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4 Debt Study Presentation CITY OF CHANHASSEN 690 City Center Drive, PO Box 147 ChdnhflSsen, Minnesotd 55317 Phone 612.9311900 General Fax 612.9375739 Engineering Fax 612.9379152 Public Safety Fax 612.934.2524 \¥íb www.cÎ.chtlnhassen.mn.us MEMORANDUM TO: Mayor City Council Bruce M. Dejong, Finance Director @ April 27,2000 L. The City ofChanhassen. A ?Towinr community with clean lakes. rmalitl' schools, a chol1ninf downtown, thrivinr businesses, and beautiful parks. A '11m! P/fl({' to Ihle, work, and plav. FROM: DATE: SUBJECT: Debt Study The attached information from Mark Ruff and Brian Shannon of Ehlers, Inc. summarizes the position of the debt service funds that the city has open at this time. The individual fund cash balances are subject to change throughout the audit process, but the information enclosed provides an accurate picture of the total debt position of the city of Chanhassen. Mr. Ruff and Mr. Shannon will be present on Monday evening to discuss the information and its implications regarding future tax levies for debt service. attachments APR. 27. 2000 8: 47AM EHLERS & ASSOC. NO. 0321 P. 2/5 . EHLERS & ASSOCIATES IHC prelimÎnaly Findings Debt Study: Special Assessment Bonds & Tax Supported Bonds May I, 2000 o City has committed a variety of sources to repay its special assessment bonds including tax increment, property tax .evies, "excess tax increment" úom the county and city from TIF District No. I and special assessments. q When special assessment bonds are approved, the resolution must contain an expected level of special assessments, other revelIue, and a tax levy to moet 105% of debt service. Based upon the resolutions' debt service levies, Exhibit A demonstrates thc dcbt levies. The debt levies can be reduced or expanded by resolution of the City Council. o In reality, many of tile City's assessment funds have too few or too many income sources. Exhibit B contains thc projected ending balances of each debt service fund based upon assessment income and property tax levies in the resolutions. o The reasons for the variation in ending balance could involve a number of factors including miscoding of assessment projects to bond funds, reduction in tax increment income, and changes in deferrals of assessments. DOne of the factors is the dedication of "excess taX increments" from District No. I from 2001 to 2003. Under an agreement with Carver County, the City and the County will dedicate their portion of tax increment not needed for pre-I 990 debt to two debt service funds related to City/County road projects. Given class rate reductions, it appears that the excess tax increment will be less than anticipated and therefore, assessment funds may have lower ending balances than expected. We also need 10 confirm the County's ability to pledge the excess tax increments given levy limits. o For taxes payable in 2004, the City's tax base will increase dramatically as District No. I is decertified. The increase will not be $1 for $1 due to the fiscal disparities impact, but it is expected that at least $1.0 to $1.2 million in extra taxes will be available for debt service. o Given the larger than cxpected negative balances in assessment funds, we are recommending a revised 1evy schedule found in Exhibit C. The levy schedule should result in a relatively flat tax rate, with reasonable projections for tax base increases. Even though the debt levy increases substantially in 2004, the tax base will also increase dramatically. Tbe total City tax rate should remain the same úom 2003 to 2004, with a potential steep drop in 2005. o All recommendations are preliminary and subject to further confirmation with the City staff and auditors. The taX levies do not include potential City exposure for G.O. Tax Increment Bonds, to be further researched. ~\ lEADERS IN PUBliC FINANCE [Qual Oøøorlunlty Employer , 'hlretl f¡l emb~r of Ih N,IIlIIIII.1 ASHltt.IIOII 01 fftdeøendent PUOIIC Flnançç Advi:¡tln ....... --.-. 3060 CenHI! Pcinte Drive, Rosel/fUe. MN 55113-110S 651.697.8500 fill 651.691.8555 'Nww.ehlers·inc.C:Offl APR. 27. 2000 8:47AM EHLERS & ASSOC. NO. 0321 P. 3/5 0 """ 0 N m 0 0 N 00 0 0 N 0 r--. 0 CD 0 .- N > CD (D ..J 0 .... 0 .c N CD C It) 0 C 0 0 '" .- .... 'V := - 0 0 0 tI) N CD 0::: (Y) 0 <C 0 N .... - .c N .- 0 .: 0 >< N W ..- 0 0 N 0 0 0 N 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 ó ó 0 0 0 0 0 0 0 0 1.0_ 0_ I.rt q 1.0 (Y) N N ..... ..- APR. 27. 2000 8:47AM U) CD U C CG - CG m ." c .- ~ c W ~ CD ... U CD .õ' ... Q. m ... .- ,g .- .c >< W o 8 ò o q (\') EHLERS & ASSOC. o o 0_ o o q ('\ - o o o o o o ~ - - o o o Ò o o (II) - - o o o o o o N - o o o o o o ~ NO. 0321 P. 4/5 - o o o ci o o ::!. 6'ð,! ð'L c9ð,! ð',L ~ð,! ~ð'L (2 .s.: ð'L í9ð,! Ù IS',L ~ð,! ~iS'L ~ð,! ð'L ~ð,! 6-: ð',L :6ð,! ù is'L í!'ð.! ~ð'L ð,! ~ ð',L ~ð,! þ.. is'L Lð,! ~ ð',L Vð,! .s.: is',L c9ð,! ð'L ~ 6'6' ù '.L ð'cQ cQ ð'L 196' '.L APR. 27. 2000 8:47AM EHLERS & ASSOC. NO. 0321 P. 5/5 I I 0 I ...... I 0 , N ! I (7) , 0 I 0 N , , CO I I 0 0 I N .s l"- I ¡;, I 0 I 0 N '1:J I C j CD ns 0 i 0 >. , N > I j , Il') I 0 I 0 '1:J I N CD ! t) I ~ 0 CD I 0 ..... I N e , , ('f') 0.. I 0 0 0 , N - I .- N .Q I 0 .- .c 0 >C I N W i ...... ! 0 0 ¡ N ! 0 ~--- 0 0 N 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Il') 0 Il') 0 it) 0 1.0 ri' ri' Ñ Ñ ...... ...... "'&' "",.. Ii? í ~~~~~P c _ " . "i 'I It I:: H U :>. 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