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ARDEN HILLS CITY COUNCIL WORK SESSION — AUGUST 29, 2011 6 City Administrator Klaers stated there are no revenues identified and this is outside the General Fund and $70,000 would be transferred out of the General Fund to the TCAAP fund which takes away our ability to do anything else out of the Professional Services line item. He stated that at this time, the City would be better served to either set a levy for the TCAAP fund, or wrap those expenditures into the General Fund. Councilmember Holden stated she is also concerned about the City eating away at the reserves; $60,000 has already been used over the past two years. Our fire costs will continue to go up significantly when Lake Johanna Fire Department goes to a 24/7 paid on call arrangement. Director of Finance and Administrative Services Iverson stated that the City was at 48% of reserves when the audit was done this year and our policy is to be at 50 %. Councilmember Holden stated she would like to have a little cushion and stated she would like to see a 2% levy increase, at least preliminarily, which would bring the City $60,000. Perhaps by December the City will know more about the TCAAP development status and can lower the levy at that time. Mayor Grant questioned the impact of a 2% levy on our homeowners. Director of Finance and Administrative Services Iverson responded that a 1% levy would mean an increase of $7.02 for the median priced home and a 2% levy would increase that same property tax to $14.07. Councilmember Holmes questioned how much is in reserves now. City Administrator Klaers responded that we currently have approximately $1.9 million in reserves. Mayor Grant asked how the 2% levy would impact commercial properties. Director of Finance and Administrative Services Iverson responded that she did not check the commercial impact; those figures are more difficult to determine because fiscal disparities must be considered. Councilmember Holmes asked if the depletion of the reserves is reflected in the budget book. Director of Finance and Administrative Services Iverson directed her to Page 5 to the line item titled "Excess Revenue over Expenditures." Councilmember Tamble stated it was difficult for him to come up with an arbitrary levy percentage "out of the air" when so few details are known at this time. Director of Finance and Administrative Services Iverson explained that this is a preliminary levy which can be reduced in December when the final levy is set. She added that the Council must set the preliminary levy by September 15.