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HomeMy WebLinkAbout11-08-2012 Charter PacketRescheduled Meeting Agenda LINO LAKES CHARTER COMMISSION QUARTERLY MEETING AGENDA Thursday, November 8, 2012 6:30 PM 1. Call to Order and Roll Call 2. Pledge of Allegiance 3. Setting the Agenda: Addition or Deletion of Agenda items 4. Open Mike / Public Comments In Appreciation Certificates / Plaque ■ Jim Drennen 4 years service 5. Minutes: • July 12, 2012 6. Unfinished Business A. Karen Marty Attorney expenses incurred --no new information B. Charter Amendments C. Five Year Plan -Council has not updated nor voted on this for several years 7. New Business A. Next meeting date, Thursday, January 10, 2013 Adjournment Christopher Lyden Chair Caroline Dahl Margaret Penn Vice Chair Secretary Charter Commission July 12, 2012 Page 1 DATE TIME STARTED TIME ENDED MEMBERS PRESENT MEMBERS EXCUSED MEMBERS UNEXCUSED STAFF MEMBERS PRESENT OTHERS PRESENT: DRAFT CITY OF LINO LAKES CHARTER COMMISSION July 12, 2012 6:37 p.m. 8:33 p.m. Bartsch, Bretoi, Dahl, Gunderson, Helgemoe, Lyden Penn, Storberg, Sutherland, Trehus, Turcotte, Williams Aldentaler, Timm, Zastrow None None Council Member Rafferty; Mayor Rafferty (arrived at 7:15 p.m.) CALL TO ORDER AND ROLL CALL Chair Lyden reconvened the meeting of the Lino Lakes Charter Commission at 6:37 pm on July 12, 2012. OPEN MIKE No one was present for open mike. APPROVAL OF AGENDA The presentation of the plaque and Certificate of appreciation to Jim Drennan was removed as Mr. Drennan was unable to be present. An item was added to New Business — Communication for Charter Commission amendment to appear on the November 6, 2012 ballot. MOTION by Commissioner Dahl, seconded by Chair Lyden, to approve the agenda as amended. Motion passes unanimously. APPROVAL OF MINUTES Commissioner Gunderson questioned why the July 8, 2010 minutes were bring brought for approval. Vice Chair Dahl noted that some Commissioners had requested changes, which had been made but that the revise minutes had not been submitted for a vote of approval by the Commission. Commissioner Sutherland commented that since two years have passed it is probably irrelevant at this time to be concerned about corrections. MOTION by Commissioner Sutherland, seconded by Commissioner Gunderson, to approve both sets of minutes from July 8, 2010. 1 Charter Commission July 12, 2012 Page 2 46 Motion passes with Commissioners Bartsch, Helgemoe, and Trehus abstaining 47 MOTION by Commissioner Dahl, seconded by Commissioner Gunderson, to approve the 48 minutes from October 14, 2010. 49 Motion passes with Commissioners Bartsch, and Helgemoe, abstaining 50 MOTION by Commissioner Sutherland, seconded by Commissioner Dahl, to approve the 51 minutes as amended from January 12, 2012. 52 Motion passes with Commissioner Penn abstaining 53 MOTION by Commissioner Sutherland, seconded by Commissioner Turcotte, to approve the 54 minutes as amended from April 12, 2012. 55 Motion passes with Commissioner Penn abstaining 56 MOTION by Commissioner Dahl, seconded by Commissioner Turcotte, to approve the minutes 57 as amended from May 31, 2012. 58 Motion passes with Commissioner Turcotte abstaining 59 60 61 UNFINISHED BUSINESS 62 63 Vice Chair Dahl indicated that Item 6B Charter Amendments on Ballot this fall was placed on 64 the agenda in case there was additional input required. 65 Commissioner Storberg asked if the Commission will be notified if the language proposed by the 66 Commission is going to be changed on the ballot. 67 68 MOTION by Commissioner Sutherland, seconded by Commissioner Bretoi, to have the Chair 69 and Vice Chair follow up on the status of the ballot language for the two proposed Charter 70 Commission amendments. 71 Motion carried unanimously. 72 On Item 6C Council response to Tax Exempt Zones by Ordinance, Vice Chair Dahl commented 73 she had checked with the City Clerk who indicated there had been no response from the Council. 74 75 On Item 6D the Council proposed amendment to Chapter 8 public improvements. An e-mail 76 from the City Clerk was received by the Chair stating there was no support for additions to the 77 Commission budget to provide for a review of the proposed amendments. 78 Considerable discussion ensued with Commissioner Sutherland noting that after listening to a 79 recording of the Council work session she is questioning why the Council appears not to have an 80 accurate picture of the Commission's budget and asked what has been provided to them. 81 Commissioner Trehus noted that the June 24th letter to Council provided the relevant supporting 82 detail. Chair Lyden reminded the Commissioners that it is the Council's prerogative to make 83 funding decisions. 84 Some more recently appointed Commissioners expressed concern about the genuine willingness 85 of the Council to support the work of the Commission through the provision of adequate funding. 86 Several Commissioners with longer service provided their perspective on the work of the 87 Commission and the Commission's challenges in working with the Council 88 2 Charter Commission July 12, 2012 Page 3 89 On item 6D, section 3 on the vehicle for the Commission to provide its concerns and ideas on the 90 Council proposed Charter amendment, Commissioners discussed a variety of options for 91 providing input to the Council. 