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CC 2014 12 01 CHANHASSEN CITY COUNCIL SPECIAL MEETING TRUTH-IN-TAXATION HEARING DECEMBER 1, 2014 Mayor Furlong called the meeting to order at 7:05 p.m. The meeting was opened with the Pledge to the Flag. COUNCIL MEMBERS PRESENT: Mayor Furlong, Councilman Laufenburger, Councilwoman Ernst, Councilwoman Tjornhom, and Councilman McDonald COUNCIL MEMBERS ELECT: Elise Ryan and Dan Campion STAFF PRESENT: Todd Gerhardt and Greg Sticha PUBLIC PRESENT: Janet Paulson 7305 Laredo Drive Patricia Deziel 22 Hazelwood Lane PUBLIC MEETING ON THE PROPOSED 2015 BUDGET. Mayor Furlong: Thank you and good evening to everybody here in the council chambers, as well as those watching at home. We’re glad that you joined us this evening. Tonight’s meeting, the only item on our agenda is a public hearing on the proposed 2015 budget tax levy. We’ll start with a staff presentation with some explanations behind the budget process and the current estimates of where it will be and then we will open it up for a public hearing as well so Mr. Sticha do you want to start with a staff report please. Greg Sticha: Absolutely. Thank you Mayor and City Council members. Before we get into the slide show discussing the 2015 budget there’s a couple items I just want to make clear for the audience listening at home and here this evening. Listening at home and in person here this evening. The taxation process begins actually well before this meeting this evening. Step 1 in the process is setting the valuation of properties in the city. That process is done in the spring of the year before the budget and tax levy of the year to be set. So for example for 2015 the basis for property taxes to be paid in 2015 was for valuations that were sent out in February of ’14. All residents should have received a valuation statement from Carver County Assessor’s Office explaining their current valuation of their property and their proposed valuation of their property for taxes payable in 2015. At that point in time they’re given the option to set up a meeting with the assessor’s office to discuss or even possibly appeal the valuation that is set by the Carver County Assessor’s Office. Those meetings take place in, I want to say about mid-April of each year. After that point in time the valuations of the properties are set for taxes payable in 2015 in this example. So I just want to make sure everybody understands how the property tax valuation works and then the City will go through an entire budget process, and we’ll go through that here this evening to set the City’s tax levy for taxes to be paid in 2015. So with that I’ll get into the presentation. So the City’s budget process begins actually in even late June. We have some City Council Truth in Taxation Hearing – December 1, 2014 initial discussions with City Council. In July the department directors here at the City submit budgets to the City Manager and myself. We review those. Make any adjustments. Then in August the City Council has a detailed budget meeting with all the staff at the City to discuss the proposed budget for the upcoming year as well as talk about any other factors impacting the budget for that year. In September of each year the City Council sets a preliminary levy. That preliminary levy is essentially an amount not to exceed. The City Council once they set that preliminary levy they cannot set a final levy greater than that amount. That is the number that is used for the Truth in Taxation statements that go out in the middle of November of each year, which all the residents should have received about a week and a half ago. After setting the preliminary levy, and once more information becomes available to staff and City Council additional meeting discussions regarding the budget are held in October and November. And then this evening we hold a public hearing allowing comment from the public on the proposed preliminary levy that was a part of the Truth in Taxation statements that the residents received. And then next week City Council will pass a final budget and tax levy for taxes payable in 2015. So taking a look at the expenditures of the City’s general fund, this is expenditures in the City’s general fund which is the most significant levy the City has. If you look across the departments and at the bottom line, the recommendation is for a 2.4 percent increase in total expenditures from 2015 to 14. Taking a look at this graph you’ll note the preliminary levy was set with a budgeted general fund expenditure of $10,236,500. Staff’s going to be recommending next week an amount lower than that of $10,164,500. The difference between the $9,928,000 and the $10,164,500 in general fund budgeted expenditures is 2.4 percent. The number you see at the bottom of this slide. Budgeted revenues for 2014 and 15 are on this slide. Taking a look at again a very, in terms of budgeting for governments your expenditures need