Loading...
CC Minutes 1998 12 28CHANHASSEN CITY COUNCIL SPECIAL MEETING DECEMBER 28, 1998 Mayor Mancino called the meeting to order at 9:00 a.m. COUNCILMEMBERS PRESENT: Mayor Mancino, Councilman Senn and Councilman COUNCILMEMBERS ABSENT: Councilman Mason STAFF PRESENT: Todd Gerhardt, Pam Snell, Don Ashworth CONTINUATION OF ADOPTION OF THE PROPOSED 1999 BUDGET. Mayor Mancino: Now our tax certification levy for 1998, that's the sheet that you had distributed on Wednesday, was $6,487,202.00. The tax certification levy for 1999, which is the part that's important for the taxpayer because it is the one that sets our city tax rate. That levy proposed for 1999 would be how much? Pam Snell: $6,358,650.00. It's on the fifth page in your packet. The comparison of the proposed levy that staff and council spoke about on Wednesday. Mayor Mancino: So the actual levy amount for 1999 would be what percentage lower than 19987 Pam Snell: In dollar. Mayor Mancino: In dollar amount it's how much? Let's see, I've got a calculator here. $128,552.00 lower. Pam Snell: It would be approximately a 2% decrease if you take your total levy as compared to 1998. Mayor Mancino: Okay. And that is due to number one, the general fund taxes to be levied in 1999 would remain the same as 1998. It was proposed to have a 15% increase. In that line item under general fund. Pam Snell: Yes. That's staff's prior recommendation. Mayor Mancino: Okay, was a 15% increase. Now it will be the same as 1998. The special revenue fund will stay the same between 1998 and 1999. Equipment funding, which is also referred to as internal, the service fund will stay the same at $430,000.00. Our G.O. debt will go up approximately 4%. It will be on the same bond that we bonded in 1998 though. We have not increased the G.O. debt, the principal. It's the same principal that we had in 1998. Now there's a 4% increase on what the interest payment that we'll be making on those G.O., that G.O. debt. How come we have that 4% increase for 19997 Don Ashworth: Schedule. Those are like 20 year bonds so however they were laid out from before. G.O. bonds are different than your... Mayor Mancino: And do we know what they will be next year? Do we have that all the way out to the 20 year of the bond. Special City Council Meeting - December 28, 1998 Don Ashworth: When those were sold, let's assume 10-15 years ago, we entered into a contract to pay that the same that you did for your home and so it's a fixed schedule. It does not change unless you do a refunding which generally brings the amount down. Mayor Mancino: Okay. And just so everyone knows, that G.O. debt is based on three bond issues. One was in 1991. Original City Hall building. One was 1988. Fire equipment bond which built the fire station and we also bought a truck. In 1989 park bond which was for Bandimere Park, the purchase of that land. So those are the three G.O. bonds that are under general bonded debt. Next we have under the levy the special assessment bonded debt. And that payment last year in 1998 was $858,688.00. This year it is $900, I'm sorry. Last year it was $491,122.00. This year again that total special assessment debt is $550,147.00 and that has gone up 13%. And again Don that is because of again the schedule. A schedule and payment. Don Ashworth: Exactly. That's committed payments. Staff has in no way changed the schedule debt portion so that is solely the principle and interest that we agreed to pay whenever we sold those bonds, whether they be '91 or '95. Mayor Mancino: And those again, there is no new special assessment bonded debt for 1999. Those are ones that were issued from 1993 and 1995. Okay, thank you. Then we have the park referendum levy. As you all know that we passed. The levy amount in '98 was for $375,000.00. This year it is $246,837.00. That is a decrease of 34% for the park referendum levy. And can you explain that detail? Don Ashworth: When the city levied for the park referendum one year ago. We were not totally sure as to the amount that would be necessary to pay the principle and interest on those bonds because they were in the process of being sold. We contacted Springsted and we asked them for their best guesstimate as to what that amount would be and they gave us the $375,000.00, which is what we levied. We have since that point in time sold those bonds and the actual principle and interest that is necessary to pay, or to be paid in 1999 is the $246,837.00 so that is what we have shown in there. Mayor Mancino: The next item is the Southwest Opt Out Levy which, when you got your proposed property tax statement there were two lines under the city. One was regular city tax. The other was our Southwest Metro. Southwest Metro in 1998 levied $504,454.00. This year they are levying $567,874.00 which is a, represents a 12.6% increase. That is again from Southwest Metro. Everything else that I've talked about is really city controlled. Southwest Metro is not. Everything else that's kind of above that line that I've just talked about are things that we as a city control as far as the levy amounts. HACA has gone down in it's distribution to the city. In 1998 it was $938,264.00. This year it's $796,536.00. Don, can you explain that decrease for the HACA distribution