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HomeMy WebLinkAbout09-14-94 • CITY OF LAKEVILLE SPECIAL COUNCIL MEETING WEDNESDAY, SEPTEMBER 14, 1994 The meeting was called to order at 7:00 p.m. by Mayor Zaun. Roll call was taken. Present: Council members Sindt, Mulvihill, Harvey, Johnson and Mayor Zaun. .Also present: Robert Erickson, City Administrator and Dennis Feller,. Finance Director. Mayor Zaun stated the purpose of this Special Council Meeting is to adopt a Preliminary Budget and Tax Levy and adopt a resolution establishing public hearings on the proposed tax levy. The City Administrator presented the 1995 preliminary budget as follows: The City of Lakeville has, during the past eight years, experienced a significant increase in residential housing starts and a corresponding increase in .population. The 1995 budget shows a shift from a predominately residential tax .base to an emerging commerciaVindustrial economic base. consistent with the Council-Adopted strategic growth management strategies. The City has embarked on a journey toward significant .business development. The 1995 budget will set the course for the remainder of the decade. Housing starts are anticipated at a level of 450. homes per year with market values exceeding the threshold identified in the fiscal impact analysis for offsetting direct costs of services. The population has increased 10.5% to 33,279 people in 1994. Lakeville is among the top 10 population gainers in the 1980's and 90's. With an anticipated annual increase of 450 new residential housing units, the population is expected to grow by 1,350 people per year. The anticipated. reduction in new residential housing starts over the next two years should have an ancillary benefit of delaying future bond referendums for additional-schools within ISD 194. The City has participated in the accomplishment of a number of activities during. the past eight months that will significantly impact the community's future. Although these activities appear to be autonomous and unrelated,. they foretell a common direction for the City of Lakeville: • CITY OF LAKEVII,LE SPECIAL COUNCIL MEETING SEPTEMBER 14, 1994 PAGE 2 i emerging economic vitality These activities include: • Completion of County Road 46 and initial construction of the County Road 46/I-35 interchange. The improvements will greatly enhance the traffic patterns of western' Dakota County and result in a corresponding increase in new business opportunities. • The Resolution Trust Corporation (RTC) sale of 462 acres of prime land in the Airlake Industrial Park. • City consideration of tax increment financing projects for New Morning Windows, Century Refining and Lakeville PreMoulded Products. • New and/or business expansions of Parker Hannifin, Landscape Junction, Ryt-Way Industries, Cracker Barrel Old Country Store, Grist Mill and Stampings of Minnesota.. • Securing New Morning Windows as the anchor tenant and development of the Fairfield Business Campus for corporate offices and light manufacturing. • • Dakota County Economic Development Partnership. The proposed budget will provide the City Council the opportunity to consider aone-time $95,250 tax levy to further advance the momentum of economic development objectives. The Economic Development Commission has finalized a Strategic Plan for Economic Development and is presenting its recommendations to the City Council. The action plan includes the following categories: Retail and Commercial, Marketing Plan, Communications and Interactions, CommerciaVIndustrial Development, Business Enhancement and Retention, and Transportation and. Infrastructure. The City Council has previously examined issues related to public transit. Lakeville has been an active participant in the I-35 .Solutions Alliance and the High Speed Bus Coalition which includes planning for a reverse bus commute to our community. A commitment has been made by the City to the Metropolitan Transit Commission (MTC) and the Regional Transit Board (RTB) to study the opt-out provision and make a decision by 1996. The 1995 budget includes aone-time $50,000 appropriation for a transit study which would be funded by a corresponding tax levy. The City Council, as part of the 1994-95 budget process, directed staff to provide a financial plan which would reduce the. City's reliance on short term debt. Historically, the City has issued Certificates of Indebtedness in .the form of short-term debt to purchase equipment and vehicles. The issuance of Certificates of Indebtedness was utilized in order to meet budgetary constraints and the state-imposed levy (property tax) limits. With the elimination of levy limits and the accumulation in the fund balance due to revenue from CITY OF LAKEVII.,LE SPECIAL COUNCIL MEETING SEPTEMBER 14, 1994 PAGE 3 • residential building permits in recent years, the City Council now has the opportunity to reconsider that