to balance with your revenues. The City’s revenues again are projected with a 2.4 percent increase based on a staff recommendation for next week’s final levy setting. The budget last year was $9,928,000 and again the final budget recommendation is $10,164,000. The preliminary levy had budgeted revenues at $10,236,500. Taking a look at the expenditure history in the general fund, this graph shows the changes in spending in the general fund from 2006 through even 2015 preliminary and 2015 final budgeted expenditures for the general fund. So what factors changed the budget for 2015 as compared to 2014? The majority of line items remain flat for 2015. Expenditures do increase by the 2.4 percent. There are wage increases included of 3 percent for city employees. We kept budgeted permit revenues the same as 2014 and as City Council is aware but the audience at home is not aware collected receipts of building permit revenue have exceeded the amount that we’ve budgeted each of the last 3 years I believe. Maybe even 4. Health care costs were budgeted originally at 15 percent. After we received bids on the health care contract we actually saw a 6 percent decrease in our health care contract costs. That is the biggest factor helping decrease total expenditures that you saw in the previous slide from the preliminary levy and new growth for taxes payable in 2015 is 1.76 percent, meaning the City of Chanhassen essentially saw new homes, new additions, new businesses of 1.76 percent created in the community for taxes payable in 2015. So taking a look at all the City’s levies, we have them broken down into two categories. Operational and capital levies and then the City’s debt levies. Taking a look at 2014 operational and capital levies of $8,614,000. That number did increase slightly. You’ll notice that there’s now $395,000 levied for the city’s streets. The City’s portion of street reconstructions. That was not as part of the operational levies in 2014. And you’ll notice that was funded because of the reducing and after this year the eventual elimination of the Audubon levy for the reconstruction of Audubon. Total levies, it’s with what was compared to 2 City Council Truth in Taxation Hearing – December 1, 2014 2014 as to staff’s recommended for 2015 is a 1.45 percent increase. Preliminary levy was $10,516,000 which would have been 1.76 percent. The exact amount of new growth which has been consistent with the last several years City Council has set the preliminary at new growth. This slide gets into exactly that. Taking a look at what the new growth in the city is as compared to what the final levy the City has set each of the last several years and you’ll see consistently the City has set, except for the year 2008 the levy at or below new growth and in most cases below the amount of new growth or new homes that the city was experiencing in each of those years. So how does this affect the average home in Chanhassen? The average home in Chanhassen increased in value by approximately 10.5 to 10.9 percent. So when you’re looking at the Truth in Taxation statements the first thing you probably want to take a look at is what happened to the value of your home as compared to the previous year and knowing that the City of Chanhassen had an increase of 10.9 percent, the impact of setting a levy at new growth, which is what the City Council did in September would mean that if you own an average in Chanhassen and your home saw about a 10.9 percent increase in it’s valuation, your city portion of your property taxes should have remained the same as the previous year in 2014. So taking a look at these 5 example parcels, and a really good one is example number 1. Parcel 1. It saw a 10.5 percent increase in it’s valuation and it’s property tax bill was essentially the same as 2014. There are a number of other examples here. Parcel 2 for example saw a higher than average increase in it’s valuation and therefore it also saw a larger increase in it’s property tax bill on the city portion. Had the valuation been closer to the 10 ½ you see in Parcel 1, the city portion of the property tax bill would have been very close to the $892 that it was in the previous year. So where do your taxes go? Your property taxes are essentially four components. The smallest component of which is miscellaneous or other. Those go to the Watershed and the Mosquito Control District I believe and your second smallest portion at 20 percent or just over 20 percent is your city portion of your property tax bill. So 1 out to every 5 property tax dollars goes to the City to maintain your streets for public safety services and all other services that the City offers. 