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Home My WebLink About12-13-99 CITY OF LAKEVILLE SPECIAL COUNCIL MEETING DECEMBER 13,1999 Mayor Zaun called the meeting to order at 7:00 p.m. Roll call was taken. Present: Council members Sindt, Mulvihill, Luick and Mayor Zaun. Absent: Council member Ryan. Also present: R. Erickson, City Administrator; D. Feller, Finance Director; B. Kempa, Accountant; C. Friedges, City Clerk. Mayor Zaun opened the Truth in Taxation public hearing. Finance Director Dennis Feller explained that the purpose of the hearing is to provide taxpayers an opportunity to ask questions and present comments on the. proposed budget. Mr. Feller then provided a detailed overview of the 2000 budget,. (see attached Truth in Taxation narrative). Mayor Zaun indicated that questions. regarding assessed. values/market valuations .are addressed during the Open Book and Board of Review meetings held in March and April. • Mayor Zaun indicated that the State Legislature provided considerable equity- aid for education to Independent School District 194.. He asked if the other school districts that serve the City of Lakeville received similar'equity aids. Mr. Feller indicated that ISD 192-received similar aids as Lakeville; however, ISD 196 did not receive the amount of aid increase by the State Legislature. Mayor Zaun asked how the proposed budget compares to the projected 2000 budget that was approved last year. Mr. Feller indicated there is only a 2% deviation from what was projected last year for the year 2000. Mr. Erickson pointed out that the proposed 2000 general fund budget is approximately .$116,000 less than the preliminary budget approved in September. This is primarily due to adjustments to capital outlay requests.. Mayor Zaun opened the meeting to questions and comments from the audience. Ms. Kim Deberge raised a concern regarding excessive spending on park benches, ball field backstops, etc. within the City of Lakeville. Mr. Erickson .explained that the City builds facilities to certain standards, based on a safety factor. The City assures that its facilities have a long life, require • little or no maintenance and are safe.. Funding is available through the City's } CITY OF LAKEVILLE COUNCIL MEETING DECEMBER 13, 1999 PAGE 2 Park Dedication Fund collected from developers. In the case of Kensington Park, funding is available through a DNR grant. In addition, several athletic organizations, such as the Lakeville Baseball Association and Lakeville Soccer Club, have donated significant funds to the City for athletic facilities. There were no further questions or comments. 99.239 Motion was made by Sindt, seconded by Mulvihill to close the truth in taxation public hearing. Roll call was taken. on the motion. Ayes, Zaun, Sindt, Mulvihill, Luick. CONSENT AGENDA 99.240 Motion was made by Mulvihill, seconded by Luick to approve the consent agenda items as follows: a. Approve City of Lakeville precinct map and designated polling places. b. Amendment to Conditional Use Permit No. 98-30 to allow the expansion of an existing non-conforming single-family dwelling • located at 9990-199' Street West. c. Resolution No. 99-287 appointing depositories: d. Resolution No. 99-288 approving change orders to contracts for Project 98-6, Lakeville Ames Arena. e. Resolution No. 99-289 setting salaries for City of Lakeville instructors and seasonal employees. f. Resolution No. 99-290 establishing a mailbox replacement policy during the snow and ice. control season. g. Resolution No. 99-291 authorizing public and private stop signs. Roll call was taken on the motion. Ayes, Sindt, Mulvihill, Luick, Zaun. There .being no further business, Mayor Zaun adjourned the meeting at 7:45 p.m. • s CITY OF LAKEVILLE COUNCIL MEETING. DECEMBER 13, 1999 PAGE 3 Respectfully submitted, harlene Friedges,.City rk D e Zaun, May • r RE: Truth In Taxation HEARING PROCESS The purpose of the hearing is to provide taxpayers the opportunity to ask questions and present comments. After all .persons have had an opportunity to speak, the City :Council should close the hearing. The City Council by statute is notallowed to approve anybudgets or tax levies at the hearing. Formal approval of the resolutions will take place at the Council meeting scheduled for Monday, December 