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HomeMy WebLinkAboutCC 12-06-1999 MINUTES CITY OF ARDEN HILLS, MINNESOTA . TRUTH-IN-TAXATION PUBLIC HEARING - 2000 BUDGET DECEMBER 6, 1999 7:30 P.M, - ARDEN HILLS CITY COUNCIL CHAMBERS CALL TO ORDER/ROLL CALL Pursuant to due call and notice thereof, Mayor Dennis Probst called to order the Truth-In- Taxation Public Hearing - 2000 Budget at 7:31 p.m, Present: Mayor Dennis Probst, Councilmembers Gregg Larson, Beverly Aplikowski, and Lois Rem. Absent: None Also present were City Administrator, Joseph Lynch and City Accountant, Terrance Post; and Recording Secretary, Lori Rolfson, ADOPT AGENDA MOTION: Councilmember Larson moved and Councilmember Aplikowski seconded a motion to adopt the agenda for the December 6, 1999, Truth-In-Taxation public . hearing, The motion carried unanimously (4-0). MAYOR - MEETING OVERVIEW AND PROCEDURES Mayor Probst explained that the Truth-In-Taxation hearing this evening was the culmination of year long activities in terms of announcements by Ramsey County of property valuations, State changes in tax rates, and City discussion of budget needs and direction, The City Council adopted a preliminary 2000 budget in September of 1999. The City of Arden Hills is legally required to hold a Truth in Taxation public hearing on a night which does not conflict with any other jurisdictions' public hearings to allow public comments with regard to the proposed 2000 budget. Subsequently, the City Council will be required to adopt the final 2000 budget, Mayor Probst reviewed the following accomplishments by the City of Arden Hills in 1999: . Congressional approval to convey a small acreage of the TCAAP property to the City of Arden Hills for construction of the new City HalL This project has been included in the City budget for the last two years and the City has not yet begun construction, It is believed that construction of the new City Hall will begin in the spring of2000 and has been included in the 2000 budget. . . The reconstruction of the Highway 96 and West Round Lake Road intersection to accommodate the further development of the area and to prepare for the reconstruction of Highway 96. ARDEN HILLS TRUTH-IN-TAXATION - DECEMBER 6,1999 2 . . The reconstruction of the park at the Arden Manor Mobile Home Park The outcome of this project has been very successful for the City of Arden Hills as the City now has control over the park land, . With the resignation of the City Administrator, Brian Fritsinger, and the Assistant to the City Administrator, Kevin Ringwald, the City staff had been short-handed for approximately three months in 1999. Mr. Post was willing to take on the responsibilities as Interim City Administrator over that period of time, In November of 1999, the City hired Joseph Lynch as the new City Administrator; however, the City is still short by one staff member. It was anticipated that a new Assistant to the City Administrator will be hired early next year. Mayor Probst requested that Mr. Post provide a presentation reviewing the proposed budget and property taxes, With regard to the reconstruction of the Highway 96 and West Round Lake Road intersection, Mr. Post noted that, although this reconstruction was a positive accomplishment, since the project was not accomplished in combination with Ramsey County's work on Highway 96, the City of Arden Hills was responsible for funding approximately $900,000 of County project costs. The City expects these funds to be reimbursed; however, it appears that the timing for this reimbursement will be delayed several years, . Mr. Post stated that the presentation for the Truth-In- Taxation public hearing reviewed the 2000 proposed budget in three general categories. Category A, Making Sense of Property Taxes, provided an understanding of how the City's market valuation, tax capacity and median values, specific to Arden Hills, impacts the property taxes, Category B, Cost of City Services in Perspective, provided a hypothetical monthly service bill which breaks down the cost of the services received by the citizens of Arden Hills. Category C, Discussion of Proposed City Budget, explained the specifics of the proposed budget in a more detailed fashion. Mr. Post proceeded with the slide presentation, He explained that Slide #1, Who Determines Your Property Tax, was a three-legged process in terms of the components of the property taxes, In addition to the taxing jurisdiction determining the levy amount, State Legislature establishes property classes and class rates, determines formulas for State Aids and determines mandates that may impact local governments. The County Assessor detem1ines market values and