please? Don Ashworth: The State continues to shift the dollars. They've placed a lot of emphasis on school district funding which is one of the primary reasons that we all saw a major decrease in the amount of money necessary to fund schools. Unfortunately they did it on the backs of cities. And one of the means by which they came up with the dollars to make the increase in aids to schools was on the backs of cities and so there was a general decrease in HACA distribution to cities, which we then became the blunt of. Mayor Mancino: So how much is that a decrease from last year? Don Ashworth: $242,000.00. Special City Council Meeting - December 28, 1998 Mayor Mancino: So again, I will repeat this as we went through the levy amount for 1999. The levy amount for 1998 was $6,487,202.00. This year for 1999 it will be $6,358,650.00 which represents a 2% decrease on the city's levy. Would you like us to make a motion? Todd Gerhardt: Well before you do that we do have one issue. If you mm to the next page that shows the 1999 budget, all funds. We have a revenue over and under expenditure. Right now our budget still is not balanced. There's $225,565.00 and at this point staff would recommend that we increase the general fund dollar amount to make that budget balance. Changing the $3,260,796.00. Increasing that by $225,565.00. Mayor Mancino: Okay. Any discussion on this? Councilman Senn: As far as the 225 goes and the primary reason that the 225 is there is in the internal service fund we're funding for.., authorizing expenditures of 250. So that's kind of the difference from where we. Councilman Berquist: 180 of the two and a quarter. Councilman Senn: Yeah. That's basically about the two and a quarter difference that we were looking at the other day. Don Ashworth: Mayor? Mayor Mancino: Okay, yes Don. Don Ashworth: Again, right now we're at the $6,500,000.00 versus, that's last year's versus the current $6 million 3. So really if you were just to bring your total levy to where it was last year, we're really only out of balance by $100,000.00 and so following Todd's suggestion to increase by the $225. Mayor Mancino: That would give us the flat tax still? Don Ashworth: Well no. It would put you with an increase of about 2%. An increase of 2% over last year. You figure roughly 1% per $50,000.00. Pam Snell: And that's an increase in property tax revenue. Don Ashworth: Correct. What Pam is saying is, we saw an increase of between 6% and 8% in the overall growth in the community and so, I know that you have. Mayor Mancino: I still have 4.7%. Don Ashworth: I'll go with your 4.7%. So if you were to take and increase 2%, that should still produce a 3% decrease in property taxes associated with the city portion of your property tax bill. Todd Gerhardt: And that's without a valuation increase. Don Ashworth: That's correct. Special City Council Meeting - December 28, 1998 Councilman Senn: With the $225,000.00 differential at this point, would it be correct to say that there is one of several avenues to go at this point. One would be to simply raise the taxes to fund the $225. The other would be to fund it out of the '98, $700 to $800,000.00 reserve. The other would be to use the internal service funds that we haven't allocated for expenditure in '99 even though we've included it as revenue, or any combination of the above. Is that a fair statement? Don Ashworth: That's correct. The only thing I would caution the Council on is unless you find one time expenditures, which you've already gone through and said certain things like Lake Ann Park you've cut out of there. You're going to... a problem for yourself for next year. That's the only thing I'd caution you on with either of the last two alternatives that you stated. Mayor Mancino: But also last year we had revenues surplus of between $700 and.., dollars due to... knowing that we may be experiencing a special... I would like some discussion around using that surplus that was generated to fund the unbalanced part of it. Councilman Senn: Yeah, I mean I'd like to see the surplus used to fund that because we're still going to have a good surplus and then the question becomes, where do we sit for '99 as far as surplus goes and we don't know that. I mean that's something we won't know until we get in, get well into the year but even if you use the reserve at this point for that, we're still going to have over half a million in surplus. We're going to have a half a million in surplus from '98 plus again don't forget we have that 200 and some thousand in reserve from internal service. That's kind of holding for what we may need... You know and this has absolutely nothing. I mean the other thing that is, we haven't even finished our an analysis of the other funds yet in the reserves and all that sort of stuff so I mean that's still an open ended issue that we have to deal with after January 1st SO the more I think about it I think I'd be comfortable with just taking that out of the reserve and. Mayor Mancino: Well I'd like to keep the internal service fund, I would like to keep that at our.., whether it's a fire truck, whether it's you know some piece of equipment. So we don't have the peaks and valleys of taxing. So I would like to keep that... So