20. The staff .has received a number of responses from property.. owners who .have received significant taxes increases as a result of increases in market value. .Person with. questions concerning their market values are encouraged to contact the Dakota County Assessors Office. Revenues for. the year 2000 General Fund are proposed to be approximately $11,657,445. The major revenue categories are as follows: GENERAL FUND 2000 REVENUES TOTAL REVENUES - $11.,657,445 OTHER (6.8%) TAXES (45.7%) CHARGES FOR $788,698 $5,330,680 SERVICES (10.2%) $1,194,362 LICENSES AND PERMITS (12.4%) ~i'~~,' i ~ $1,444,044 INTERGOVNTL (5.6%) $652,057 STATE AID (LGA/HACA/LPA) (19.3%) $2,247,604 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. ,Other revenue sources include intergovernmental revenues, licenses and permits, charges for services and otherrevenues. Revenue protections take into consideration City Councils approval on September 7, of an interim ordinance prohibiting approval of residential development • to GENERAL FUND 2000 EXPENDITURES TOTAL EXPENDITURES - $12,227,334 PARKS AND. RECREATION (13.4%) GENERAL $1,640,925 GOVERNMENT (27:2%) $3,323,866 PUBLIC WORKS (18.0%) $2,195,998 PUBLIC SAFETY (41.4%) $5,066,545 Of the major city functions, public safety has the largest proposed expenditures in the amount of $5,066,545 or approximately 41% of the expenditures. In addition, General Government Services are estimated. to be $3,323,866, Public Works at $2,195,998 and Parks and Recreation at $1,640,925.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. According to the State Auditor's office, Lakeville's per capita expenditures are significantly less than those of other Minnesota cities especially in the areas of public safety, public works and parks and recreation.. 11 CITY OF LAKEVILLE EXPENDITURES PER CAPITA $200 State-wide City Average City of Lakeville $150 147.09 $118.96 $100 $77.33 $77:78 hll~ir° ~'~~r'r day ~u'I~~ ill $62 60 DUI+,~ ai lull~~illpui'~~~'~~~~P 61.61, $51.56 °li, $50 n~;G { , r a J~V~iNlil~lllw~l' ' I ~h ~lu~ld6iljii ~ ~ IryII i , t r ~i Ili ~~~I~ "~r .r li i~ P ~ ~ °~II~~ IF'll I,,~, ~i F-° GENERAL GOVERNMENT PUBLIC SAFETY PUBLIC WORKS PARKS & RECRATION Lakeville is able to maintain a below average expendiutres due to prudent fiscal management and is due to the. fact that Lakeville will continue to have 3.4 employees per thousand CITY OF LAKEVILLE EMPLOYEES PER THOUSAND CITIZENS ~ 4.0 z N w w Z O 3.5 Q.J ~ g 3.0 W W a 2.5 1993.- 1994 1995 1996 1997 1998 1999 2000 population The designated 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 $4,644,312 which is 38.0% of the expenditures. The projected fund balances are adequate and sufficient but not excessive. 12 SPECIAL REVENUE FUNDS 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. Collectively these funds will have an accumulated a balance of approximately $621,027 since. their initial creation less than nine years ago. 2000 Expenditures Cable TV $255,354 Environmental Recycling 24,002 Drug Enforcement 80,148 Employee Benefit. 30,270 GIS 90,477 Surface Water Management 407,917 Oak Wilt 8,000 Enhanced 911 0 Economic Development 0 Downtown Special Service 34,950 Total $931,118 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 council. meetings. The Environmental Recycling Fund accounts for grants that the City receives from Dakota County for the 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. The Employee Benefit Fund, which accounts for severance pay for city employees. The proposed budget includes an annual $40,000 transfer from the General Fund. The annual transfer is offset by the elimination of the transfer from the excess liability insurance coverage. 13 The City also has a GIS Fund for geographic information computer system, which accounts for all the specific parcels within the City of Lakeville. The .primary revenue sources are property taxes and GIS fees which axe 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 Oak Wilt Fund accounts. for grants received from the Department of Natural Resources The Enhanced 911 Fund accounts for the revenues from the telephone taxiffs 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. - INTERNAL: SERVICE FUND The Municipal Reserves (Internal Service) Fund accounts for the. City's general liability, excess liability, .property, casualty and workers Compensation insurance costs. 