32 percent of your property tax bill goes to the County and 41.6 of your property tax bill goes to the school district. This is an assumption that you live in School District 112. So how does the City compare in terms of budgeted expenditures to its key financial strategy cities? Its other cities it compares itself to. Relatively well and this is taking a look at budgeted 2013 versus 2014. Obviously we don’t have 2015 budgeted expenditures passed for any of the cities yet but taking a look at the history of budget expenditures for the City of Chanhassen we compare very favorably to our comparable cities. In this instance the average budget increased in our KFS cities by 4.72 percent. Going from 13 to 14 and ours increased by 2.17 percent. The City Council has had I would say design strategy to keep budgeted expenditures at or near the budget expenditures from the previous year. You’ll notice some cities on here as high as 12 percent and some as low as minus 3 percent. In some instances these cities tend to take a different approach when setting their budget and levies. They’ll set them as low as possible in some years and then the next year they’ll have to have more significant increases to help fund certain levels of services. The City has taken the approach in the past to have moderate increases rather than fluctuations from year to year. Comparing ourselves to other cities in Carver County, our budget expenditures. This slide shows that the average increase from 13 to 14 was 6 point, almost 7 percent and Chanhassen was 2.1 percent. Per capita spending, taking a look at the populations and then those budget expenditures that you saw in the previous slide. How much does the City of Chanhassen spend per person? Based on budgeted expenditures for 2014 Chanhassen’s per capita spending was $418. The average was $489 based on our comparable cities. And comparing ourselves to 3 City Council Truth in Taxation Hearing – December 1, 2014 Carver County cities, Chanhassen again at the $418 with the average being about $470 per person. Chanhassen’s tax rate. This is the urban tax rate that the City has. Taking a look at all of the Carver County tax rates for taxes payable in 2014, Chanhassen urban tax rate was 27.238. The average for the county was 64.846 and Chaska was 26.586 for tax payable in 2014. So at this point in the budget process after this evening, next week the City Council will have one last final discussion on the budget and levy for 2015 which will obviously impact the taxes paid by residents and businesses for that year so I would be happy to take questions from council now and if the council wants to open the public hearing they could do that as well. Mayor Furlong: Alright, thank you Mr. Sticha. Questions for Mr. Sticha on any of these items. No? Okay. Let’s go ahead and open up the public hearing and invite any interested party to come forward and address the council with their questions. Do you want to flip a coin? Or just come up. Patricia Deziel: I’ll get up there. What the heck. Hi. My name is Patricia Deziel. I live in, at Galpin and 5 at the Autumn Ridge townhouses. Mayor Furlong: And what’s your street address? Patricia Deziel: 2382 Harvest Way. Mayor Furlong: Thank you. Patricia Deziel: Okay. Congratulations Denny to being the future mayor I must say. Councilman Laufenburger: Thank you Pat. Patricia Deziel: I was looking at property tax increases per Carver County, City of Chanhassen and the School District and I’ve always been kind of questioning why you have a proposed tax rate and then when it comes to the real deal its maybe $100-$125 dollars more. That concerns me since I live on social security. There are a lot of people that are living on a fixed income or one income so I’m wondering if $117, of $1,744 dollars I’ll say yahoo because it will be a great decrease to my taxes and so I’m concerned with what goes into that margin. I see that Carver County’s at 95 percent increase. You’re at 96. I would say you get down to 90 and I think the public will be happy. If your percentage could go down to 90. Point 90. Mayor Furlong: And can you help us which document you’re looking at there. Maybe bring it over to Mr. Sticha or Greg, do you want to go over and look at that. Patricia Deziel: Proposed 2015. Mayor Furlong: Okay. Patricia Deziel: Okay. And I did the numbers and I see that Carver County is increased by .9 percent. Your increase by .96 percent. I just think there’s a way to go back and crunch more numbers and come back at .90. 