of the estimated taxes by jurisdiction and the Truth in Taxation hearings. Again, the City Council has the ability in December to adopt a tax levy that is equal to or less than the levy that is adopted today. The City Council is also required to certify to the Dakota County Auditor-Treasurer dates for the proposed budget hearing. The staff is recommending that the budget hearing be held on Monday, December 13, and the actual tax levy itself be adopted on Monday, December 20. g: \denni s\c ounc i1\speech~relim_budget. doc • 4