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. Commencing in 1995, the City enrolled in the League of Minnesota Insurance Trust Retrospective Rating Plan. This plan is intended to produce a final premium cost that reflects an individual. City's actual workers: compensation claims experience. Workers Compensation .costs have been reduced 25% as a result of the refunds and the City's favorable claims experience. The fund has accumulated a $305,450 fund balance as a result of self insuring the excess liability coverage since 1993. Since the excess liability program has adequate fund balance, the proposed budget. will cease to annually collect $37,000 from other benefited funds commencing in 2000. CAPITAL PROJECT FUNDS Capital Project Funds account for financial resources used in the acquisition of capital facilities and equipment, except those financed by Enterprise Funds. 14 . The Equipment Fund accounts for the purchase of public safety, street and park maintenance equipment. The budget anticipates the issuance of approximately $735,000 of Certificates of Indebtedness for 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 with the City's objective of being "Debt Free by 2003" for city facilities. 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. The proposed budget provides $1,317,328 for approximately.20 park and trail improvement projects. Some of the more major projects include: • Northeast sector park acquisition • Greenridge Park development • Kensington Park phase II development • Playground upgrades (Valley Lake Park & Bunker Hill) • Ipava Parkway Trails (192nd to Century JR High School) • Heritage Square • Bleachers ENTERPRISE FUNDS Enterprise Funds account for liquor, water and sanitary sewer operations far the City; they are self-supporting .from retail sales and user charges. Operations are managed in much the same way as private enterprises. LIQUOR FUND According to the Minnesota State Auditor, Lakeville ranked fourth in municipal liquor sales in 1997. Sales are projected to be $9.7 million in 2000. As a result, net income before transfers is estimated to attain $825,297 in 2000. 15 . LAKEVILLE LIQUOR STORES GROSS SALES BY YEAR $10,00Q000 $9,000,000 $8,000,000 $7,000,000 ~ $6,000,000 d $5,000,000 O Cal $4,000,000 $3,000,000 $2,000,000 $1,000,000 1993 1994 1995 1996 199'7 1998 1999 .2000 WATER OPERATING FUND The City does not propose any water rate increases for'2000. Lakeville has the second lowest water rates in Dakota County. The results of operations are as follows: Expenditures 2000 Personnel 472,684 Commodities 153,271 Contractual Services 537,696 Major Maintenance Projects 13,670 Other -Net 49,929 Capital Outlay 656,605 TOTAL 1,8$5,855 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. A Water Treatment Facility expansion is`proposed to be financed from the Water Trunk Fund in 2000. SANITARY SEWER OPERATING FUND The Metropolitan Council Environmental Services (MCES) is responsible for sewage treatment and disposal; cost of treatment and disposal is recovered from municipalities based on sanitary sewer flows. The Metropolitan Council Environmental Service cost per million gallons will decrease from $1,350 in 1998 to $1,180 in 2001. The decrease in rates is attributable to MCES's budgetary commitment to reduce organizational costs and user rates. 16 Expenditures 2000 MCES sewer charges $1,792,186 ..Personnel services 292,521 Commodities 30,101 Contractual services 136,905 Other -net 48,756 Capital .Outlay 19,271 Total 2 319 740 The .largest single expenditure is for the Metropolitan Council Environmental Services Division for sewage treatment costs in the amount of $1,792,000 which is represents 80% of the total budget. The City does not propose any sanitary sewer rate increases for 2000. Lakeville sanitary sewer rates remain comparable to those of other Dakota County cities Quarterly C~ Sanitary Sewer So. St. Paul $59.50 Burnsville 50.80 • Apple Valley 48.74 Farmington 48.50 Rosemount 48.00 Lakeville 47.60 Hastings. 