I saw that last year at the end of 1998 we...have a good reserve. I don't feel uncomfortable using... Councilman Berquist: I understand the anxiousness to minimize the tax bite to the community. The only thing that I will offer is, every audit session that I've sat in for four years, the auditors had continuously talked about the shifting of expenses from the feds and the state and the county... I would prefer, contrary to popular public opinion perhaps, I would prefer to keep it as high as practical. Councilman Senn: Yeah, well we are. We're keeping the reserves beyond that of $2 ½ million. I mean again that has nothing to do with any of the special funds. That's purely general fund that we're keeping at $2 1/2 million. Plus now the new half million if we use the 200, then that number's even going to go up more. Don Ashworth: Mayor? If I could clarify what I'm hearing the council say and that is that you want to take and see a zero percent increase in general property taxes. Mayor Mancino: Yes. Don Ashworth: And to, the sheet as presented would show that last year was $6 million, roughly 5. This year's right now at $6 million 4. It's a difference of about $130,000.00. Special City Council Meeting - December 28, 1998 Mayor Mancino: So you're saying take part of it from there and the other part from the surplus? Don Ashworth: If I'm hearing you correctly, then I'm hearing you say that you'd balance these two which means the amount coming out of reserves would be approximately $100,000.00. Mayor Mancino: Okay. Councilman Senn: That'd be using the combination of the two then right? Mayor Mancino: That'd be using the combination of 1 and 2. To set the levy as the same last year's. Instead of a 2% decrease, plus use the surplus which is a good.., and keep the internal service the same. Councilman Senn: Okay. We have had a public hearing and it is closed but you may come forward Bob. Bob Ayot: Did some, I don't know if I'm going to need this thing but do you think there, I'm a little concerned about infrastructure. You didn't talk about that. And Councilman Berquist probably has a pretty good handle on what has been going down.., big expense. I'm also concerned about the reserve. Because our department of public works is involved primarily with.., don't have a good handle I don't think, and tell me if I'm wrong, a good handle on where the hiccups might be. It's a big concern. I'll go back to my favorite, and I'm sure you folks.., lift stations. We've got such a large number of them. Some percentage of those are going to go down... I had to worry about that so in terms of analyzing where we stand there, I have a very, very big concern. This is not an independent concern. I've talked to a number of people about it. The second area is parks and rec. There's three. Public... It's a review based on Mr. Ashworth's recommendation.., one of the things that concerns me, 23.4% of total revenue... We are at about.., and again that might be somewhat skewed. I might be off... I talked with Todd. He said your concerns will go away... The question is, is there an advantage to accelerating the servicing of that debt. Is there an advantage in any way, or how could we do it? Mayor Mancino: Using some of the surplus to reduce debt. Bob Ayot: ... paying now versus later. Is there a gain in something... ? Don Ashworth: That would be contrary to what you're trying to fight with right now which is to keep property taxes down. Bob Ayot: I know that. I hope someone's here to quote me but I've got to ask the question. Mayor Mancino: Sure. Don Ashworth: There's absolutely no question, and the city council's fully aware of this, that the city of Chanhassen's debt per capita is much higher than many, many cities. But as has been reported continuously by two different auditing firms, both of which are highly recognized, 70% to 80% of that debt is not really general obligation debt but in fact is debt that's either. Mayor Mancino: Special assessment. Don Ashworth: Special assessment or tax increment. Special City Council Meeting - December 28, 1998 Mayor Mancino: Tax increment debt. Don Ashworth: And so if you factor those in, and we took a bigger hit now with passage of this park referendum but you know prior to that point in time if you factored all of those others out you'd be way below the average city. The second question Bob has asked is one that is constantly looked at by your auditors, or I mean by your debt experts and that is an analysis of what we're currently paying versus what the market is. And as you're fully aware, we constantly bring back potential refundings where we're able to save potentially 3, 5,700,000. And that's an activity that they carry out on a continuous basis. I don't want to say monthly but I would say quarterly at a minimum and so I'm confident in telling you right now... 6 months so as I'm saying this they may be doing the analysis and maybe next week they'll come back saying yes, we should do a refunding of the bonds of 9 lA. But I can confidently state to you that it is not in the best interest of the city to accelerate payments or to do anything other than just move ahead with the... Todd is correct on 2003, 4. Bob Ayot: ... follow-up with another question. Another thing