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3 2004 Tax LevyCITYOF CHANHASSEN 7700 Market Bouleva8 PO Box147 Ohanhasse~. MN 55317 Administration Pr'o'~e: 952 227 1100 Fax 9522271110 Building Inspections Pi~ene: 952227 1180 Fax 952 227 1190 Phone 952 2271160 Fax 9522271170 Finance Phooe: 9522271140 Fax: 952227 1110 Park & Recreation Phor~e: 9522271120 Fax 952 227 1 ! 10 Recreat on Center 2310 Coulter Boulevard Phone: 952.2271400 Fax 9522271404 Planning & Natural Resources Phor~r': 952227 Fax 9522271110 Public Works 1591 Park Road Phone: 952 227 1300 Pax 952227 1310 Senior Center Phone 952227 1125 Fax~ 952 227 1110 www ci :hanhassen rqn us MEMORANDUM TO: FROM: Mayor City Council Bruce M. DeJong, Finance Director DATE: September 2, 2003 SUBJECT: Approval of 2004 Tax Levy The preliminary tax levy for Chanhassen should fully fund the programs that the City Council approves for the following year and debt service levies approved when bonds were issued. Staff recommends that the budget for general fund property tax levies for taxes payable in 2004 be set at $6,65'7,060 - the levy limit as certified by the Minnesota Department of Revenue. Staff further recommends that the debt service levy be set at $2,496,'753. This is a total tax levy increase of $486,815 which works out to about a '7%o increase for the city portion of taxes on an average residential property. The city is approximately 30% of the total tax bill, so this is about a 2% increase on the total property tax. General Fund The general fund levy increased over last year primarily due to: · $45,000 - General Liability Insurance · $27,000 - Library Building Maintenance · $32,000 - Elections · $40,000 - Salary Reallocation · $28,000 - Street Maintenance Worker · $86,600 - Salary and Benefit Increases $258,600 It should be noted that staff used their re-estimated 2003 budget when calculating their 2004 budget. This includes the $319,000 in expenditure cuts and revenue increases. For 2004, the state of Minnesota has cut aid payments to the city in the amount of $319,209. To minimize the budget hardship, the state has allowed cities to levy back 60% of the aid cuts, which is $191,525. The City el Chanhassen · A growmg comm~mity ',~ith cleao iakes qual ty schools a charting downtown.' . ", ~ . ~hr,~,,.o laL~smess~s w nd~9 t a is and bea(Jtifui pa ks A ore}at pla.se to. live Approval of 2004 Preliminary Tax Levy September 2, 2003 Page 2 The total taxable tax base for Chanhassen has increased by 12%. Some of that increase is based on inflation because residential properties are selling for more than last year. 2.7% of the increase comes from new structures being built. That includes both residential and commercial/industrial properties. The tax base increase is not evenly split between commercial/industrial and residential. C/I property has seen a decline in taxable value that was only offset by new C/I construction. The residential market - roughly 90% of property value in the city has seen a 13% increase overall. The growth in the tax base from new construction projects is 2.7% based on information from the Carver County Assessor. Extrapolating from the tax rate for 2003, those properties would generate city taxes in the approximate amount of $233,500. This does not include additions and remodeling that have been added to existing buildings. The only way to take advantage of this growth in the tax base is to levy additional taxes which defray the cost of providing service to these properties. Any amount less that $233,500 will decrease the city taxes paid by an average property with only an inflationary increase. This is the amount that would cause a zero percent increase for a typical homeowner. Debt Service Taxes The debt service issue is more complicated than the