1e Proposed Property Tax Levies
CITY OF
CHANHASSEN
)0 City Cmter Drivr, PO Box 147
ChanhiIJsen, Minnesota 55317
Phonr 612.937.1900
Gmeral FiIX 612.937.5739
fnginrrring FiIX 612.937.9152
'ublic Saftry FiIX 612.934.2524
U'téb www.ci.chanhtJJsen.mn.us
1£-._
MEMORANDUM
TO:
Mayor
City Council
Scott Botcher, City Manager ~
FROM:
DATE:
September 6, 2000
SUBJ:
Agenda Items
There are just a few items on the agenda for the 11 th on which I would like to offer
some comment.
First, at 5:15 p.m. there will be a brief discussion regarding deferred special
assessments. There have been some internal discussions primarily between the
City Engineer, City Attorney and myself regarding this issue and we would like a
few moments to share with you our discussions so when these issues come
forward and or reach a decision point, you will have this background information
to rely upon. Mr. Knutson will be present at 5: 15 p.m.
Secondly, you need to establish a maximum levy amount and budget for purposes
of the Truth in Taxation publication. You previously were presented with a
budget that increases the general fund levy 3\1,% as you directed in June. There
was some discussion at the last meeting about potentially increasing this amount
to smooth out some levy issues in the years 2002, 2003, and 2004 where some
debt service issues become heightened. Pursuant to your request, the Finance
Director has calculated levy increases and his findings are herein attached for your
review. My expectation this evening is that we will be able to discuss the budget
during the work session and reach some consensus as to whether or not if3\1, % or
higher maximum levy is appropriate and thereafter authorize publication of the
Truth in Taxation Budget in a simple consent agenda action during the Council
meeting. Councilmember Jansen raised an issue at our last work session
regarding utilization of the general fund balance. If one were to agree with Ms.
Jansen's position, there are two primary ways to deal with the concerns. First of
all, the levy could be increased by the general fund balance amount applied.
Secondly, expenditures could be cut by the same amount so no general fund
balances were to be utilized until the year 2001. Obviously, ifthere is some
inclination on the part of the Council to go above the 3 \I, % increase amount for
either debt service purposes or to meet some of the concerns raised by Ms. Jansen,
then they should publish an amount that would allow the Council to do that. If the
Council does not wish to levy anything above 3\1, % regardless then they can so
state and make such a motion as part of the consent agenda motion.
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·r City of ChalllJllSsm. A J(rOwin~ community with clean !czk", Qlldlit¡ schook, a charmin. downtown, thrivin. busin",,,, and beautiM parks, A mat P!cz" to livr, work, and P!cz.
Mayor and City Council
September 6, 2000
Page 2
Again, this is not the approval process for the budget. It is simply a publication establishing
maximum amounts primarily for levy purposes. We still have several months of budget work to
perform.
Finally, under Administrative Presentations I have placed Building Quality Communities'
Initiative. In your packet during the month of August were some pieces of correspondence ITom
the League of Minnesota Cities regarding the Building Quality Communities' Initiative. I will be
asking Council Monday evening for some direction and response to this League correspondence.
Does the Council wish to participate in this initiative? Does the Council wish to participate by
means of a resolution or would Council like to move ahead with something more involved such
as a City Hall Open House or other projects suggested in the League correspondence or
recommended by one of you?
Thank you.
g:\user\scottb\agenda9-11.doc
CITY OF
CHANHASSEN
;10 City Cmter Drive, PO Box 147
ChanhiIJsen, Minnesota 55317
Pholle 612,937.1900
Gmeral FiIX 612.937.5739
ElIgilleerillg FilX612.937.9152
Public Saftty FiIX 612.934.2524
\¥éb www.ci.chanhassen.mn.us
MEMORANDUM
TO:
Mayor
City Council
Bruce M. Dejong, Finance Directortf!i)
FROM:
DATE:
September 6, 2000
SUBJECT:
Proposed Property Tax Levy Certification
When hired, I was charged with making the budget and financial reports presented
to the City Council more understandable. To that end, Scott and I have
consolidated many funds. This brings general government operations and salaries
back into the general fund. The effect is to raise the level of both revenues and
expenditures in the general fund, but the consolidation makes it easier to see what
operations are performed and how much they cost.
During the consolidation, we discovered that the city was not fully funding many
of its operations. As discussed last year, the city paid for various operations out
of Tax Increment Financing (TIF) funds, capital project funds and historic
preservation. This resulted in fund balances and bond proceeds paying for current
operations. That process violates one of the fundamental tenets of governmental
finance - today's taxpayers should pay for today's services.