assigns property classes. Slide #2, Tax Computation Example, provided an example of how property taxes are calculated, The first step was determining the property's tax capacity, which was determined by the class . rate, and tbe market value determined by the County Assessor. The first $76,000 of the estimated market value had a one-percent tax capacity, The estimated market value in excess of $76,000 had a tax capacity of 1 ,65 percent For a home in Arden Hills, with an estimated median market value of$157,850, there would be a net tax capacity of$2,11 0,53. To determine the total ARDEN HILLS TRUTH-IN-TAXATION - DECEMBER 6,1999 0 ~ . property taxes, each of the jurisdictions have created a budget which was translated to a levy for the needs of the budget which are supported by property taxes. This levy amount was compared against the total tax capacity for the jurisdiction and a percentage yielded, In the case of Arden Hills, the local City levy proposed for 2000 would be 18.985 percent. This percentage, multiplied by the tax capacity of$2,110.53, would result in a local city tax of$400,68. When this was added to the other jurisdictions' levy rates, the total proposed 2000 property tax payable for a $157,850 home would be $2,487,79, Slide #2A listed a number of Lcgislative changes in class, The Legislature has made a deliberate effort over the past four years to compress the class rates, The class rates for Commercial/Industrial have changed from a maximum of 4.60 percent in 1997 to a maximum of 3.40 percent in 2000, There was a substantially lesser amount of compression for the residential homestead rates, changing from a maximum of 2,00 percent in 1997 to a maximum of 1.65 percent in 2000. Over the last three years, property tax burden has been shifted from one class to another. Mr. Craig Wilson, 1677 Lake Valentine Road, asked how the shifting of property taxes from one class to another affects the City of Arden Hills, Mr. Post stated that this would affect the City of Arden Hills more than, for example, the City of Shoreview, since Arden Hills has a relatively higher commercial and industrial tax base than Shoreview does, Therefore, the residents of Arden Hills will experience a greater degree of tax burden shift than will the residents of Shoreview. . Mr. Elwood Caldwell, 1457 Arden View Drive, confirmed that the term compression was referring to the fact that the class rates for Commercial/Industrial were moving closer to the Residential class rates, Mr. Post stated that this was correct. Since the majority of the class rates were decreasing for the year 2000 from previous years, Councilmember Larson asked if the effect of this was that the actual tax rate would have to go up since the tax capacity for all classes of property was increasing, Mr, Post explained that market valuation is impacting tax capacity more than rate compression such that tax rates generally should be decreasing rather than increasing. Slide #3, Market Valuation, Tax Capacity and Levy Data Payable 1993 to Payable 2000, was a historical look at the City's valuation, tax capacity and tax levies since payable year 1993, The City of Arden Hills as a community experienced a reduction in market valuation for several years in the early 1990's. Towards the end of the 1990's the market valuation began to stabilize and has begun to pick up. The market valuation for 2000 was up 8.49 percent over 1999. Throughout most of the 1990's the tax capacity had been decreasing, however, the tax capacity has begun to pick up in the last couple of years, With regard to the Fiscal Disparities pool, the City of Arden Hills is a net contributor to this pool. Of the total tax capacity of $11,991,914 for the year 2000, the City of Arden Hills will contribute $2,005,653 to the Fiscal Disparities pool. . The City will receive back from this pool $908,726, Therefore, the City of Arden Hills is a net contributor to this pool of $1,096,927 or 92% of total tax capacity. ARDEN HILLS TRUTH-IN-TAXATION - DECEMBER 6, 1999 4 . Mr. Caldwell requested an explanation of the Fiscal Disparities adjustments, Mr. Post explained that the concept of the Fiscal Disparities pool was that, just because one community benefits from being close to existing infrastructure, that community should not be able to reap all the rewards of development activity, The requirement is that the community share 40 percent of its new commerciallindustrial tax capacity with the entire metropolitan area since the metropolitan area was also providing resources for the development growth. Therefore, when a new building goes up in a community, 40 percent of the building's tax capacity goes into the Fiscal