that was kind of interesting and you've got to forgive me because I'm just looking at, you know I've just barely scratched the surface looking at this and a few other things. But take a look at the document we just received. It validates a trend. In 1996 we, along with Burnsville... double the area of parks and recreation. Mayor Mancino: You mean the proportion of spending? Bob Ayot: Yes. Not just proportion in terms of percentage but also the actual dollars. Mayor Mancino: Okay. Bob Ayot: And then the figures in this document, we had a capital investment of about 600K. Something like that. So, and that's part of the referendum. The thing I'm noticing in this budget, and what's true here so it says that the trend is continuing. As we put more into parks and rec, we drive up recurring services. ... investment to get the parks and rec going. You know you put a new road in, what have you. Now you have the service activities that are generated from that. My suggestion, if there's any way that we can take a look at that. But I also know, based on the discussion I've had with the Mayor in the past and the analysis I've done, our facilities... (a), way under utilized, and (b), more expensive than it needs to be in terms of utility rate and so on. So on one...we were to force the issue of the parks and rec becoming self sustaining or if we can somehow stop the investment at this point, slow it down, the 410 per recurring services. Is that possible? Can we slow that down, the capital investment to... service activity to maybe marry it up with... ? Because I want to keep more reserve around because I think, especially in my neighborhood, that we're going to have an issue with infrastructure. We're still building to code better than requirement. That's another subject that I want to bring up. Don Ashworth: I'm guessing that that's an area that the city council will probably take a look at during the course of the 1999. You've already identified that there's a fair reserve under 410. You've already stated that certain things like the Lake Ann Park road should maybe be something that would be looked at in 1999 and made a decision as to whether or not to pay for it out of that reserve fund. Mayor Mancino: Yes, and we have asked to pay for it out of the reserve fund. Special City Council Meeting - December 28, 1998 Don Ashworth: And you've already said that, you've recognized that as new properties come on board, they pay into that park fund which has really been set up to insure that as a new neighborhood park is needed in that area, that we have the money to pay for that. It also recognizes that, and as the houses then are built, because I mean you don't get the money until after the house is built and now you put the money in the bank and you've been able to buy and build the park. The houses are already there too to ensure that the operating cost associated with it get paid. My only statement in regards to ours being higher is that I think if you were to look at the out ring communities that are growing, you would find the same kind of phenomenon. Meaning that they are getting dollars in and they are, so that reports shows the capital expense. So as we purchase the neighborhood parks in the past year, that's gone in that report as just a gross amount. One million dollars. Which then when you make a comparison to Chanhassen for 1996 expenses in comparison to let's say Hopkins or Crystal, it looks like we're spending a lot more money. We're really not. Bob Ayot: But there is some advantage to consider how we can slow it down and... Councilman Senn: Well Bob if you look at what we've done with 410 activity this year, it's precisely what you're saying. There's not a lot of new capital investment in it. It's more taking care of existing capital investments that we have. Bob Ayot: Is there much of a penalty fee if we were to maybe... (There was a tape change at this point in the discussion.) Mayor Mancino: Yes. We're starting on that but what I'd like to do is make sure that you are notified when we have those meetings. For you to come and listen with us and comment with us. Okay? So we'd like to have you do that. Thank you. May I suggest that we go ahead and adopt the budget. That we, the tax certification levy be set at the same as last year, which is $6,487,202.00. That there is no increase. Therefore we will raise approximately $128,552.00 with setting up the same and we will use $97,013.00 out of the reserves to fund to balance the budget. Councilman Senn: I would move that we adopt the levy equal to the 1998 amount of levy and authorize a general fund spending budget as presented here with the difference to come out of the 1998 reserves. And not part of that motion but separate from it, the other funds will be acted on or reviewed separately as we get into January then. Mayor Mancino: I'll second that motion. Councilman Senn moved, Mayor Mancino seconded to adopt the 1999 levy to equal the amount of the 1998 levy and authorize a general fund spending budget as presented with the difference to come out of the 1998 reserves. All voted in favor and the motion carried. Mayor Mancino adjourned the meeting at 9:30 a.m. Submitted by Todd Gerhardt Acting City Manager Prepared by Nann Opheim