4 City Council Truth in Taxation Hearing – December 1, 2014 Mayor Furlong: Okay. Patricia Deziel: And make it a better deal. Greg Sticha: Her Truth in Taxation statement shows actual decrease on both the city and county portions of her property tax statement so her property taxes are going down. Her valuation did increase by less than the average so that’s. Mayor Furlong: Can you show her on that sheet Greg? If she’s thinking it’s going up. Patricia Deziel: Right here. Greg Sticha: So your valuation went from $120,000 to $127,000. Patricia Deziel: Right. Greg Sticha: So the average went up by 10 ½ percent so on $120,000 that would be about $12,000 so yours only went up $7,600. Therefore you’re paying $13 less in property taxes to the City next year than you were in 2014. Patricia Deziel: Okay if that holds true. I still doubt it. I really do. Greg Sticha: There are usually some small amounts that do get adjusted if there are abatements and other court tax ordered proceedings that take place right now before they set the actual taxes for next year. It is possible each tax statement could be either increased or decreased pretty minimal amounts but. Todd Gerhardt: Less than a dollar. Greg Sticha: Yeah, usually less than a dollar or two but. Patricia Deziel: Well I guess I don’t see it when it comes to my tax payment. I know that you’ve only, you’ve taken a 3.4 percent decrease in the charge taxation and social security comes in at 1.7 percent which is, yours is double but I still think we need to do more. I think we need to be smarter on what we’re paying for. Todd Gerhardt: Okay. It went down. Patricia Deziel: It went down 3.4 percent. Todd Gerhardt: Yeah. Patricia Deziel: But why can’t you do another 1.7 percent to give the homeowners a boost? 5 City Council Truth in Taxation Hearing – December 1, 2014 Todd Gerhardt: Yeah and it will go down a little bit more. We already have had preliminary discussions with council so what you see is the preliminary levy that was certified and our health insurance, we didn’t have that information when we established the preliminary levy so that was a net decrease of about $80,000. We used $40,000 of that $80,000 to get to what the council established as the preliminary levy and then roughly used $32,000 of the other $40,000 to reduce the levy another $32,000. Patricia Deziel: Okay, that’s great. How about wages? That’s always a biggie. You’re getting 3 percent. For god’s sake when I was in Corporate America I got 2.5. I think you’re over rated as far as your 3 percent. I mean if it’s just blatantly 3 percent for everybody that works for you know county or city, that’s a bit much. I think taking it down to 2.5 would make a lot of people happy. Truly. Todd Gerhardt: Okay, thank you. Patricia Deziel: You bet. I guess I have nothing else to say until I see my tax form come through. Mayor Furlong: Okay. Patricia Deziel: Thank you. Mayor Furlong: Thank you. Anyone else that would like to speak? Ms. Paulson? No? Okay. If there’s nobody else here. Okay yeah. I just want to make sure anybody who came for the public hearing had an opportunity to speak and I do appreciate Pat you coming up. Other comments or questions. Councilwoman Ernst. Councilwoman Ernst: Yeah so Greg I have a couple questions. Can you talk a little bit for the public about our surplus and what that amount is. So a surplus basically is what’s left over at the end of the year. What is that amount is right around $400,000 right? Greg Sticha: For 2013, for calendar year and fiscal year end at 2013 the surplus was $417,000. Councilwoman Ernst: Okay. Greg Sticha: The City Council acted on that about a month ago. They took that $417,000. Transferred $150,000 of it to be used for picnic shelters and the remaining three hundred and, or $267,000 to be used to fund the City’s portion of their street reconstruction efforts. Councilwoman Ernst: So that if we look at basically last year’s total tax levy and the difference between last year total tax levy and last year’s general fund, just purely general fund dollars, the difference is roughly about $150,000 difference from last year to the proposed this year in both situations for the total tax levy and just the general fund line item. Greg Sticha: The total levy. 6 City Council Truth in Taxation Hearing – December 1, 2014 Councilwoman Ernst: Right. Greg Sticha: Just general fund. Councilwoman Ernst: Yes. Greg Sticha: The total levy is being proposed by staff to be $148,900 more than the 2014 levy. That number’s not on any of these slides but the total levy of all the levies. Oops, I think it is on my slides. Councilwoman Ernst: Right. Greg Sticha: Right here so if you look at the total levy for 2014 was $10,334,000. Staff’s planning on recommending a total levy for 2015 of $10,484,000 so it’s a hundred and. Councilwoman Ernst: $149,000. Greg Sticha: $149,000. Councilwoman Ernst: Right and then if you take the general fund line item up at the top. No. Yeah, on that same slide. Greg Sticha: Yep. Councilwoman Ernst: So if you look at the 2014 and the 2015, that’s roughly about $149,000- $150,000. Somewhere in there. Just that line item. Greg Sticha: That line item. Councilwoman Ernst: That just turns out that way right? Greg Sticha: Yep. Councilwoman Ernst: So the difference really comes in, the $395,000 for the revolving street cost construction fund, right? That’s the big difference. Greg Sticha: That’s the largest difference in levies from the previous year. Councilwoman Ernst: Right. Greg Sticha: Correct. Councilwoman Ernst: Yeah, okay. And then can you talk about the difference, is it Mrs. Deziel? Councilman Laufenburger: Deziel. Pat Deziel. 