general fund issue. Here taxes are levied to meet bond payments for straight general obligation issues, improvement bond issues (partially assessed against property owners), and bonds for other government entities such as the Carver County HRA and the City of Chanhassen Economic Development Authority. Other issue types, such as TIF bonds and water and sewer debt, have not had a tax levy associated with them, but are still backed by the full faith and credit of the city. That means we pledge to levy sufficient taxes to repay the bonds if the dedicated revenue source is insufficient to meet the obligation in any given year. Where we have a problem is in the improvement and TIF bonds. For some reason, in previous years didn't levy sufficient taxes to pay several items, or alternative revenue sources that haven't come up to the level expected. The debt issues that have difficulty are the 1992A, 1991A, 1995C, 1996D. In our debt study two years ago we planned on the 1996D being paid for by excess increment from the downtown TIF district because it was scheduled to be decertified on November 1, 2003. The others are in deficit for a variety of reasons - not levying taxes because of prepaid assessments, assessments that were not split properly across bond issues, and overly optimistic forecasts. We can solve this year's one time problem by transferring money that was scheduled for transfer to debt service funds in the general fund. The money from Approval of 2004 Preliminary Tax Levy September 2, 2003 Page 2 this year and the 2004 budget should be sufficient to lop off the peak that was originally planned to picked up by the downtown TIF district. I don't believe this will cause a permanent problem since we were in a workout situation on our debt levies anyway. However, I feel strongly that planned increases in tax levies such as the $300,000 increase in the 1998A Park Bonds should be levied fully. Adding this will cause a small increase in the total city taxes for each property, but will keep us on the schedule established in the bond indenture. We will have to transfer general fund and historic preservation trust fund balances to those funds that are in deficit. Fortunately, the money originally set aside for local street improvements can be used for this purpose. Those funds total approximately $1,366,000 which will be generated from the 2003 ($515,000) and 2004 ($540,000) budgets. The remainder should come from the $311,000 surplus added to the General Fund balance in 2002. We are examining our ability to refinance some of our bond issues, but those do not significantly affect the proposed tax levy for 2004. The issues that are currently refundable were not scheduled for a tax levy in 2004. The City Council should note that refinancing any issues will increase the tax levy dramatically as shown in the attached schedule. The refinancing options include the 1998 D and 1998F non-qualified TIF bonds, the 1996D bonds that financed Powers Road. If we do these mfinancings, the debt tax levy would go up by over $2,000,000 per year starting in 2005. This will be offset by the taxes generated from the Downtown TIF district properties that come back to the general tax roll in 2005. Ehlers recommends that we take no more than three years for these refinancings. Their view is that the bond rating agencies will see a longer time frame as impeding our ability to finance other projects. We certainly will have many bonding needs as we extend infrastructure into the 2005 MUSA area and continue to reconstruct existing residential streets. Before permanently deciding to do any of these refinancings, we need to examine the Downtown TIF district financial situation in detail and see if we can approach the Commissioner of Revenue regarding a possible