Disparities pool. There are more net city receivers from the pool than there are net city contributors to the pool, and the City of Arden Hills is one of the few net contributors to the pool. Mayor Probst noted that the City of Richfield received approximately $1,000,000 from the Fiscal Disparities program, Mr. Wilson asked what the basis was for receiving money from the Fiscal Disparities pool. Mr, Post stated that the distribution of funds was formula driven, Slide #4, Median Market Value of Homes in Ramsey County by City, Payable 1999 to Proposed Payable 2000, provided information regarding what the neighboring cities proposed city tax rates were and the median valuation of their residential properties. In the case of Arden Hills, the percentage increase in City tax on the median value home would be 6.64 percent. The change in tax percentage of the neighboring cities ranged from 14,30 percent for White Bear Township to a negative 4.45 percent for Little Canada, The City of Little Canada had a bond levy that had been paid off and the levy dropped accordingly, Overall, the average increase in the city portion of the . tax for the II neighboring cities was six percent. Slide #5, Components of Total Proposed 2000 Rates, explained the portions of the property tax bill from each of the jurisdictions. The City of Arden Hills' portion was 16 percent of the total property tax bill. Ramsey County represented 39 percent and the School District #621 represented another 40 percent of the total bill. Special Independent School District #916 was a small component which represented less than one percent ofthe tax bill. Prior to the adoption of the Educational Credit given to residents, School District #621 had traditionally been operating at approximately 55 percent, Therefore, with the Educational Credit, the School District had essentially bought down approximately 15 percent oftheir portion of the property tax bill. Slide #6, City of Arden HilIs/Neighboring Cities Analysis of 1999 State Aid to Cities, presented the distribution of State Aid for North Metro cities. The HACA and Local Government Aid may be used as a dollar-for-dollar reduction in need for property tax levy, The City of Arden Hills has historically been a significantly less than average recipient of State Aid funds. Arden Hills receives approximately $9 per capita in State Aid which was substantially lower compared to the anlount of such aid received by neighboring cities, Mr. Caldwell asked why the amount of State Aid received by the City of Arden Hills was lower than the surrounding communities, Mr. Post explained that when the State of Minnesota was experiencing financial difficulties in the 1980' s, the State removed the Local Government Aid . from the City of Arden Hills. The State of Mimlesota also made a permanent reduction in the amount of HACA aid being received by Arden Hills, Mr. Caldwell asked if anything could be done about these reductions in State Aid, Mr. Post stated that Legislative action or a Minnesota Department of Revenue policy change would have to occur, -- --...------ -- ARDEN HILLS TRUTH.IN-TAXATION - DECEMBER 6,1999 5 . Slide #7, City Delivers Quality Services at an Affordable Price, presented a hypothetical check which broke down the General Fund services being funded by the property taxes based upon the total City taxes of $400.68 for a $157,850 median.valued home. The monthly bill for this median-valued home would be $33.39, In terms of the value of the services being provided, this appeared to be a reasonable cost, Mr. Post noted that the amount shovm for street maintenance was much higher than it has been in the past, He indicated that this was due to the proposed two- year cycle for the Pavement Management Program and the amount shown on the hypothetical check represented two years worth of work. Slide #8, How Does the 2000 Proposed Budget Impact Your City Taxes, provided the proposed city tax rates for 2000, compared to the rates of 1999, based on the market valuation of residential home and commercial/industrial properties, The decrease of city tax rates across the board was a result of the reduction in class rates which will be in place for the year 2000, These reductions were not as substantial in some areas as they had been in the past Slide #9, General Fund Revenues/Transfers In, provided an overview of the sources of Arden Hills' General Fund revenues, The portion received from property taxes was lower than it had been in previous years, due to the fact that other sources will be contributing nine percent to the General Fund to finance the expanded scope of the Pavement Management Plan, Slide #10, General Fund Expenditures/Transfers