7 City Council Truth in Taxation Hearing – December 1, 2014 Councilwoman Ernst: Thank you. Talking about the wage increase. Can you talk about the difference between a 1 percent versus a 2 percent versus a 3 percent and what impact those dollars have on the budget? Greg Sticha: I believe its right around $40,000 per percent. Just over $40,000 per percent change in wages to the general fund. Councilwoman Ernst: Okay. Okay, thank you. Mayor Furlong: On that last item one of the questions was whether everybody gets the same amount or not. Mr. Gerhardt could you speak to our City’s compensation policy with regard to changes, if any and how we do it and then how other cities do it as well. That question was raised. Todd Gerhardt: Yeah. Our compensation is based on a pay for performance system so based on an annual performance review and how the department works on achieving goals. There’s a variety of different areas that are measured and based on that you know an employee, depending on where they are within their midpoint could see anywhere from a zero percent or as high as 5 percent depending on where they are within the midpoint and that’s a tool that’s used in private and public businesses. As people work up, some people call them a step process. We don’t use that. We base it on the employee’s performance and so it’s not an automatic. You have to perform to see a salary increase and even though you may be below the midpoint so. And then we do every 4 to 5 years we analyze our salaries to our comparable cities and see where they fall within the range and then we share that splatter gram. I think we did it last year that showed every employee and where the midpoint was and where employees fell, either above or below that midpoint and so as long as that employee is performing to the standards that we’ve set, they could see an increase. Patricia Deziel: Excuse me. Mayor Furlong: Yes, if you want to come back. Please Ms. Deziel. Patricia Deziel: Hi, Pat Deziel again. Hi. I would like to say that I was friends for years with a city manager for a different city and I know that the wage increases are much higher for government workers based on corporate America so I still say it’s too high. I still say get it done. Todd Gerhardt: Okay. Patricia Deziel: Okay? Todd Gerhardt: Thank you. Mayor Furlong: Thank you. Other questions for staff. 8 City Council Truth in Taxation Hearing – December 1, 2014 Councilman Laufenburger: Mr. Mayor? Mayor Furlong: Yes, Councilman Laufenburger. Councilman Laufenburger: Mr. Sticha you, Councilwoman Ernst pointed out the delta in the total tax levy last year versus this year is just over, let’s say just under $150,000, right? Greg Sticha: Correct. Councilman Laufenburger: I know that in previous discussions we’ve had conversations about the property tax revenue resulting from growth in the city last year over the year prior and that is a percentage of, I think you said is it 1.76 percent? Greg Sticha: The new construction. Councilman Laufenburger: The new construction. Greg Sticha: Or new growth in the city. Councilman Laufenburger: The new growth in the city. Greg Sticha: Was 1.76 percent. Councilman Laufenburger: What does that translate to in real dollars of property tax revenue? Greg Sticha: About $180,000. Councilman Laufenburger: So $180,000 more in property tax revenue from growth and we’re essentially, this is not a completely accurate statement but we’re using $150,000 of that to fund expansion of services for an increased population. Greg Sticha: Correct. Councilman Laufenburger: Okay. So that means $30,000 is not being used and that $30,000 is actually some would argue that that’s being used to reduce the property taxes of the existing residents. Greg Sticha: Based on staff’s recommended levy you see in front of you, the $10,484,021 every homeowner will see a tax bill from the City lower than what they received on their property tax statement. On their Truth in Taxation statement. Councilman Laufenburger: Lower. Lower than what the document that was sent out within the last 2 weeks. Greg Sticha: Correct. 9 City Council Truth in Taxation Hearing – December 1, 2014 Councilman Laufenburger: Irregardless of whatever tax abatement things you were talking about there right? Greg Sticha: Correct. Councilman Laufenburger: Okay. Greg Sticha: And most homes based on the recommended levy, most homes will see, more homes will see a decrease than will see an increase based on the $10,484,021. Mayor Furlong: For the City’s portion. Greg Sticha: For the City’s portion of it’s property taxes. Mayor Furlong: Obviously we have no control over the county or school district or any other districts. Greg Sticha: Correct. Councilman Laufenburger: Right. So notwithstanding what Ms. Deziel said, I think it would be worthwhile for us to look closely when you get your tax statement, let’s compare it to what your preliminary tax statement is and let’s