extension beyond the one year statutory extension that we are pursuing. Recommendation Staff recommends that the City Council approve the preliminary tax levies for the general fund and debt service in the amounts of $6,657,060 and $2,496,753 respectively. Staff further recommends that the City Council set the date for the Truth in Taxation hearing on December 1, 2003 with a continuation date of December 8. CITY OF CHANHASSEN 2004 BUDGET Expenditures Personal Materials & Contractual Capital Services Supplies Services Outlay Total 2003 Total % Change GENERAL GOVERNMENT 1110 Legislative 1120 Administration 1130 Finance 1140 Legal 1150 Assessing 1160 MIS 1170 City Hall 1180 Elections 1190 Library Building TOTAL 34,200 200 104,800 375,381 500 52,700 500 186,000 1,000 92,350 2,500 110,000 70,100 144,016 24,500 96,450 61,111 41,400 328,200 500 24,250 7,500 61,500 824,958 67,600 923,600 3,500 139,200 429,081 281,850 110,000 70,100 264,966 431,211 31,750 61,500 1,819,658 139,370 388,500 282,150 110,000 70,100 279,560 398,100 0 34,000 1,701,780 -0.12% 10.45% -0.11% 000% 0.00% -5 22% 8.32% 80.88% 6.93% LAW ENFORCEMENT 1210 Law Enforcement 1220 Fire 1260 CSO TOTAL 66,368 1,015,000 492,754 37,579 103,895 43,066 4,550 11,050 602,188 42,129 1,129,945 1,081,368 634,228 58,666 1,774,262 1,077,800 647,000 60,700 1,785,500 0.33% -1.97% -3.35% -0.63% PUBLIC WORKS 1310 Engineering 441,431 1,800 33,010 250 1320 Street Maintenance 580,197 167,850 37,270 1,250 1350 Street Lighting 1,500 231,800 1370 Vehicle Maintenance 235,671 78,200 53,800 6,000 TOTAL 1,257,299 249,350 355,880 7,500 476,491 786,567 233,300 373,671 1,870,029 998,710 758,570 261,300 374,500 2,393,080 -52.29% 3.69% -10.72% -0.22% -21.86% COMMUNITY DEVELOPMENT 1410 Planning Commission 1420 Planning Administration 1430 Senior Commission 1250 Building Inspection * TOTAL 150 2,950 299,294 700 14,125 17,180 220 1,050 709,613 7,800 26,400 1,026,087 8,870 44,525 3,100 314,119 18,450 743,813 1,079,482 3,700 32O,525 18,450 743,900 1,086,575 -16.22% -2.00% 0.00% -0.01% -0.65% PARKS & RECREATION 1510 Park & Rec. Commission 125 2,100 1520 Park Administration 98,213 1,000 12,000 1530 Recreation Center 194,363 13,350 35,800 1540 Lake Ann 10,975 9,340 42,825 1550 Park Maintenance 580,295 87,300 109,805 1560 Senior Center 30,586 3,664 10,775 1600 Recreation Programs 143,811 13,408 70,175 1700 Self-Supporting Programs 29,257 8,635 77,303 TOTAL 1,087,500I 136,822 I 360,783 3,000 3,000[ 2,225 111,213 243,513 63,140 780,4O0 45,025 227,394 115,195 1,588,105 2,225 111,300 243,650 65,440 809,400 45,025 239,105 123,155 ,639,300 O.OO% -0.08% -0.06% -3.51% -3.58% O.0O% -4.90% -6.46% -3.12% Transfer to Debt Service TOTAL GENERAL FUND Total Revenue Deficit 4,798,032 504,771 2,814,733 14,000 540,000 300,000 80.00% 8,671,536 8,906,235 -2.64% 8,671,426 8,906,635 -2.64% [ (110) 4OO CITY OF CHANHASSEN 2004 BUDGET Expenditures Personal Materials & Contractual Capital Services Supplies Services Outlay Total 2003 Total % Change GENERAL GOVERNMENT 1110 Legislative 1120 Administration 1130 Finance 1140 Legal 1150 Assessing 1160 MIS 1170 City Hall 1180 Elections 1190 Library Building TOTAL 34,200 200 104,800 375,381 500 52,700 500 186,000 1,000 92,350 2,500 110,000 70,100 144,016 24,500 96,450 61,111 41,400 328,200 500 24,250 - 7,500 - 61,500 824,958 67,600 923,600 3,500 139,200 429,081 281,850 110,000 70,100 264,966 431,211 31,750 61,500 1,819,658 139,370 388,500 282,150 110,000 70,100 279,560 398,100 0 34,000 1,701,780 -O12% 10.45% -0.11% OOO% O.OO% -5.22% 8.32% 80.88% 6.93% LAW ENFORCEMENT 1210 Law Enforcement 1220 Fire 1260 CSO TOTAL 66,368 1,015,000 492,754 37,579 103,895 43,066 4,550 11,050 602,188 42,129 1,129,945 1,081,368 634,228 58,666 1,774,262 1,077,800 647,000 60,70O 1,785,500 0.33% -1.97% -3.35% -0.63% PUBLIC