92 Chair Lyden noted that the choices open to the Commission are to accept, reject or offer a 93 counter amendment which the Commission would have to do without legal advice. 94 95 MOTION by Commissioner Bretoi, seconded by Commissioner Williams, to reject the 96 amendment proposed by the Council. 97 The question was called by Commissioner Williams. Voting on the main motion carried 98 unanimously. 99 The Main motion passed with two Commissioners opposed. 100 101 NEW BUSINESS 102 103 On item 7A Communication from the Commission to the public on the Charter amendments, 104 Commissioner Trehus indicated there was a press release that had been prepared by the Chair 105 that could be used for communication. 106 Commissioner Gunderson expressed interest in exploring the possibility of putting together a 107 LLC to generate funds to provide information to the public regarding the amendments. She also 108 proposed seeking input from the Commission's attorney, Karen Marty regarding actions the 109 Commission could take to inform the public. 110 Vice Chair Dahl commented that Letters to the Editor in the quad press are free and are read by "; 111 citizens. 112 MOTION by Commissioner Bretoi, seconded by Commissioner Storberg, to submit an article for 113 publication in the City fall newsletter, and request that it be printed as submitted. 114 Motion carries unanimously. 115 116 ADJOURN 117 118 MOTION by Commissioner Dahl, seconded by Commissioner Bartsch, to adjourn the meeting at 119 8:33 pm. Motion carried unanimously. 120 121 122 123 Respectfully Submitted, 124 125 Margaret (Marg) Penn 126 Secretary and Commissioner Taxable Market Value Annual % Change City of Lino Lakes Net Tax Capacity Calculation Adopted Adopted 2006 2007 Difference 1,731,811,800 1,928,715,900 196,878,100 12.83% 11.37% Total Net Tax Capacity Value 18,850,702 20,974,940 2,229,841 11.269% Less FD Contribution in Value 1,010,480 1,172,916 129,006 Less Captured Value for Tax Increment 389,386 428,590 114,684 Total Net Tax Capacity Value Annual % Change 17,450, 836 19, 373,434 1,986,151 12.84% 11.02% Net Tax Capacity. Rate Calculation Adopted Adopted 2006 2007 otal Levy 7,976,907 8,456,328 I Less HACA 1 Less FD Distribution * 1 1 Total Net Levy % of increase/(decrease) 758,895 912,521 7,218,012 7,543,807 10.54% 4.51% �ry� _ ,7362✓0��,+;� ;�.�+_�:3�t„�3�9�0` "�'' B-8 City of Lino Lakes Net Tax Capacity Calculation Taxable Market Value* Annual % Change Total Net Tax Capacity Value Less FD Contribution in Value Less Captured Value for Tax Increment * Total Net Tax Capacity Value Annual % Change Total Levy Less FD Distribution * Total Net Levy % of increase/(decrease) Adopted 2007 Adopted 2008 Difference 1 1 1,928,715,900 11.37% 20,974,940 11.269% 1,172,916 428,590 2,020,298,300 19,373,434 11.02% 22,077,339 1,282,019 532,794 20,262,526 Net Tax Capacity Rate Calculation Adopted 2007 8,456,328 912,521 4.59% Preliminary 2008 8,866,956 965,414 1 196, 878,100 1 2,229,841 1 129,006 114,6841 1,986,1511 ,wa 0 ,r wa. Y� i" 7,543,807 4.51% r 9 0 7,901,542 4.74% rr 1® * Estimated for 2006 B-8 '-y. Y•n^2r.�.�,F x._1* } iT4 r,�-y i4ti 14 r�'_. �a 1'r', �-.-.'� ��` Taxable Market Value Annual % Change Total Net Tax Capacity Value Less FD Contribution in Value Less Captured Value for Tax Increment Total Net Tax Capacity Value Annual % Change Total Levy Less FD Distribution Total Net Levy % of increase/(decrease) City of Lino Lakes Net Tax Capacity Calculation Adopted 2007 Adopted 2008 Adopted 2009 Difference 1,928,715,900 11.37% 20,974,940 11.269% 1,172,916 428,590 2,021,961,000 4.83% 22,092,854 1,282, 009 532,660 2,108,241,700 4.27% 23,261,403 1,461,587 642,048 86,280,700 1,168, 549 179,578 109,388 19,373,434 11.02% 20,278,185 21,157,768 4.67% 4.34% Net Tax Capacity Rate Calculation Adopted 2007 8,456, 328 Adopted 2008 8,866,956 Preliminary 2009 9,244, 338 912,521 965,414 1,082,933 879,583 7,543,807 4.51% 7,901,542 4.74% 8,161,405 3.29% B-8 Taxable Market Value Annual % Change Total Net Tax Capacity Value Less FD Contribution in Value Less Captured Value for Tax Increment Total Net Tax Capacity Value Annual % Change Total Levy Less FD Distribution i' Total Net Levy % of increase/(decrease) City of Lino Lakes Net Tax Capacity Calculation Adopted 2008 Adopted 2009 Estimated 2010 Difference 2,021,961,000 4.83% 22,092,854 1,282,009 532,660 2,134,558,200 5.57% 23,196,932 1,461,587 664,119 2,009,657,700 (5.85%) 22,123,270 1,697,800 328,898 (124,900,500) (1,073,662) 236,213 (335,221) 20,278,185 4.67% 21,071,226. 3.91% Net Tax Capacity Rate Calculation Adopted 2008 8,866,956 965,414 Actual 2009 9,244,338 1,082,933 20,096,572 (4.63%) Estimate 2010 8,695,414 1,097,539 7,901,542 4.74% 8,161,405 3.29% 7,597,875 (6.90%) KtT. i gaci� rR01-i r` r c' i' KW, k� . $ S041i .. 