see if in fact it does go down by, well it may go down by a dollar but at least it will go down for the city portion versus what you have on your tax statement right now. Mayor Furlong: Is that preliminary? Councilman Laufenburger: Based on the preliminary, yeah. Todd Gerhardt: Yeah, Patricia I’d really like to kind of go back 5 years maybe and get your phone number and Greg and I give you a call and the County has a great website and you can go back and look at the history of your taxes and kind of show you how the City’s performed for your property over the last 5 years and give you kind of a snapshot of the impacts on that. So I’d love to do that. We love doing numbers. Mayor Furlong: Thank you. Mr. McDonald. Councilman McDonald: Mr. Sticha, I have a question for you. We talk about growth and we’re keeping taxes within that parameter. Can you kind of explain what growth is? Where does it come from? What does it mean? Can you kind of break that down a little bit into a little bit more relatable terms? Greg Sticha: Sure. It’s essentially new homes. Additions to homes. New businesses. New construction. Actual built or constructed new properties within the city of Chanhassen in the past year. And as I think Mayor Furlong and Councilmember Laufenburger pointed out, those 10 City Council Truth in Taxation Hearing – December 1, 2014 are new now services that will be requiring to provide for those newly constructed homes. So they’ll obviously be an increase in costs to provide additional people service. Councilman McDonald: Right so at that point there’s a few extra miles of roads to plow for snow. There’s a few extra miles of pipe to put in for water and sewer. The hookups for all of those but the growth pays for all that. Now when you talk about this the new growth actually subsidizing existing homeowners, that goes back to our previous policies of trying to keep within the growth numbers so that the revenue that we take in from growth would cover services. This year what we’re saying is, and to your point ma’am, we’re getting more efficient in the delivery of services to where we’re now able to take growth and turn that back around and give money back to the homeowners so I think you know you talk about spending money smarter. That’s an example of how we are spending money smarter and we’re very aware of that and we do look for examples and places where we can do that and I think this year what that shows is it is possible to again capture money that the City makes from new houses. New development and actually have the homeowners benefit from that. That was all. That was the only point I wanted to make about growth. Mayor Furlong: And just a, I’m sorry Mr. Gerhardt. Todd Gerhardt: Yeah I just wanted to add, when we talk about new growth, that’s not the inflationary growth. One of the examples I think the homeowner Greg showed had a 15 ½ percent increase in his market value and didn’t do anything new to the home so that’s an inflationary increase so that is, expanded the tax base and the average across the board is 10 percent in Chanhassen. We do not use that as a part of our new growth calculation. New growth is the things that Greg mentioned. New homes that are here. New commercial. Office industrial and any additions that may have been added to a home or a business. And so, and just wanted to also explain how we’re getting more efficient. Before we even got out of the gate we contract with Carver County for our sheriff services and our law enforcement and their increase in that contract was $70,000. Patricia Deziel: I read that. I was kind of surprised by that. My son is a deputy sheriff out in Washington State. I’ll tell him about that. He’ll probably say damn. Councilman Laufenburger: You’d love to have him closer to you, wouldn’t you? Patricia Deziel: I would yeah. But I just see that as a large increase. Are they adding to staff or just increasing wages? Todd Gerhardt: Wages, benefits. Included in that is automobile expense and then overtime. Patricia Deziel: Okay. Is that an estimate or are those given numbers from Carver County? Todd Gerhardt: No, that is the actual contract increase for 2015. Patricia Deziel: Okay. 11 City Council Truth in Taxation Hearing – December 1, 2014 Todd Gerhardt: So, and then we also you know we’re not providing the same services that we did last year. We added 2 new parks to our system. Pioneer Pass and a park down by Reflections off of Lyman so that’s additional parks that we’re going to have to maintain. We added approximately 4.5 miles of new trails. We have 116, no 106 miles of trails and 116 miles of roads so we almost have an equal amount of trails that we have to roads so we’re plowing those trails for the residents to utilize during the winter months and they get used and it’s a great service back to the community but that’s one that we’re expanding on those services when we add additional trails so there’s more hours put in in