We also learned through the debt study update that the city has not levied fully for
the bonds that were issued in the past. This caused some of our tax supported
bond funds to have deficits. Lastly, Mr. Ruff, from Ehlers, Inc., discussed the
situation of our downtown TIF district and the debt that we are not allowed to
expend from TIF revenues after April, 200 I according to state law. The debt that
remains after defeasance must be repaid ITom general revenues.
As a result of this exhaustive review, the tax levy proposed to fund our needs
must increase. That is the bad news. However, taxable property value in
Chanhassen is growing dramatically. The estimated total value of property has
grown by 13%. We are proposing to increase the net taxable value even more by
de-certifying the Hennepin County TIF district and putting those properties back
on the general tax roll.
-'he City ofChallhassell, A J(rowill~ commullity with clealllakrs, Quality schook, a charmill.JowlItowlI, thrivill' busillrsses, alld beautifùl Parks. A .reat P!cz" to live. work. ßlId P!cz.
4
Proposed Property Tax Levy Certification
September 6, 2000
Page 2
We have the opportunity, because of this growing value, to increase the tax levy
without increasing the rate. Based on preliminary county assessor data, an
increase of 18.1% in the tax levy could be sustained without changing the tax rate.
This would increase the amount paid by individual property owners, but at a rate
lower than the increase in value.
The total net levy proposed for 2000, collectible in 2001 is $6,937,375. That'total
is approximately 18.1 % higher than the finailevy certified to Carver County in
1999. Since levy limits expired this year, we do not have to concern ourselves
with any actual caps, but an analysis will be enlightening. Last year's overall levy
limit was $5,214,672 for the general fund and SW Metro transit. There was no
levy limit for debt service, but scheduled debt service levies are $2,752,810 for
2001. Together, they total of $7,967,482. The proposed total levy would still be
under the theoretical levy cap by over $1 million!
The 2001 proposed tax levy for the City ofChanhassen supports the preliminary
budget as presented by the City Manager. The net tax levy increases ITom
$4,076,000 to $4,630,000, an increase of 13.6%. A gap of approximately $86,000
between revenues and expenditures exists at this point in the budget cycle, but we
expect to bring it back into balance prior to the final levy approval in December.
This fully funds our existing general fund operations with general fund revenues
and eliminates the gimmicks used in previous years to balance the budget.
The scheduled debt service levies for 2001 are $2,752,810 as originally listed in
our bond indentures. Those levies may be cancelled based on available balances
in the debt service funds. Mr. Ruff has calculated the amount oflevies necessary
to pay all General Obligation (G.O.) debt in a timely marmer and break even at the
end of each bond's term. Based on that, the amount has been reduced to
$1,699,054 as shown in the debt study documents. The total debt service levies
increased 40.3% over the $1,210,618 levied for 2000.
Finally, the Southwest Metro Transit levy is increased 3.5%. That levy goes up
from $587,750 to $608,321.
I believe that this preliminary levy is consistent with City Council direction for
the 2001 budget. If you wish to begin levying an additional amount to smooth the
levy growth rate, an additional 5% on the general fund levy would amount to
$231, 500 which would be used to reduce levies in 2003 and 2004.
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CITY OF CHANHASSEN
CARVER AND HENNEPIN COUNTIES, MINNESOTA
DATE: September 11, 2000
RESOLUTION NO:
MOTION BY:
SECONDED BY:
A RESOLUTION ESTABLISHING PROPOSED TAX LEVIES
FOR 2000, COLLECTIBLE IN 2001
WHEREAS, the State of Minnesota has mandated the Truth in Taxation process
requiring cities to certify a proposed property tax levy by September 15 for the ensuing year tax
collections; and
WHEREAS, the proposed property tax levy must not be increased but may, in fact, be
decreased during the budget preparation and adoption process;
NOW. THEREFORE, BE IT RESOLVED that the City of Chanhassen hereby certifies a
proposed gross property tax levy for collection in 2001 of $7,709,929, reduced by anticipated
Homestead and Agriculture Credit Aid (HACA) of $765,233 producing a net property tax levy for
collection in 2001 of $6,937,375.
Passed and adopted by the Chanhassen City Council this 11th day of September, 2000.
ATTEST:
Scott A. Botcher, City Manager/Clerk
Nancy K. Mancino, Mayor
YES
NO
ABSENT