Out, explained the distribution of the proposed expenditure total of $2,934,090, The Street Maintenance portion was substantially higher than . previous years due to the scope of the street reconstruction work, Other finance uses referred to a planned operating transfer to the Municipal Land and Buildings Fund #408, Slide #11, Summary Comparison of General Fund Revenues, Expenditures, and Operating Transfers, provided historical information on the General Fund proposed revenue and expenditures from 1995 to 2000, The significant changes in expenditures for the 2000 General Fund compared to 1999 occurred in Elections, which are held every other year and the year 2000 will be an election year; the operating costs of the Round Lake Road facility were less than anticipated in 1999 and this was reflected in the year 2000 budget; the Street Maintenance expenditures will experience a large increase from $380,130 budgeted in 1999 to $756,880 budgeted in 2000, which again was due to the expanded scope of the Pavement Management Plan. ML Caldwell confirmed that the expenditures for Street Maintenanee would be expected to go down in the 2001 budget year, Mr. Post stated that this was eorrect, Mr. Wilson asked why the summer playground and skating rinks expenditure categories showed zero dollars being expended in the 2000 budget ML Post explained that since 1998 these activities have been combined into the Recreation Fund #226, Council member Larson confirmed that the increase of $32,032 for Fire Protection included . Capital Improvement expenditures. ML Post stated that this was correct. ARDEN HILLS TRUTH-IN-T AXA nON - DECEMBER 6, 1999 6 . With regard to the revenue categories for the 2000 General Fund, Mr. Post stated that the significant change occurred in Other Financing Sources, He indicated that the increase of $273,200 was a transfer primarily from the PIR Fund, Mr. Wilson asked what the acronym PIR stood for. Mr, Post stated that PIR was a Capital Fund entitled Permanent Improvement Revolving Fund, He indicated that this fund was where most of the City's Capital projects initiate. Mr. Wilson asked if the expenditures for the new City Hall would come from tile PIR fund, Mr. Post stated that the construction of the new City Hall would be funded by the Municipal Land and Buildings Fund #408. Slide #12, Proposed Capital Budget Summary, explained thc General Fund Capital items which are funded by the 2000 property tax dollars. The projected cost of $2,750,000 to construct the new City Hall was included under the Capital Municipal Buildings Fund #408, The Public Works Equipment Project #306 included the replacement of a backhoe at a projected cost of $90,000, The Public Works Projects Project #402 included a planned street project in 2000 totaling $2,243,200, The cost for this project will be split between the General Fund, the Capital Fund and Enterprise Funds, Additional significant Capital projects proposed for the year 2000 were the completion ofthe residential water meter replacement program at a cost of $450,000, and sewer line rehabilitation at a cost of$200,000. Overall, the proposed 2000 total City Capital Budget was $6,178,865, This figure was lower than the previous year because the City Hall project was included in the . 1999 budget, and the 1999 budget had included a large amount of EDA expenditures for the West Round Lake Road/Highway 96 intersection Phase I project not found in the 2000 budget Slide #13, Summary Comparison of All Funds Expenditures/Transfers Out, reviewed the proposed 2000 expenditures for the General Flmd as well as the other funds under which the City operates. The slide presented historical information from the year 1995 through to the proposed expenditures for 2000. The TCAAP Reuse Planning Fund #229 within the Special Revenue category had budgeted $419,070 in 1999 of which no funds were expended. The City had anticipated the implementation of a planned study of the TCAAP site which had not occurred, This planned study was not included in the proposed 2000 budget With regard to the Round Lake Office Fund #704, the work has essentially been completed within this district and what remained in this fund category was debt service payments, both internal and to a bond fund, Under the Debt Service Funds, the $136,998 proposed for the 2000 budgct represented interest payment on the GO Tax Increment Bond issued in 1998. Additionally, the 2000 budget proposed a transfer 01'$1,150,00 from the Debt Service Fund #315, These funds were being transferred to the Municipal Land and Building Fund #408 as part of the financing of the new City Hall facility, Councilmember Larson noted that the City