keeping those trails open and maintaining them. Same thing with the parks. That’s all I have to add. Mayor Furlong: Thank you. Mr. Sticha, could you pull up the graph that shows the total levy versus new growth again? You had that up there. Greg Sticha: This one or this one? Mayor Furlong: That one right there. The other factor that I look at and a couple things to point out. First of all at the far right side of this it shows the 2015 preliminary and the 2015 final and I guess the final is really a recommended at this point. Greg Sticha: Yep. Mayor Furlong: That’s what you’re going to be recommending next week since we haven’t taken action on this. But the preliminary you’ll notice that the preliminary levy was equal to the new growth in the tax base and we just got through talking about that relationship of preliminary levy to the new growth has been consistent at the preliminary levy standpoint for at least the last I think 4 or 5 years perhaps. Actually much longer than that. It’s been a while that we actually looked at it. Probably back in 2008 where it was higher but in each of the last 4 or 5 and now this year as well, the final levy will actually be coming in less than the preliminary levy. We’ve moved it down. Credit to our professional staff and the council working together to try to find ways to reduce that so that’s been a consistent trend of preliminary levy limited to the real growth in the tax base and then a reduction of that levy when we get into December for the final estimate. The real growth doesn’t change. That’s there. That’s been there for the year and that’s there. The other thing I’ll point out with this graph is you notice in each year in which the green bar is lower than the purple bar, and I think there was only one year where it wasn’t back in 2008. What happened in 2008, many people recall is we opened up the new high school and so with that we helped fund a portion of the school’s resource officer through the Carver County Sheriff’s contract there and we also added an investigator on the contract with the sheriff’s office to investigate crimes and so there was an addition of services done in that year but for each and every other year where the real levy, or where the final levy comes in less than the real growth, those are also compounding effects. So the difference between in 2006 of a reduction of almost 1 percent. Point 9 percent relative to the real growth tax base, that’s about a 2.5-2.6 percent difference in the levy in that year and that difference has held out each and every year so it’s really a, every time you can take just a little bit less, which is what we’ve tried to do. Maintain services but not capture even all the real growth in the tax base, let alone the inflationary growth. Every time you can take something less than the real growth, that’s a reduction to the existing taxpayers and that reduction continues each and every year so it’s a compounding effect that 12 City Council Truth in Taxation Hearing – December 1, 2014 adds up and the difference, I didn’t calculate it now with the new one but I know in the prior years it’s adding up to a substantial amount because just a little bit each and every year compounded does make a difference so I wanted to share that. That it’s not just a static but because we do it each and every year that there is that dynamic effect or the compounding going on as well with those savings. Any other questions for staff at this time? Councilwoman Ernst: I had another question Mayor. Mayor Furlong: Sure, Councilwoman Ernst. Councilwoman Ernst: Greg can you remind me what the health insurance going down by 6 percent, right? What is the dollar? Was that $87,000? Greg Sticha: Saved the general fund right around $80,000. Councilwoman Ernst: Okay. And did that money go, is that shown here in the general fund? Greg Sticha: Yep. Councilwoman Ernst: Even in the proposed one line item general fund amount, that is included in there? Greg Sticha: The $80,000. Councilwoman Ernst: The credit. Greg Sticha: Yep. Councilwoman Ernst: Okay. Thank you. Mayor Furlong: Thank you. Any other questions? Yes, please. Patricia Deziel: I’m sorry. Mayor Furlong: Nope, that’s fine. We want to answer your questions. That’s fine. Patricia Deziel: I look at Chanhassen and the cities around it and the businesses that have come into those cities and I see Chanhassen not getting a bite on a lot of that stuff. There’s Waconia is growing. Victoria is growing. Chanhassen, or Chaska since I moved here has grown ten times since I moved here in 1999. I don’t see much of that type of thing happening in Chanhassen. Mayor Furlong: Is there a particular type of business that you’re referring to? Patricia Deziel: I would like to see more general manufacturing for one thing. I would like to see that come in. I would like to see service related industries like another fast food place or 13 City Council Truth in Taxation Hearing – December 1, 