policy. The 1995 budget and future budgets are premised on the assumption that the capital outlay items with useful lives of five years or less will be paid for from the fund balance. Significant capital outlay purchases with a useful life of more than five years, such as a front-end loader, street sweeper and rotary mower, will be acquired using lease-purchase agreements. An interest -rate of 6% :has been utilized for .calculating the leases.. One advantage of lease purchase-over certificates is the elimination of bond issuance costs. A proposed transfer in 1994 of $546,125 from the General Fund to the Equipment Fund would provide an adequate financing source for the 1995 and 1996 capital outlay. It is anticipated that a transfer from the Liquor Fund to the Equipment Fund may be required in 1997. Embellishment of a fiscal policy that utilizes the fund balance and lease purchases to finance acquisitions will result in the discontinuance and elimination of all short-term debt before the end of the decade. The result will be an enhanced fiscal position and reduction in tax levies to pay interest costs. It is anticipated that fiscally responsible policies such as these will be viewed favorably by Moody's Investor Service; an improved bond rating would translate into lower interest • costs. The City's policy of "doing more with less" had its origins in the 1990 budget. The City will continue to make use of leading-edge technology to the extent that it can be .efficiently and effectively utilized within the organization. A few examples include the installation in 1994 of a new 911 system for the Police Department, Auto-cad for the Engineering Department, the latest computers, word processing and Windows software applications. This tradition will continue in 1995 with the acquisition of the latest spreadsheet software (Excel for Windows), use of Opticom emitters in marked squad cars, GIS ArcInfo for GIS purposes, ArcView for Community Development, the installation of mobile data terminals (MOT's) in new police cars and cellular phones for key maintenance personnel. The community's environmental consciousness is reflected in various programs throughout the budget. The most recent example is the implementation of the Surface Water Management Utility Fund,-which will accomplish the goal of protecting surface water quality while providing a dedicated source for funding. In response to specific concerns expressed by residents and City Council directives, the City staff has reduced street sweeping expenditwes from $56,000 to $25,000; the $31,000 reduction will be appropriated to water quality monitoring. The debt service portion of the budget reflects a corresponding increased tax levy to account for the recent voter approval of a $3.75 million park bond :referendum. It will provide an expanded foundation for the community's parks and recreation/open space CITY OF LAKEVII.,LE SPECIAL COUNCIL MEETING SEPTEMBER 14, 1994 PAGE 4 • needs for future generations. The acquisition of land, construction of park facilities and trails will be a primary focus for 1995. As part of the City's effort to provide the necessary physical facilities to serve a growing population, all major City buildings have either been constructed, modified or remodeled in the last eight years, with the exception. of Fire Station. #1. This fire station is scheduled for structural modifications in 1995. Excluding the Fire Station #1 project,. no significant. expenditures-for City facilities are-anticipated within the next five years. Following is a list of all: major municipal buildings and the date of construction or modification. Year Year Facility Constructed Remodeled City Hall 1990 Police Station 1986 1994 Fire Station #1 1980 1995 Fire Station.#2 1975 1993 Fire Station #3 1986 Public Works Garage 1972. 1994. • Senior Center 1986 1991 The City of Lakeville receives state aid for property tax relief in the form of LGA and HACA. The state aids will increase $28,164 from $2,187,718 in 1994 to $2,215,:882 in 1995. The 1.3% increase in state aid revenues is not adequate to sustain reasonable service levels when the population has increased 10.5%. The methodology for distribution of state aids to all cities for property tax relief is no longer accomplishing its original purpose. The inequitable distribution of state aids has favored out-state cities. The state aids were intended to relieve the. burden to property taxpayers; however, the system has .been modified over the years so that growth cities receive only token increases. The inevitable net result is higher property taxes and/or reductions in service levels. The City Council should renew its long-standing legislative support for elimination of state aids to all cities for property tax relief. The City has, for several years, had the lowest tax capacity rate of any .city in Dakota County. According to the Minnesota Taxpayers