46.50 Inver Grove Heights: 46.25 West St. Paul 43.32 Eagan 38.30 PROPERTY .TAXES The proposed 2000 tax levy is as follows: 17 2000 General Fund $5,302,302 Drug Enforcement 66,000 GIS Fund 44,466. Certificates of Indebtedness 221,085 Voter-approved debt 440,300 Public improvements 514,378 Total tax levy 6 588 531 The City continues to maintain a strong tax base as a result of commercial/industrial development, the increasing value of new residential housing construction, and the continued strength of real estate market valuations.. The City of Lakevilles Year 2000 net tax capacity rate is 2000 Estimate Tax levy $6,319,198 Fiscal disparities $(779,750 Net tax levy. $5,539,448 Net tax capacity $28,499,501 Tax capacity rate 0.19437 Tax levies for bond issues approved by referendum after August 1, 1994, are based on market value rather than tax capacity value. The only City. of Lakeville levy based on market value is the 1994 Park Bonds . MARKET VALUE TAX LEVY 1999 2000 Variance Actual Estimate $ °f° Market Value $1,854,426,903 $2,082,898,400 $228,471,497 12.3% Tax levy for 1994 Park Bonds $269,928 $269,333. $(595) (0.2)% • Tax rate based on market value 0.0001456 0.0001293 (0.000016) (11.2)% 18 • The improved tax base combined .with a conservative fiscal policy are dominant reasons for. the City's ability to continue to have one of the lowest tax capacity rates, for the eighth .consecutive year,. of any city over 5,000 population 'in Dakota County. According to the Minnesota, Taxpayers Association, Lakeville's taxes are among the lowest in the metropolitan area. In Mid-November, taxpayers received parcel specific notices that informed them of the various Truth in Taxation hearings and the impact the juridictions have on their specific parcel. Thee following is an example of one such notice. Market Value=1999 112,200 Market Value-2000 117,600 Increase 4.8% incr/(Deer) Incr/(Deer) Due to Due to Proposed 1999 S.pendjng n}hPr fartnrs anon Dakota County 392.12 27.17 (24.99) 394.30 Lakeville 280.56 35,70. (19.94) 296.32 ISD 194 747.77 (23.64) (183.71) 540.42 ..Other districts 33.69 3.51 (2.52) 34.68 Total 1,454..14 42.74 (231.16) 1.265.72 The truth in taxation notice states that the County share of the taxes increase modestly. In the illustration shown the market value increased 4.$% while the City share of taxes increased 5.6%. If the legislature had distributed state aid for property tax relief to cities which takes into consideration the increase in growth, the City share of taxes would only. have increased 3.9%. The legislature however, appropriated the state .aid for property tax relief to the school district .rather than to the municipality.. The state has increased its equity aids for property. tax relief to the Lakeville school district by reducing the tax levy requirements. In addition.,.the .State increased the Educational Homestead Credit from $320 to $390 for residential homesteaded properties. When the legislature increases the state-aid for property tax relief, the taxpayer benefits. Despite the Legislature's re-imposition of levy limits, inequitable. distribution of state aids. for. property tax relief, and shifts in properly classification rates, it is our expectation that:. Lakeville will continue o have one of the lowest tax rates in the metro area. • 19 . COMPARISON OF TAX CAPACITY PROPOSED RATES FOR 1999 0.450 0.3925 0.3807 W 0.400 ~ 0.3055 Q.3012 ~ 0.350 0.2900 o.27so 0.300 0.2519 0.2497 0.2444 ~a V 0.250 0.2113 0.1914 a h a o.200 ~~L Q ',i' C1 0.150 ,,',i~r X 0.100 iii 0.050 ~ °~z ~ <n;''~ dap' ~il~i s 0:000 ~ _ ~ _ ~ O = ~ O - N C ` J j W ~ N = ~ N V] O to ~ ~ Q N O= The Council has the ability to adopt a final tax levy that is equal to or less than the preliminary tax levy approved in September. It may not, however, adopt a final tax levy that is .greater than the preliminary tax levy. • Lakeville's low tax rates. are due to: • Prudent fiscal management • Long term and short term debt policies • Investment policy • CommerciaUindustrial growth • Increased value of new residential construction • Fiscal disparities contributions • Strategic Growth Management Plan • Economic Development Commission's Strategic Plan • Two-year budget. planning process • Five-year Capital Improvement Program The proposed .2000 budget and tax levy continue to exemplify the City of Lakeville's long- standing commitment to providing the highest quality of service possible in a cost effective, innovative and responsible manner. • ao