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City Council - 12/02/2002 - Truth in Taxation TRUTH-IN-TAXATION HEARING APPROVED MINUTES EDEN PRAIRIE CITY COUNCIL MONDAY, DECEMBER 2, 2002 7:00 PM, CITY CENTER Council Chamber 8080 Mitchell Road CITY COUNCIL: Mayor Nancy Tyra-Lukens, Councilmembers Ron Case, David Luse and Jan Mosman CITY STAFF: City Manager Scott Neal, Parks & Recreation Director Bob Lambert, Public Works Director Eugene Dietz, Management and Budget Director Don Uram, City Planner Michael Franzen, City Attorney Ric Rosow and Council Recorder Theresa Brundage I. ROLL CALL/CALL THE MEETING TO ORDER II. PLEDGE OF ALLEGIANCE Mayor Tyra-Lukens stated the purpose of a Truth-in-Taxation Hearing is for the City to present to the citizens of Eden Prairie an overview of the City's budget and reasons for tax changes. She said this is not the time for review of individual tax bills, and those with questions on individual tax bills may contact Colin Schmidt. III. PUBLIC HEARING A. OVERVIEW OF 2003 PROPOSED BUDGET AND TAX LEVY City Manager Scott Neal said this hearing is an opportunity for citizens to come forward and speak to City Council and City Staff about budget priorities and City finances. He said 2003 will be the second year of a two-year budget process, and although Council has previously reviewed and approved it, state statutes require the Council to approve it as the official 2003 budget. Management and Budget Director Don Uram gave an outline of the process and framework of the City's 2003 budget. He gave a Powerpoint presentation that included detailed summary and objectives. He said the General Fund Budget totals $31.6M and is broken up into two components - the property tax levy and debt service levy. He said the total property tax levy is a 0% increase over 2002. He said the City property tax, based on median value home of $257,900, is increased by $463 and includes Hennepin County, the school district, including the recently passed referendum, the City and other jurisdictions. Uram said objectives include continuing the Capital Improvements Program, funding necessary services and staff, comply with levy limits and ensure reasonable tax impacts. He said levy limits for Pay 2003 limit the City's ability to raise property taxes to $23,337,073 which is a 3% increase over Pay 2002. He said factors used in determining calculations of the levy limits include the Implicit Price TRUTH IN TAXATION HEARING December 2, 2002 Page 2 Deflator (0.76%), Household Growth Adjustment (1.6%) and Market Value of New Commercial/Industrial Construction Adjustment (0.65%). Uram said in the calculation of levy limits, Staff has noticed a difference household growth adjustment. He said Staff has calculated household growth at 7% and the State Department of Revenue calculated it at 1.6%. He said the City is servicing a larger population than the MET Council and Dept. of Revenue have calculated. He said the City's population is approximately 58,670. Mosman asked if the factors used are determined by the State Dept. of Revenue. Uram said they were. Luse asked about the impact of the difference in Household Growth Adjustment. Uram said the State is basing the levy amount on a smaller population than what Staff believes they are actually serving. Uram reviewed the Total Property Tax, Property Tax Distribution and the City Property Tax with a residential increase of 3.63% and apartment and commercial properties showing a decrease of 17.8% and 11.4% respectively. In General Fund Revenues, he said Intergovernmental Revenues show an increase of 14% that includes local government aid that was increased from the State last year for the city and totals approximately $172,00. He said depending on what happens with the State budget, this may or may not be received. Uram said in General Fund Expenditures, the key to the Community Development/Finance budget included an additional $55,000 for economic development purposes. He said in an overall operation standpoint, there is an increase of about 3%. He said new employees for 2003 include two police officers, a fire inspector and some miscellaneous positions. He noted there is also a tax abatement of $300,000 in accordance with an agreement between the City and ADC to help fund intersection improvements at Technology Drive and Mitchell Road. Uram said the Staff expectation is that the $300,000 prior to the certification of the final levy, will be reduced based on the final determination of the value of the ADC building. He said overall, the City's budget from 2002 to 2003 is up 1%. The median value homeowner pays $73.83 for City services per month. Case said the debt service reduction is looking better this year and asked if it was primarily due to a better interest rate or retiring debt. Uram said Staff has refunded or restructured debt where possible, some of the debt has been called, and some of the debt has matured. He said Staff is also evaluating additional refunding opportunities which should save additional monies. Uram said the City's bond rating is AA1. Uram said the City is ranked among the top 7 communities in the State for bond rating. Uram also reviewed Utility Fund Budget and Liquor Fund Objectives and Budget. In summary, he said the General Fund Budget is $31.6M; Property Tax Levy includes a General Fund of $23.3M and Debt Service of $2.36M; and Total Property Tax Levy is $25.66M with a 0% increase over 2002. TRUTH IN TAXATION HEARING December 2, 2002 Page 3 Case asked what types of homes are included in the median value home. Steve Sinell said townhomes are nearly the same as median value and condos a little less. Sinell noted that property taxes are a budget driven tax, so if one group of taxpayers values are up, another will be down. He said commercial properties are down because values are down, with houses value increasing. Mosman asked about the 3% increase for residential homes, but median values had gone up 10%. Sinell said the 3% is after factoring in that the value had changed. Case noted that the 3% is only the City portion of the tax bill. Sinell said the typical median family home has a truth-in-taxation notice that would include all of their property, district, city, county, and with the school referendum, will be about 16%. B. PUBLIC COMMENT AND DISCUSSION There was no public comment. IV. CLOSE OR CONTINUE PUBLIC HEARING MOTION: Case moved, seconded by Mosman, to close the Public Hearing. Motion carried 4-0. V. ADJOURNMENT MOTION: Luse moved, seconded by Mosman, to adjourn the meeting. Motion carried 4-0. Mayor Tyra-Lukens adjourned the meeting at 7:27 p.m.