Association and the Citizens' League, Lakeville ranks in the bottom 25% quartile in taxes. The proposed 1995 tax levy will increase $837,792 from $3,888,312 in 1994 to $4,726,104 • in 1995. The primary reasons for the increase are population growth, the voter- approved CITY OF LAKEVII..LE SPECIAL COUNCIL MEETING SEPTEMBER 14, 1994 PAGE 5 park bond referendum ($283,351), the Economic Development Commission Strategic Work Plan ($95,250) and the transit study ($50,000). Historically, the City Council has controlled fiscal and operational issues by utilizing a per capita formula for establishing the tax levy. The 1995 per capita tax levy for operations and debt ($129.14/capita) is consistent with the 1994 evy. The tax levy for he Park Bond referendum approved by the voters in June 1.994. adds $8.51 per capita. Lakeville continues to have one of the lowest ratios of employees per capita in the state for cities of similar size; the 1995 ratio is 3..24 employees per 1,000 residents. The proposed tax levy also includes a $2.86 .per capita levy for implementing the Strategic Work Plan recommended by the Economic Development Commission. In addition, a $1..50 per capita tax levy is proposed for a transit study. The total tax levy as .proposed will increase by $12.87 per person as shown below: PER CAPITA TAX LEVY _ 1995 1994 Proposed Actual Increase . Operations and debt $.129.14 $129..14 $0..00 Park bond referendum 8.51 8.51 Subtotal $137:.66 $129.14 $8.51 Economic Development 2.86 2.86 Transit Study. 1.50 _ 1.50 Net Tax. Levy 142..01 129.14 12.87 Based on the preliminary property value information obtained from the Dakota County Assessor's Office, the tax capacity rate would increase .7% as a result of the tax levy for operations. The tax capacity rate will also increase 7.6% for the 1994 park bond referendum. The tax levy for the Strategic Work Plan proposed and'the :transit tudy would increase the tax capacity rate by 2.6% and 1.3% respectively, as shown below: ESTIMATED TAX CAPACITY RATE 1995 1994 Increase/ Proposed Actual tDecrease~ • Operations and debt 0.20155 0,20024 0.7$ CITY OF LAKEVII.,LE SPECIAL COUNCII. MEETING SEPTEMBER I4, 1994 PAGE 6 • Park bond referendum 0.01526 7.6 Subtotal 0.21681 0.20024 8.3~ Economic Development 0.00513 2.6~ Transit Study 0.00269 1.3~ Net Tax Levy 0.23 0.2_ 0024 12.2 If the City Council adopts the tax levy as proposed, taxpayers will receive parcel specific notices in November informing them of an estimated 12.2% increase. in taxes. and of the December 15 Truth in Taxation hearing. The Council has the ability to adopt a final tax levy in December which is equal to or less than the preliminary tax levy approved in September. It may not, however, adopt a final tax levy which is greater than the preliminary tax levy. Consideration of the per capita tax levy has served the City well during the growth years. However, .with the decline in residential construction and the corresponding reduction in population, the increase in the community's economic base and an increasingly punitive state policy on state aids for property tax .relief, .the City Council should examine other property tax control measures prior to consideration of the 1996 budget process. The 1995_ tax capacity rate is subject to changes in the assessor's final estimated market value. Taxpayers may experience a change in actual property tax payments which will differ from the increase in tax capacity rate depending on market value, property classification or property classification rates for their specific parcels. The proposed 1995 tax levy includes $655,215 for voter approved debt and $281,125 for payment of Certificate of Indebtedness. The following schedule. shows the tax levies for such debt purposes over the ensuing five years: 1995 1996 1997 1998 1999 VOTER APPROVED Police Station $100,281 $100.,407 $.94,873 $ $ 1986 Park bonds 184,086 183,456 182,369 180,768 .183,.887 1994 Park bonds 283,351 284,430 281,860 284,424 281,369 1986 Fire St ,~3 87,497 81,830 75,805 80,575 81,980 Total $655,215 $650,123 $637,907 $545,767 $547,235 Cert. of Indebt 281,125 28.5,640 238,873 129,812 • Total 936 340 935 763 876 780 675 579 547 235 CITY OF LAKEVII.,LE SPECIAL COUNCIL MEETING SEPTEMBER 14, 1994 PAGE 7 • The 1994 Park Bond issue was blended with a previously outstanding park bond such that the tax levy for park issues will remain fairly constant at approximately $465,000/year for the next twenty years. Tax levies for voter-approved debt will decline in 1998 and 2003 with the final payments on the Police Station and Fire Station Bonds. The proposed policy of discontinuing the. use of Certificates of Indebtedness will also-result in the decline of tax. levies for that purpose within the next five years. - TRUTH IN TAXATION Minnesota Statutes require cities to certify. the proposed property tax. levy to the County Auditor and adopt a proposed budget prior to