8'{�3 .. s`, ° a 3 . °lo'. B-8 (974,654) LINO LAKES CHARTER COMMISSION QUARTERLY MEETING AGENDA Thursday, October 11, 2012 6:30 PM 1. Call to Order and Roll Call 2. Pledge of Allegiance 3. Setting the Agenda: Addition or Deletion of Agenda items 4. Open Mike / Public Comments In Appreciation Certificates / Plaque ■ Jim Drennen 4 years service 5. Minutes: No Report 6. Unfmished Business A. Karen Marty Attorney expenses incurred --no new information B. Charter Amendments C. Five Year Plan -Council has not updated nor voted on this for several years 7. New Business A. Next meeting date, Thursday, January 10, 2013 Adjournment Christopher Lyden Chair Caroline Dahl Margaret Penn Vice Chair Secretary Kennedy c H A R T E R E D Offices in Minneapolis Saint Paul St. Cloud 470 U.S. Bank Plaza 200 South Sixth Street Minneapolis, MN 55402 (612) 337-9300 telephone (612) 337-9310 fax www.kennedy-graven.com Affirmative Action, Equal Opportunity Employer STEPHEN J. BUBUL Direct Dial (612) 337-9228 Email: sbubuh2lkennedv-graven.com July 25, 2012 Mr. Jeff Karlson City Administrator City of Lino Lakes 600 Town Center Parkway Lino Lakes, MN 55014-1182 Re: City Charter Amendment Proposed by Charter Commission Dear Jeff: By email dated January 25, 2012, the Lino Lakes Charter Commission (the "Commission") delivered to the city clerk of the City of Lino Lakes (the "City") a proposal for two amendments to the City Charter. You asked me to review the first of the two amendments, and advise the City Council whether the City is obligated to call an election regarding that amendment. The proposed amendment in full is as follows: Section 7.13. Tax Cap. The City shall be restricted in the amount it can raise taxes each year. The maximum levy shall be calculated in accordance with the provisions of Minn. Stat. §§ 275.70 to 275.74 (2010), as modified below. If the state legislature adopts new levy limits, the City shall be restricted to the lesser of the limits imposed under the laws in 2010, and the new limits. The City's levy for the year 2012 shall be used as the starting point for calculating all subsequent levy adjustments. Any unused levy authority from 2012 or prior years may not be used. Levies imposed on a majority of the property owners in the City for a new special district or utility (such as a storm sewer improvement district, storm sewer utility, or lake improvement district) created after 2011 shall be included in the levy limit. These levies will qualify as "special levies" only if a majority of the City's voters specifically vote to authorize the creation of the special district or utility. Mr. Jeff Karlson July 25, 2012 Page 2 For the purpose of determining the maximum levy, the original net tax capacity shall be used for all property which is both (a) placed in a tax increment financing district after 2011 and (b) being taxed on the basis of its original net tax capacity. The Commission is authorized to propose amendments to the City Charter under Minnesota Statutes, Section 410.12, subdivision 1. Any amendment proposed by the Commission must be submitted at least 17 weeks before the general election. Id. Minnesota Statutes, Section 410.12, subd. 4 provides that amendments so submitted by the Commission "shall be submitted to the qualified voters at a general or special election and published as in the case of the original charter." Section 410.12, subd. 4 goes on to state that "the form of the ballot shall be fixed by the governing body" and that the "statement of the question on the ballot shall be sufficient to identify the amendment clearly and to distinguish the question from very other question on the ballot." While Section 410.12, subd. 4 states the general rule—that charter -commission proposed amendments "shall" be submitted to the voters—Minnesota courts have long held that a city council may refuse to place on the ballot any proposed charter amendment that is manifestly unconstitutional, contravenes public policy of the State, or is preempted by State law. Minneapolis Term Limits Coalition v. Keefe, 535 N.W. 2d 306, 310 (Minn. 1995); Haumant v. Griffin, 699 N.W. 2d 774, 779-81 (Minn. App. 2005) The question is whether the so-called "tax cap" amendment exhibits the deficiencies referenced above. In my view, there is a strong argument that the amendment is unconstitutional and contravenes State public policy for the following reasons. The proposed levy limit is so ambiguous and vague that it is impossible to determine how the limit would be calculated—it simply cannot be implemented without making assumptions and judgments that go beyond the language in the amendment itself. The first problem is that the amendment states the "maximum levy shall be calculated in accordance with the provisions of Minn. Stat., Sections 275.50 to 275.54 (2010)," as modified elsewhere in the amendment. One of the modifications is "the City's levy for year 2012 shall be used as the starting point for calculating all subsequent levy adjustments." It is not possible to reconcile this language with the actual text of Minnesota Statutes, Sections 275.70 to 275.74. Section 275.71, subdivision 5 states the general rule: "For taxes levied in 2008 through 2010, the property tax limit for a local government unit is equal to its adjusted levy limit base determined under subdivision 4," plus any voter approved additional levies, and less state aid under Minnesota Statutes, Section 477A.011 to 477A.014 and certain other aids and adjustments. The "levy limit base" in turn is determined by starting with the "levy aid base" as defined in Section 275.70, subd. 6, 408003v1 LN140-86 Mr. Jeff Karison July 25, 2012 Page 3 which base is further adjusted under Section 275.70, subd. 4 by three factors (growth in implicit price deflator, household growth, and taxable value increase due to new commercial construction). As is evident from this description, the determination of the levy limit is complex in the extreme. In fact, Section 275.74 states that the "commissioner of revenue shall make all necessary calculations for determining