2014 what have you but just so that we’re increasing our, you know our desire or our ability to make a business happy to come here. Mayor Furlong: Okay. Okay. There are some things going on right now in the downtown area. As you probably drive down Highway 5, the BP station for example is redeveloped and there’s a new building going in there. There’ll be 3 new businesses. Two new restaurants and another business going in there. The Ivan Sinclair, the Sinclair station over by the McDonalds, that’s been closed now and that, it will be redeveloped as well. That building’s coming down and there’ll be another building going in there with multiple tenants as well. There’s some new building going on in Village on the Ponds. In fact two new buildings. One’s under construction. Another one has been approved. And in the Village on the Ponds, that’s the first time in about 13-14 years perhaps that there’s been any new construction there so we’re starting to see some of that and it’s a market that’s doing that. And that’s in my mind a very positive situation. Overall there’s about 50,000 square feet of new retail taking place in our downtown area. Multiple different projects so it’s not always one big project that you can look at that stands out like maybe Lifetime did when that came in several years back or some of the others. I mean there’s a new building just south of Powers Boulevard. Just south of the railroad tracks. Powers Point that’s coming in. That’s going to be a manufacturing assembly building. About 140,000 square feet with new jobs coming with that soon so there are some things going on but again it’s, it’s a little bit here. Little bit there. It all adds up and all that is part of this new growth that we talk about in addition to the residential but I appreciate your comments and I think that’s something that as a city and a staff we can always look at, is how can we make sure that we are creating an environment where businesses know that they’re welcome and can succeed here in town. We want a strong local economy and I think everybody’s in favor of that and so we’ll continue to look for those opportunities. Patricia Deziel: I have one more question. Mayor Furlong: Certainly. Patricia Deziel: You know a portion of downtown Chanhassen over by the, there’s a strip center that’s not really working well. It’s the one where there’s a dry cleaners and Curves right, okay. And in front of that there are like 4 houses as you drive into Chanhassen off the railroad tracks in making that curve. 4 to 6 houses that really should be torn down in my estimation. th Mayor Furlong: And where’s this, along West 78 Street? Patricia Deziel: Yep. Is there anything that the City can do to either take them down or whatever you do to revamp a city of homes like that? Because I think they’re tearing the city down. I mean they’re bringing the city down. Todd Gerhardt: Yeah, I think those homes are occupied. Patricia Deziel: They are but occupied doesn’t mean it’s pretty and worthwhile. 14 City Council Truth in Taxation Hearing – December 1, 2014 Todd Gerhardt: And council has looked at providing low interest loans for home improvements and at this time the council felt as though private property owners could utilize a variety of private methods. Refinancing their home. Taking out a second mortgage. You really didn’t want to get into short of any code violations in the single family home and but you know giving that homeowner the flexibility and not giving them too much government at their doorstep but making sure that they don’t decrease the neighbor’s property values through code violations. They still have to maintain their home. We make sure that the grass is mowed. That they have paint on their. Patricia Deziel: It’s not happening on the one on the corner. It’s like a 1900’s house. The garbage cans are out front. That’s all you know is when the garbage cans move. I just think something needs to be done with those homes. I know that there was one place on the lake that the City took control of and there’s now a beautiful home on the lake as you go around that corner. So I think there’s things that can be done. Todd Gerhardt: Sure. Mayor Furlong: Alright, great. Thank you. If nobody else will speak tonight, without objection let’s go ahead and close the public hearing and with that, unless there are any other questions at this time we will have, by members of the council for staff, we will be considering adoption of th the final levy and budget for 2015 at our meeting next week on the 8 so, at our regular council meeting. With that, that completes our items of business here this evening so is there a motion to adjourn? Councilwoman Tjornhom moved, Councilman McDonald seconded to adjourn the meeting. All voted in favor and the motion carried unanimously with a vote of 5 to 0. The Truth in Taxation meeting was adjourned at 7:55 p.m. Submitted by Todd Gerhardt City Manager Prepared by Nann Opheim 15