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Springsted August 31, 2011 Jeff Karlson, City Administrator Al Rolek, Director of Finance City of Lino Lakes 600 Town Center Parkway Lino Lakes, MN 55014 Re: Proposed Tax Cap Amendment Springsted Incorporated 380 Jackson Street, Suite 300 Saint Paul, MN 55101 -2887 Tel: 651 - 223 -3000 Fax: 651 - 223 -3002 www.springsted.com I have reviewed the proposed "Amendment to Our Charter" for Chapters 1 and 7, dated July 29, 2011. The following comments pertain to the impact these amendments would have on the City of Lino Lakes. Charter restrictions place additional restraints on local governments beyond those required by federal and state law, and our concern would be financial restraints that impair the City's ability to finance ongoing operations, to comply with debt obligations, and to meet capital and infrastructure maintenance needs. It appears that the Chapter 1 proposed amendment addresses the Charter Commission's role in maintaining and updating the Charter. We have no particular comment on this section as it does not directly impact the three areas of concern noted above. Chapter 7, Section 7.13, Tax Cap Amendment The proposed amendment raises several concerns that should be considered by the City Council. 1) The City of Lino Lakes has minimized increases for several years in response to the recession and declining property values. The empty chair at the reception counter is one of many notable reductions. Using the 2011 actual levy as the starting point, as proposed in paragraph 2, will restrict the City to a base year levy that was developed during the recession and may not be sustainable over time, even with implicit price inflators. 2) The third paragraph includes levies for storm sewer districts, storm sewer utilities, or lake improvements as part of this levy limit. These special districts are usually funded by special assessments or fees as opposed to general tax levies. How or if a levy limit can be calculated is not clear. It is also unclear whether these districts can be added even if they do not levy or use special assessments. Public Sector Advisors