levy limits for localgovernments and notify the affected governmental units directly by September 1 of each levy year." But if levy limits under Section 275.70 to 275.74 are not in effect—those provisions expired with taxes levied in 2010 and paid in 2011 the commissioner will not prepare the calculations. The various data that are needed to determine the "levy aid base" and the "levy limit base" may not be available, and in fact the aids may or may not exist, or may be delivered in different ways or under different statutes. Therefore, it is simply not possible to calculate a levy "in accordance with the provisions of Minn. Stat., Sections 275.70 to 275.74" as the amendment purports to require. Moreover, the amendment adds to the confusion by stating that the levy for the year 2012 will be the starting point for calculating all subsequent levy adjustments. Does this mean that one should ignore the definitions of "levy limit base" in the statute altogether? If so, how are levy limits determined "in accordance" with the statute as the amendment directs. And exactly what adjustments are to be made? Does one just use the three factors identified in Section 275.71, subdivision 4? But again, those factors are applied to the "levy limit base," and since it's not clear how the City should calculate that, or whether that term is relevant to the "year 2012" tax levy, it's not clear how those factors should be applied. It is not even clear whether the levy "for the year 2012" refers to taxes levied in 2012 for collection in 2013, or the levy collected in 2012. One assumes the intent was to reference the 2012 levy year, though the levy "for the year 2012" literally seems to mean the year in which the taxes are paid (in Minnesota, taxes are levied in one year, for collection and use in the following year). This adds to the uncertainty in whether the City could ever have confidence that it was determining the levy limit in compliance with the -City Charter. The next paragraph of the amendment introduces even greater problems. This section includes within the levy limit all levies "imposed on a majority of the property owners in the City for a new special district or utility (such as a storm sewer improvement district, storm sewer utility, or lake improvement district) created after 2011 ...." These levies qualify as "special levies" only if the voters authorize the creation of the special district or utility. This provision is flawed in several respects. First is the difficulty of determining when a levy is imposed on the "majority of property owners." Exactly how will that be 408003v1 LNI40-86 Mr. Jeff Karlson July 25, 2012 Page 4 measured? Second is the vagueness of the terms "special district" and "utility," and the lack of guidance as to when those items are considered to be "new." These terms are not defined in State law or elsewhere in the Charter. More importantly, if the City finances a new water or sewer project, is that project a new "utility?" Possibly. If the City finances that improvement through general obligation bonds under Minnesota Statutes, Chapter 444, the City will pledge the City's full faith and credit in case revenues are insufficient. But if these improvements are considered to be a "utility" under this charter provision, any tax levy to pay the bonds would not be a "special levy" and would instead be subject to the Charter's levy limit. In effect, this provision directly contradicts Minnesota Statutes, Chapter 444 and 475, contravening the State public policy that cities may finance utility infrastructure through issuance of general obligation bonds without voter approval, where the bonds are secured in the first instance with utility revenues. Further, the amendment provides a condition that levies for a special district or utility are "special levies" if the voters approved creation of the district or utility. But State law does not generally provide for voter approval of any such utility district, so the amendment seems to be attempting, indirectly, to call for voter approval of something (an undefined utility district) where State law does not authorize voter approval. This further contravenes State law and policy, as it is well-settled law in Minnesota that local governments are not authorized to hold referenda unless expressly authorized to do so. 1 The last paragraph of the amendment is the most problematic of all. It indicates that for the purpose of determining the "maximum levy," the original net tax capacity (a tax increment term) shall be used for all property that is both placed in a tax increment financing district after 2011, and being taxed on the basis of its original tax capacity. However, the original net tax capacity of any property is irrelevant to calculation of levy limits under Minnesota Statutes, Section 275.70 to 275.74. The only meaning of this paragraph that I can discern is that the amendment is attempting to dictate how the levy will be spread. But if so, that effort is clearly preempted by State law; a city charter may not alter the fundamental property tax system. Even taken at face value, the paragraph is incomprehensible, as no property is taxed "on the basis of its original net tax capacity." The tax increment statute has nothing to do with how the property in a tax increment district is taxed—it only affects how the tax dollars are distributed. 