had budgeted $2,050,000 in 1999 for the City Hall project and was now proposing $2,800,000 for the 2000 budget He asked why there was such a . difference between the amount budgeted for the City Hall in 1999 comparcd to the amount proposed for 2000, Mr. Post explained that the City had anticipated the construction of the new City Hall to be a two-year project, with construction beginning in the fall of 1999 and completing ARDEN HILLS TRUTH-IN-TAXATION - DECEMBER 6,1999 7 . in 2000, The project was now expected to begin in the spring and be completed in the fall of 2000. Slide # 14, Glossary of Terms, defined some of the terms used during property tax discussions. ML Caldwell asked if the City had planned to discuss possible action to rectify the discrepancies in the amount of State Aid received by the City of Arden Hills compared to other similar cities, ML Post stated that the City had no plans to take action with regard to the Local Government Aid. He indicated that he had spoken with the Department of Revenue on sevcral occasions, pointing out the inconsistencics which he felt should be rectified, The Department of Revenue was remaining firm with regard to the action that was taken in the 1980' s to withhold HACA funds from the City of Arden Hills. ML Caldwell noted that circumstances have changed significantly since the 1980's. He added that the State of Minnesota was feeling discriminated against in terms of Medicare reimbursements. At the present time, the Senior Federation was suing the Federal Government which will draw attention to the issue, ML Post stated that he would distribute the information as widely as possible regarding the local State Aid in order to point out the disparity of the distribution, He indicated that the solution may not be within the Department of Revenue, rather it will have to be a Legislative BilL . Mayor Probst noted that in order for the City of Arden Hills to receive more State Aid, another community will have to receive less. Councilmember Aplikowski added that the representatives of Arden Hills represent other cities as well and would prefer to reduce rather than increase the amount of State Aid being received by any city, Councilmember Larson requested an explanation of where the revenue for the Advance Refunding Bond Fund #315 comes from and requested confirmation that these funds will be transferred to the Municipal Land and Buildings Fund #408, Mr. Post explained that the revenues for the Advance Refunding Bond come from special assessments. In the late 1960' s and early 1970's, the City of Arden Hills created the majority of the City's sanitary sewer and water infrastructure, This construction was financed through a bond that was to be paid by long term special assessments, During timcs that the interest rates were low and it was advantageous to refinance bonds, the City did so and benefited from the fact that some residents chose to pay off their assessments early, Over the years, the City accumulated revenues in excess of debt service requirements. PUBLIC COMMENTS Mayor Probst invited those present to come forward and address the Council on any questions or concerns they may have regarding the 2000 proposed budget . Mr. Wilson commended staff for the Truth-in-Taxation presentation, ARDEN HILLS TRUTH-IN-TAXATION - DECEMBER 6,1999 8 . COUNCIL/ADMINISTRATOR COMMENTS Mr. Lynch noted that additional letters had been received regarding the Council vacancy and suggcsted that the Council discuss the process to review the potential candidates, He indicated that he was not able to locate a list of defined questions used previously by the City CounciL He asked the City Council whether it would prefer a list of questions or to conduct a free forum process, Mayor Probst stated that he could recall a list of questions being used in previous Council interviews. He noted that the last appointed Councilmember was Councilmcmber Larson, Councilmember Larson indicated that he had not been asked a specific list of questions, Councilmember Aplikowski stated that she could not recall if she had been asked a written list of questions when she interviewed for the City CounciL She felt that a free forum may be acceptable, however, a few predetermined questions may be helpfuL Mayor Probst pointed out that the interviews were scheduled to begin the following evening and any list of questions that was to be used would have to be generated prior to that time. He suggested that the Councilmembers meet one-half hour prior to the first interview to determine the questions to be used, Councilmcmber Larson agreed that the use of a list of questions would be valuable to the intcrviews and indicated that he