September 15. City Councils are also required to certify to the County Auditor two dates for budget public hearings. City staff is recommending Thursday, December 15 for a public hearing to present the budget; this date follows the school districts and county Truth in Taxation hearings. The County Auditor will mail parcel-specific Truth In Taxation notices on approximately November 10. The notices inform property owners of the time and place of the hearings and the impact of the proposed property tax levy. BUDGET AUTHORITY The City operating plan grants the City Council full authority over financial affairs of the City.. The City Administrator is charged with the responsibility of preparing the estimates of the annual budget and enforcement of the provisions of the budget as specified in the budget resolution. Upon adoption of the annual budget resolution by the Council, it becomes the formal appropriation budget for City operations. The City Administrator is authorized to expend funds in excess of the appropriations for individual line items as long as the department's expenditures remain within the total department appropriation approved by the City Council. The budget may be amended by the City Council from time to time as it deems necessary. • CITY OF LAKEVII.,LE SPECIAL COUNCIL MEETING SEPTEMBER 14, 1994 PAGE 8 • DEDICATION This budget is dedicated to the 382 members of the business community for their long- standing fiscal `support of City. programs .and services and for their. generous support of various community activities, including the Land of Amazement, Lakeville Ames Arena, the DARE program, Safety Camp, the annual Panorama of Progress celebration, .Fire, Police and Parks and Recreation Department programs, and other activities too numerous to mention. The business portion of real estate taxes has gone from 37.9% in 1990 to the present 33.3%. With the implementation of the strategic growth management controls plus an enhanced level of business opportunities, this trend should continue, thus rewarding businesses for the many years in which they carried a disproportionate share of the tax burden. CONCLUSION . In closing, the City of Lakeville has embraced a more businesslike approach throughout the organization over the last five years, including the use of cutting-edge technology. This approach has enabled us to become more entrepreneurial, thus benefiting. the entire community. We want to continue to maximize the use of this practice as we implement the 1995-96 budget. With the Council's solid policy direction, .the hard work of City staff and the many contributions of our advisory committees and volunteers, Lakeville .will be recognized as one of the most fiscally sound and best planned cities in the state. This budget will continue the long-standing tradition of maintaining quality services to the community, the outstanding quality of life we've learned to enjoy and, most importantly, safe and secure neighborhoods. Mr. Erickson presented the following highlights from the budget narrative: • Community Survey • MLC Housing Study • Organizing a Lakeville Historical Society • Economic Development. Commission • Hire two additional police officers • Hire Engineer in Training position • Hire apart-time SecretarylReceptionist for the Parks & Recreation Department • Opticom Emitters for marked squad cars • Transfer mowing of trails and boulevards from Street Dept. to Parks Dept. CITY OF LAKEVII.,LE SPECIAL COUNCIL MEETING SEPTEMBER 14, 1994 PAGE 9 i • Youth survey • Teen special events • Energy retrofit of Fire Station #1 • Joint purchase of bandshell • Rotary gang mower • Liquor Store #4 construction • No rate increase for water or sanitary sewer Mr. Erickson stated that the City Council needs to discuss the merits of the tax levy for the Economic Development Strategic Workplan and the Metropolitan Transit Study. One option the City Council may wish to explore is the use of an intern for the Metropolitan Transit Study. If the City opts to be included within the Metropolitan Transit District, an additional $400,000 per year in increased taxes would have to be funded by Lakeville residents. Opting into the transit district would also require special legislation. Councilmember Harvey pointed out that joining the Metropolitan Transit District would cost each household approximately $30 to $40 per year. He questioned whether each household would receive benefits equal to the amount of taxes. Mayor Zaun pointed out that the 1993 ending fund balance was 55% of expenditures. The 1995-96 budgets contain a reduced fund balance, due to the policy of a reduced reliance on short-term debt. Mr. Erickson explained that the City needs a fund balance of approximately 32% of expenditures in order to meet cash flow requirements for the first half of the year,-since the City does not receive its tax settlement from Dakota County. or State aids