1 The existing City Charter requires an election for certain improvements financed in part with special assessments, which is permissible because Minnesota Statutes, Chapter 429 expressly recognizes that a city charter may establish procedures for assessed improvements, and those provisions prevail over state law with limited exceptions. Nothing in Chapter /111 similarly suggests that a charter may impose a referendum requirement in order to establish a sewer, water, or storm sewer utility. 408003v1 LN140-86 Mr. Jeff Karison July 25, 2012 Page 5 Taken together, I believe these flaws reasonably support the conclusion that the proposed amendment is either unconstitutionally vague, or contravenes state public policy in numerous respects, or both. The most instructive case supporting this conclusion is Housing and Redevelopment Authority of Minneapolis v. City of Minneapolis, 198 N.W. 2d 531, 534 (Minn. 1972). That case involved a proposed amendment to the Minneapolis City Charter initiated by petition rather than Charter Commission, but the principles are identical. The amendment included three provisions: an "initiative procedure" whereby citizen petitioners could initiate ordinances; a provision requiring that any action by the City Council was subject to referendum (with a timely petition); and a provision that no urban renewal project may be initiated until a special election is held in the specific area to be redeveloped. The Supreme Court upheld the City Council's decision not to place the amendment on the ballot, specifically referencing the trial court finding that the proposed amendment was "vague, ambiguous, and incapable of implementation." Housing and Redevelopment Authority of Minneapolis, 198 NW. 2d 531, 534. The court noted that the provision requiring a reverse referendum for any city council action might create a chaotic situation in city government, and granted to voters a sweeping authority not authorized under any law. It also noted that the urban renewal vote provision was unconstitutionally vague and also deficient because it confined participation in a referendum to residents of the immediately affected area. While the facts here are not precisely the same, the tax cap amendment is hampered by features similar to those that troubled the court in Housing and Redevelopment Authority of Minneapolis. Like the referenda requirements in that case, the levy limit is vague and effectively impossible to implement, leaving the City no clear legal path to raise its general levy. Likewise, the utility provision is so vague as to be unworkable, and as noted above directly contravenes state law and policy on the financing of utilities, at least to the extent it attempts to authorize elections to establish utilities. Finally, one of the most troubling features of the amendment is the last paragraph dealing with original tax capacity. One might be tempted to simply strike that paragraph, as it seems impossible to reconcile it with the rest of the amendment, or even to give it meaning of any kind. But again the Housing and Redevelopment Authority of Minneapolis case is instructive. One of the three charter proposals in that case had no flaws, and could have gone to the voters on its own. But the court noted it could not read the minds of those who signed the petition, and it was not appropriate for the court to re- write the amendment. Id. at 538. Similarly, here the City Council can't determine the Commission's intent in including the final paragraph, and it is inappropriate for the Council to re -write the Commission's 408003v1 LN 140-86 Mr. Jeff Karison July 25, 2012 Page 6 amendment. Likewise, there is no basis for the Council to reject the troubling third paragraph regarding utilities, or to correct the ambiguities in the just the core first and second paragraphs and submit those items alone. For all of the above reasons, I believe the City Council has a strong claim that it may decline to submit the tax cap amendment to the voters on November 6, 2012. The facts are unusual, and a court could reach a different conclusion, but I believe the trend in case law on this topic is to broaden rather than narrow the scope of the council's right to reject charter amendments. See, e.g. Haumant, 699 N.W. 2d at 780 ("this phrase ['manifestly unconstitutional] has never been interpreted as barring only those proposed amendments that are proved to be unconstitutional beyond a reasonable doubt.") If the Council chooses to submit the tax cap amendment to the voters, I should add that the Council retains the right under Chapter 410 to draft the actual ballot question (as opposed to the text of the amendment itself). The Commission's communication to the Council included ballot language, but the Council has no obligation to use that language. Finally, I have not been asked to review the Commission's second ballot question, so have no comment on that topic. If you have questions about this letter, please let me now. Stephen J. Bub 1 408003v1 LN140-86 Joseph J. Langel Direct Phone: (612) 225-6837 Direct Fax: (612) 225-6860 jjl@ratwiklaw.com John P. Edison jpe@ratwilclaw.com August 1, 2012 Mr, Jeff Karlson City Administrator City of Lino Lakes 600 Town Center Parkway Lino Lakes, MN 55014-1182 st l.