would be willing to have some ideas available prior to the . interviews or to determine the list now, Councilmember Aplikowski suggested that one question could be what each applicant feels it could bring to the City CounciL Councilmember Larson stated he would want to know ifthe applicants were willing to commit the amount of time that being on the City Council requires, Councilmember Rem suggested that the Council request additional information regarding , . prevIOus expenence. Councilmember Larson suggested a question regarding what the applicant considers priorities for the City of Arden Hills and what vision each has for the future of the City. Councilmember Aplikowski suggested including in this question what is important to the applicant with regard to what the City accomplishes next Mayor Probst suggested that the applicants be given a few minutes at the beginning of the interviews to introduce themselves and make comments. He confirmed that the following three questions should be included in the interviews: L Why are you seeking this position? 2. What can you bring to the job? , What are your priorities for the City of Arden Hills, ~. . Councilmember Aplikowski suggested that the applicants be asked what ongoing projects they are aware of within the City, Councilmember Larson agreed that the applicants should be asked if they are aware ofthe issues currently before the Council, rather than only being familiar with their own personal priorities, ARDEN HILLS TRUTH-IN- TAXATION - DECEMBER 6, 1999 9 . ML Post expressed his surprise that all three of the applicants had not attended this evening's meeting, Councilmember Aplikowski concurred. Since each interview had been scheduled for 40 minutes, ML Lynch suggested that the applicant be allowed the first five minutes for introduction, 25 minutes for questions from the Council and the remaining 10 minutes for any follow up discussion, Mayor Probst confirmed that the following three questions would be added to the list: L What current issues facing Arden Hills are you aware of? 2, What would be your decision-making process in making choices on overall community issues? 3, What meetings have you attended to familiarize yourself with the current issues facing Arden Hills? Councilmember Aplikowski stated that although the answer to the last question would be obvious, it would still be valid to ask Councilmember Rem suggested that this question relate to more general issues throughout Arden Hills, Councilmember Aplikowski asked if the three candidates had all confirmed their attendance at the interviews, Mr. Lynch stated that none of the applicants had indicated that they would not be available, Mayor Probst asked ML Lynch to make follow up telephone calls to confirm the . availability of the applicants, Councilmember Larson asked if the City would be allowed to re-advertise the vacancy if it was not satisfied with any of the three current applicants, Mayor Probst stated it was his opinion that the City Council was not obligated to select one of the three candidates, ML Lynch added that, if the vote on the appointment of an applicant resulted in a tie, the Mayor would have the legal ability to make an appointment, Councilmember Larson noted that he would not be available to attend the City Council meeting on December 13, 1999 which will leave three Councilmembers to vote on the appointment. Councilmember Aplikowski stated that she had received additional calls regarding the Council vacancy, She asked if the City Council should meet early prior to the interviews. Mayor Probst suggested that the City Council meet no later than 6:45 p,m, Mayor Probst stated that he had received an invitation to the Library Foundation event being held December 15, 1999, which he may not be able to attend, Councilmembers Larson and Rem indicated that they would try to attend this event. Mayor Probst stated that the City received a letter from the Minnesota Department of Transportation regarding candidate projects for the Transportation Revolving Fund, He was not sure that the City of Arden Hills had any projects that would qualify for this Fund. . Mayor Probst expressed his appreciation to ML Dwayne Stafford and the Public Works staff for the positive input the City received from one of its residents, - ~ ARDEN HILLS TRUTH-IN-TAXATION - DECEMBER 6,1999 10 tt AD.JOURN MOTION: Councilmember Rem moved and Councilmember Aplikowski seconded a motion to adjourn the Truth-In-Taxation public hearing at 8:29 p,m, The motion carried unanimously (4-0). NOTICE OF MEETINGS The ncxt regular City Council meeting will be held Monday, December 13, 1999 at 7:30 p.m. at the Arden Hills Council Chambers. . .