until July of each year. He further explained that the Moody's Credit Report complimented the City on its sound financial position, "Conservative budgeting practices have contributed to a long trend of favorable operating results leading to ample .General and. Debt Service Fund reserves. Favorable tax base growth continues. to moderate the need for property tax .increases, and property tax collections have been strong". Mr. Erickson further stated that the City should strive to be debt free by the Year 2003. Councilmember Sindt asked how Fire Station #4 would be financed if the City were to become debt free. Mr. Erickson stated that it is anticipated that transfers from the Liquor Fund would be adequate and sufficient to provide for construction of future city buildings such as a new fire station. Mayor Zaun stated the special Council meeting. will now be recessed and reconvene • following a joint work session between the City Council. and Economic Development Commission. The purpose of the work session is to discuss the. proposed strategic plan for CITY OF LAKEVB.LE SPECIAL COUNCIL MEETING SEPTEMBER 14, 1994 PAGE 10 • economic development and how that might affect the proposed budget. The City Council will reconvene following the work session and consider adoption of the preliminary budget and tax levy. The meeting was recessed at approximately 8:20 p.m. and reconvened at approximately 9:.20 p.m. Mr. Erickson stated that the Economic Development Commission Workplan and the Metropolitan Transit Study would represent a 2.6% and 1.3% increase in the tax Ievy, respectively. The overall tax levy would increase by 12.2% over last year. Councilmember Sindt stated that the results of the .community survey scheduled for 1995 should be reviewed prior to proceeding with any funding of a Metropolitan Transit Commission study. Councilmember Harvey stated that the Economic Development Commission's recommendation represents a $2.86 per capita increase which, he felt, should be spread over a two year period (213 in 1995; lJ3 in 1996). The City Administrator recommended the Council consider budgeting one-half the cost of the EDC strategic plan funding in 1995, with the other one-half being budgeted for. in 1996. He based his recommendation on the . time required to prepare RFP's to engage consulting services. Councilmember Johnson stated he feels the overall tax levy should not increase by more than 9.5%. Councilmember Mulvihill stated she favorselimination of the tax levy for the Metropolitan Transit Study. 94.175 Motion was made by Harvey, seconded by Mulvihill. to approve Resolution #94=185 approving. the General Fund Budget amended such. that revenues from taxes would be decreased by $97,625, with a corresponding decrease in the City Administrator's budget in the amount of $50,000 (eliminating the Metropolitan Transit Study) and a $47,625 reduction in the Community Development budget for the Economic Development Commission Work Plan. Roll call was taken on the motion. Ayes, Sindt, Mulvihill, Harvey, Johnson and Zaun. 94.176 Motion by Sindt, seconded by Johnson to approve the following Preliminary Budget Resolutions: Resolution No. 94-186 approving the 1995 preliminary Cable TV Fund budget. Resolution No. 94-187 approving the 1995 preliminary Environmental Recycling Fund budget. Resolution No. 94-188 approving the 1995 preliminary Drug Enforcement Fund budget. CITY OF LAKEVII.,LE SPECIAL COUNCIL MEETING SEPTEMBER 14, 1994 PAGE 11 • Resolution No. 94-189 approving the 1995 preliminary Employee Benefit Fund budget. Resolution No. 94-190 approving the 1995 preliminary Motor Vehicle Fund budget. Resolution No. 94-191 approving the 1995. preliminary GIS Fund budget. Resolution No. 94-192 approving the 1995 preliminary Storm Water Utility Fund budget. Resolution No. 94-193 approving the 1995 preliminary Equipment Fundbudget. Resolution No. 94-194 approving the 1995 preliminary Building Fund budget. Resolution No. 94-195 approving the 1995 preliminary Liquor Fund budget. Resolution No: 94-196 approving the 1995 .preliminary Water Fund budget. Resolution No. 94-197> approving the 1995 preliminary Sanitary Sewer Fund budget. Resolution No. 94-198 approving the 1995 preliminary Municipal Reserves Fund budget. Roll call was taken on the motion. Ayes, Mulvihill, Harvey, Johnson, Zaun and Sindt. 94.177 Motion by Johnson, seconded by Mulvihill to approve Resolution No. 94-199 adapting the preliminary tax levy in the amount of $4,628,479. Roll call was taken on the motion. Ayes, Harvey, Johnson, Zaun, Sindt and Mulvihill 94.178 Motion by Harvey, seconded by Sindt to approve Resolution No. 94-200 setting the budget hearing dates. • Roll call was taken on the motion. Ayes, Johnson, Zaun, Sindt, Mulvihill and Harvey. There being no further business, Mayor Zaun adjourned the meeting at 9:30 p.m. Respectful 'tted, De s Feller, Fi ce Director Du ne Zaun, May r r.