- %%f Ratwik, Roszak & Maloney, P.A. RE: Proposed Charter Amendments by Election Our File No. 4021-0081 Dear Mr. Karlson: In recent communications, you asked for an opinion on the following: FACTS On January 25, 2012, the Lino Lakes Charter Commission ("Commission") voted to propose two amendments to the Lino Lakes City Charter ("Charter") for public approval in the November 6, 2012, general election. The Commission approved two amendments and corresponding ballot wording. The first proposed amendment and corresponding ballot wording are as follows: Ballot question: Should the City Charter be amended to adopt ongoing levy limits similar to those formerly provided by state law? Proposed amendment: Section 7.13. Tax Cap. The City shall be restricted in the amount it can raise taxes each year. The maximum levy shall be calculated in accordance with the provisions of Minn. Stat. §§ 275.70 to 275.74 (2010), as modified below. If the state legislature adopts new levy limits, the 730 Second Avenue South, Suite 300, Minneapolis, MN 55402 • p (612) 339-0060 • f (612) 339-0038 • www.ratwiklaw.com Patricia A. Maloney* Terrence J. Foy* Scott T. Anderson Kevin J. Rupp Jay T, Squires*t Ann R. Goering Nancy E. Blumstein* Joseph J. Langel* Michael J. Waldspurger* Margaret A. Skelton Amy E. Mace Eric J. Quiring Erin E. Ische Christian R. Shafer Trevor S. Helmers Tessa S. Kowalski Scott E. Schraut Timothy A. Sullivan John P. Edison Courtney R. Sebo * Also admitted in WI t Real Property Specialist Certified by the MN State Bar Association Paul C. Ratwik (Retired) John M. Roszak (1944 — 2011) Mr. Jeff Karlson August 1, 2012 Page 2 City shall be restricted to the lesser of the limits imposed under the laws in 2010, and the new limits. The City's levy for the year 2012 shall be used as the starting point for calculating all subsequent levy adjustments. Any unused levy authority from 2012 or prior years may not be used. Levies imposed on a majority of the property owners in the City for a new special district or utility (such as a storm sewer improvement district, storm sewer utility, or lake improvement district) created after 2011 shall be included in the levy limit. These levies will qualify as "special levies" only if a majority of the City's voters specifically vote to authorize the creation of the special district or utility. For the purpose of determining the maximum levy, the original net tax capacity shall be used for all property which is both (a) placed in a tax increment financing district after 2011 and (b) being taxed on the basis of its original net tax capacity. The .second proposed amendment and corresponding ballot wording are as follows: Ballot question: Should the City Charter be amended by adding a new Section 1.04, spelling out the duties of the Charter Commission and that its members are appointed by a judge; and a new Section 1.05, requiring all proposed amendments to be submitted to the Charter Commission, and giving the Commission equal opportunity with the City Council to inform the public about amendments? Proposed amendment: Section 1.04, Charter Commission. The City shall have an ongoing Charter Commission with responsibility for maintaining and updating the Charter, and for informing residents of the meaning or impact of the proposed Charter amendments. Members of the Charter Commission shall be appointed by the Chief Judge of the local district court, and shall receive no compensation. Section 1.05. Amendments to this Charter. All proposed amendments to the Charter and corresponding ballot wording shall be submitted to the Charter Commission for review. The City Council may not directly or indirectly use public funds to inform the public about an amendment unless the City Council provides the Charter Commission with equal funds and opportunities to inform the public about the amendment. The City questions the legality of the proposed amendments and requested an opinion as to whether the Council must authorize the proposed amendments to be placed on the November 6, 2012, general election ballot. Mr. Jeff Karlson August 1, 2012 --. Page 3 ISSUES 1. Are the proposed amendments constitutional? 2. If not, is the City Council required to place the proposed amendments on the November 6, 2012, ballot? DISCUSSION As an initial matter, the City's bond counsel, .Stephen Bubul, wrote you a detailed letter in which he determined the proposed "tax cap" amendment is likely unconstitutional and violates public policy of the State of Minnesota. Mr. Bubul then advised you that the City Council may lawfully refuse to submit the proposed amendment to the City's voters. Since Mr. Bubul has already addressed the City's concerns with respect to the first proposed amendment, the discussion in this letter will be limited to the second proposed amendment. I. The City Council's Obligation to Submit a Proposed Charter Amendment to the Voters. The Charter Commission is authorized to propose amendments to the City Charter. Minn. Stat. § 410.12, subd. 1. A proposed amendment must be submitted at least 17 weeks before the general election. Id. Once submitted, the proposed amendment "shall be submitted to the qualified voters at a general or special election and published as in the case of the original charter." Minn. Stat. § 410.12, subd. 4. While "shall" is generally considered mandatory language when used in a statute, Minnesota courts recognize that a city council may refuse to submit a proposed charter amendment to the voters under certain circumstances. These circumstances include