WORKS 1310 Engineering 441,431 1,800 33,010 250 1320 Street Maintenance 580,197 167,850 37,270 1,250 1350 Street Lighting 1,500 231,800 1370 Vehicle Maintenance 235,671 78,200 53,800 6,000 TOTAL 1,257,299 249,350 355,880 7,500 476,491 786,567 233,300 373,671 1,870,029 998,710 758,570 261,300 374,500 2,393,080 -52.29% 3.69% -10.72% -0.22% -21.86% COMMUNITY DEVELOPMENT 1410 Planning Commission 1420 Planning Administration 1430 Senior Commission 1250 Building Inspection * TOTAL 150 2,950 299,294 700 14,125 17,180 220 1,050 709,613 7,800 26,400 1,026,087 8,870 44,525 3,100 314,119 18,450 743,813 1,079,482 3,700 320,525 18,450 743,900 1,086,575 -16.22% -2.00% O.OO% -0.01% -0.65% PARKS & RECREATION 1510 Park & Rec. Commission 125 2,100 1520 Park Administration 98,213 1,000 12,000 1530 Recreation Center 194,363 13,350 35,800 1540 Lake Ann 10,975 9,340 42,825 1550 Park Maintenance 580,295 87,300 109,805 1560 Senior Center 30,586 3,664 10,775 1600 Recreation Programs 143,811 13,408 70,175 1700 Self-Supporting Programs 29,257 8,635 77,303 TOTAL 1,087,500I 136,822I 360,783 Transfer to Debt Service TOTAL GENERAL FUND Total Revenue Deficit 3,000 3,000 4,798,032 504,771 2,814,733 14,000 2,225 111,213 243,513 63,140 780,400 45,025 227,394 115,195 1,588,105 2,225 111,300 243,650 65,440 8O9,4OO 45,025 239,105 123,155 1,639,300 0.00% -0.08% -0.06% -3.51% -3.58% 0.00% -4.90% ~646% -3,12% 540,000 300,000 80.00% 8,671,536 8,906,235 -2.64% 8,671,426 8,906,635 -2.64% (11o) 400 City of Chanhassen, Minnesota Estimated Tax Levies 2004-2025 1995B Year of Carver Co Collection HRA Bonds 2OO2 2003 2004 33,600 2005 33,600 2006 33,600 2007 33,600 2008 33,600 2009 33,600 2010 33,600 2011 33,600 2012 33,600 2013 33,600 2014 33,600 2015 33,600 2016 33,600 2017 33,600 2018 33~600 2019 33,600 2020 33,600 2021 33,600 2022 33,600 2023 33,600 2024 33,600 2025 33,600 1998A GO Park Bonds 489,731 540,950 841,397 881,234 928,568 977,687 1,027,922 406,469 6,093,958 2000 GO Pub Proj 117,018 118,693 120,093 121,213 122,048 122,548 122,703 122,603 122,195 126,420 1~215,530 2001C GO Equip Certs 145,000 146,300 147,000 152.600 590,900 2002A GO Libra~ Bonds 423,732 478,200 484,000 483,100 486,700 489,100 490,700 491,300 496,400 495,400 498,800 501,200 502,400 502,500 507,000 505,100 512,800 513,900 513,700 517,500 9,893,532 1992A 1994B 1995B 1995C 1996B 1996D GO Impr GO Impr GO impr GO Impr GO Impr GO Impr Bonds Bonds Bonds Bonds Bonds Bonds 44,000 45,000 44,100 45,126 56,028 34,831 420,000 500,000 1,200,000 381,874 90,290 83,541 480,000 150,000 100,000 2003A GO Equip Certs 137,532 140,947 138,814 141,380 138,173 696,846 1999 GO Impr Bonds 64,835 69,371 68,659 67,840 100,000 100,000 100,000 2OO3 Proposed Refinancing 159,000 2,252,000 2,252,000 2,252,000 6,915,000 2001B GQ Impr Bonds 28,600 28,800 29,000 29,100 29,300 29,500 29,600 29,600 2O04 Street Impr 155~000 155,000 155,000 155,000 155,000 775,000 Total General Impr Bonds 1,134,435 889,489 1,940,131 96,940 129,300 129,500 129,600 29,600 2OO5 Street Impr 155,000 155,000 155,000 155,000 155,000 775,000 Total Deferred Levies 2,309,916 2,173,632 3,862,753 4,316~634 4,401,030 4,610,815 2,407,698 1,548,572 962,195 810,420 532,400 534,800 536,000 536,100 540,6OO 538,700 546,400 547,500 547,300 551,100 33,600 33,600 33,600 33,600 2006 Street Impr 155.000 155,000 155,000 155,000 155.000 775,000 Cash Trans from Gen Fund 1,366,000 540,000 540,000 540,000 Total General Bonded Debt 1,175~481 1,284.143 1,922,622 4,219,694 4,271,730 4,481,315 2,278,098 1,518,972 962,195 810,420 532 400 534 800 536 000 536 100 540 600 538 700 546 400 547 500 547 300 551 100 33,600 33,600 33,600 33,600 26,281,566 Net Tax Levy 2,496,753 3,776,634 3,861,030 4,070,815 480,000 133,100 555,705 2,120,000 135,985 250,000 570,705 233,500 4,478,995 30,760,561