situations where a proposed charter amendment is unconstitutional, contravenes public policy, or is preempted by State law. See, e.g., Minneapolis Term Limits Coalition v. Keefe, 535 N.W.2d 306, 310 (Minn. 1995); Haumant v. Griffin, 699 N.W.2d 774, 779-81 (Minn. App_ 2005); Housing andSedeveiopment Authority of Minneapolis v. City of Minneapolis, 198 N.W.2d 531, 536 (Minn. 1972); Davies v. City of Minneapolis, 316 N.W.2d 498, 504 (Minn. 1982) ("When a proposed charter amendment appears manifestly unconstitutional, the City Council must have the authority to avoid what would amount to a futile election and a total waste of taxpayers' money."). The question is whether the second proposed amendment defining the scope of the Charter Commission's authority falls within one or more of those situations. II. The City Council May Lawfully Refuse to Submit the Second Proposed Charter Amendment to the Voters. The second proposed Charter amendment is, in part, an effort by the Commission to expand its own authority. Because the Legislature is constitutionally vested with the authority to provide the framework for creating charter commissions and has enacted Chapter 410 of the Minnesota Statutes in Mr. Jeff Karlson August 1, 2012 Page 4 furtherance of its authority, the Charter Commission may not propose an amendment that expands its authority beyond what is granted in Chapter 410. Doing so would violate both the Minnesota Constitution and public policy related to the role of the legislature in defining the duties of the Commission. Minnesota's Constitution authorizes local units of government to adopt a home rule charter for their government. Minn. Const. art. XII, § 4. In order to allow for the creation of charters, the Constitution directs the legislature to provide a statutory framework for the formation and duties of charter commissions. Minn. Const. art. XII, § 5 ("The legislature shall provide by law for charter commissions"). The phrase the "legislature shall provide by law for charter commissions" leaves no room for a charter commission to define its own duties. A core principle of constitutional interpretation is the notion that "[e]very positive delegation of power to one officer or department implies a negation of its exercise by any other officer, department or person. If it did not, the whole constitutional fabric might be undermined and destroyed." Leighton v. Abell, 31 N.W.2d 646, 653 (Minn. 1948) (citation omitted). While there is no reported Minnesota case directly addressing this issue, case law in other jurisdictions recognize that charter commissions derive their authority solely from applicable state constitutional provisions and legislative enactments. See, e.g., Milne v. Hutchenreider, 2008 WL 4739779 *5 (Mass. Super. 2008). This conclusion is consistent with the recognized limitations on authority of local units of government, such as cities. Minnesota's Constitution authorizes the legislature to create and define the duties of local government units, and the legislature has done so. Minn. Const. art. XII, § 3. Minnesota courts routinely recognize that the scope of a local government unit's authority is limited to those powers expressly conferred by statute or implied as necessary in aid of those expressly conferred powers. See, e.g., Calm Waters, LLC v. Kanabec County Bd. Of Com'rs, 756 N.W.2d 716, 721 (Minn. 2008). A city may not engage in conduct that is not so authorized. A charter commission, with its similar constitutional and statutory grants of authority, is similarly limited.- It may only engage in conduct that is authorized by statute. For the reasons outlined below, the proposed amendment adding new Sections 1.04 and 1.05 -to the Charter is unconstitutional, violates public policy, and is partially preempted by State law because itseeksto expand the authority of the Commission -beyond what has-been granted by the legislature in Chapter 410. The Commission's general purpose is limited to framing and amending the Charter. Minn. Stat. § 410.05. Starting with the proposed Section 1.04, the proposed language is problematic for two primary reasons. First, the language purports to authorize an "ongoing Charter Commission." This vague language implies that the Commission will exist in perpetuity, which would violate the statutory provisions authorizing the discharge of charter commissions. Minn. Stat. § 410.05. A commission can discharge itself or voters can discharge it in a referendum. Id at subd. 5. A charter provision may not abrogate the statutory rights of the either the Commission or voters to discharge the Commission. Mr. Jeff Karlson August 1, 2012 Page 5 Second, the phrase indicating that one of the Commission's duties is "informing residents of the meaning or impact of the proposed Charter amendments" is an unlawful expansion of the duties of the Commission. As discussed in Michael Dougherty's 2009 memorandum to the City, the Commission does not have authority to produce and distribute educational materials. Cities and school districts have implied authority to create factual materials for dissemination to the public, but that authority is derived from express statutory responsibilities to manage and control public property, public employees, or public business. Abrahamson v. St. Louis County School District, 802 N.W.2d 393, 402-3 (Minn. App. 2011). The Charter Commission does not have similar responsibilities, so no authority for informing the public can be implied. See November 4, 2005 letter from the State Auditor to Eagan City Administrator Thomas L. Hedges (Outlining State Auditor's position that Eagan Charter Commission "lacked authority to produce and distribute even an educational flyer."). Indeed, the Charter itself indicates that it the City Council's role to inform the public. Charter § 12.12. The proposed amendment language for Section 1.04 is inconsistent with the Commission's limited statutory authority. Turning to the language of the proposed Section 1.05, the requirement that 141 proposed amendments to the Charter and corresponding ballot questions shall be submitted to the Charter Commission for review" is an unconstitutional expansion of power. The Charter Commission has no authority to review a Charter amendment proposed by petition of City voters. Minn. Stat. § 410.12, subd. 1; see also Op. Atty. Gen. 58c (July 5, 1968) ("where the proposed charter amendment is made by a petition of the voters, the charter commission has no power to inquire into the validity of the petition itself and shall propose the amendment"). The legislature disallowed such review when a citizen petition is involved. Likewise, the Commission lacks statutory authority to draft and review the ballot question related to a proposed Charter amendment. By statute, the Council is expressly vested with the authority to draft such ballot questions. Minn. Stat. § 410.12, subd. 4. The Commission cannot seek to amend the Charter in a manner that flatly contradicts state law. The second half of the proposed Section 1.05 regarding the use of public money to inform voters -is also an attempt to instill the Charter Commission with authority not granted by the legislature. As discussed above, the Commission cannot seek to grant itself authority to create informational materials. Such an expansion of power would be_unconstitutional. Likewise, the Commission- cannot acquire the authority to insist that the City provide "equal funds and opportunities" for such purposes. The City's obligation to provide funds to the Commission is outlined in Minnesota Statutes section 410.06. This obligation is essentially limited to providing reasonable and necessary funding for (1) the employment of an attorney or other person to assist with the process of framing or revising the Charter, (2) the cost to print the Charter or a revision, or (3) certain administrative expenses incurred for the purpose of framing or amending the Charter, such as a reasonable and necessary room rental fee. Minn. Stat. § 410.06. Nothing in this statute deals with funding informational campaigns. Moreover, the City's obligation to provide funding is capped at $1,500 per year unless the City Council elects to authorize additional funding on its own initiative. Id. Mr. Jeff Karison August 1, 2012 Page 6 The fact that the Commission has no authority to direct the City Council to pay expenses related to informing the public is underscored by a failed bid to amend Section 410.06 during the last legislative session. H.F. 2107, 87th Leg. (Minn. 2012). The proposed amendment would have required cities to pay the costs incurred by charter commissions for informing the public of the effect of a proposed charter amendment. Id. The funding authority obviously does not exist if there was an attempt to change the law to allow it and the attempt failed. In addition, there is at least one District Court case supporting the notion that the City is not required to provide funding to the Commission for the purpose of informing the public. In 2008, a Dakota County Judge ruled that the expenditure of $1,200 by the Eagan Charter Commission to create a website for the purpose of informing the public of the purpose and mission of the Commission was not an expense incurred for the purpose of framing a charter and was not a necessary expense for the framing of a charter. Fedde v. City of Eagan, Court File No. 19-C9-08-12422 (May 8, 2008 Findings of Fact, Conclusions of Law, Order, and Order for Judgment)). The Commission cannot acquire authority by Charter amendment when such authority has been denied by the legislature. Lastly, the proposed requirement that the City provide "equal funds and opportunities" to the Charter Commission to inform the public about an amendment violates public policy because it implies an adversarial relationship between the Council and the Commission. It is elementary that neither the Council nor the Commission may spend public funds for the purpose of advocating a particular position on a proposed Charter amendment. Essentially, the proposed amendment would either waste taxpayer money by duplicating efforts to provide factual information to the public or it would have the effect of authorizing the Commission to violate the law by advocating a particular position on a proposed Charter amendment. CONCLUSION In the aggregate, the deficiencies and ambiguities in the proposed new Sections 1.04 and 1.05 render thesecondproposed Charter amendment an unconstitutional infringement on the legislature's authority to define the duties of charter commissions. The amendment is preempted by Chapter 410. Accordingly, the City may decline to submit the amendments -to voters during the November 6, 2012. Very trulyours, C seph J. L'angel John P. Edison Enclosure JJL/jpe RRM: 166596