HomeMy WebLinkAboutAgenda Packets - 2004/08/23 (2)
CITY OF MOUNDS VIEW
SPECIAL CITY COUNCIL WORK SESSION AGENDA
August 23, 2004
6:00 p.m.
ROLL CALL: Linke, Quick, Marty, Stigney, Gunn
PUBLIC COMMENT
Citizens may speak to issues not on tonight’s agenda. Before speaking, please give your full
name and address for the minutes. Also, please limit your comments to three minutes.
Agenda Items Discussed by Consensus
_______ 1. Budget
Next Council Work Session: Tuesday, September 7, 2004
Next City Council Meeting: Monday, September 13, 2004
Item No. 1
Meeting Date: August 23, 2004
Type of Business: Work Session
City Administrator Review: ______
City of Mounds View Staff Report
To: Honorable Mayor and City Council
From: Charles Hansen, Finance Director
Item Title/Subject: General Fund Budget
After discussing some alternatives for reducing services at the August 9th work-session,
the City Council reached a consensus that no drastic changes should be made to the
delivery of city services. If the initial draft of the budget is balanced solely by means of
a property tax increase, the levy will be placed at about $3,839,000, or a 27.5%
increase over the 2004 levy.
Several ideas are still under investigation. Some of these are discussed below. Others
will be reported on at the September 7, 2004 work-session.
Selective De-certification of Parcels from the TIF Districts
Background:
The City of Mounds View has three Tax Increment Financing (TIF) Districts that were
created in the late 1980s. District 1 is required to de-certify no later than December 31,
2013. District 2 is required to de-certify no later than December 31, 2015. District 3 is
required to de-certify no later than December 31, 2014.
All three districts have experienced financial stress due to changes in the property tax
system by the State of Minnesota during the 1990s that reduced TIF revenues. These
stresses eased in the last couple of years as obligations of the districts were satisfied
and surplus revenues became available to pay back internal loans to other city funds.
TIF District 1 should be close to breaking even at the end of 2004 with internal loans
mostly or entirely paid back, but little or no cash on hand. Districts 2 and 3 should end
2004 with modest cash balances.
Important obligations of Districts 1, 2, and 3 are also close to being satisfied. The TIF
bonds, series 1996A and 1996 B will make their final principal and interest payments on
February 1, 2005. The TIF districts will make their final transfers to the debt service
funds on December 31, 2004.
After that, the only remaining obligations of the TIF Districts will be some developer pay-
as-you-go agreements, operating costs of the EDA, TIF bonds, series 2001A and any
new projects the City Council may approve. New projects could include Highway 10
revitalization, blighted housing removal, or support of new commercial development.
Options:
Staff discussion gravitated toward investigating a 10% reduction in the total value of
property in the TIF districts. It was thought that this would be large enough to have a
measurable impact on the property tax rate while preserving enough value in TIF to
handle any likely future project.
The question can be re-examined a year from now and further reductions made if the
TIF districts are found to have more resources than needed. However, if too much is
taken out of the TIF districts now, it can’t be added back later.
The City’s total taxable market value for pay 2004 is $698,253,600. Of this,
$111,656,700 is captured in the TIF districts. Reducing TIF by 10% requires finding
parcels in the TIF districts with taxable market value of $11,165,670 and de-certifying
them so they are placed back on the general tax rolls.
In selecting parcels to de-certify, we thought we should preserve in the TIF districts
parcels that either front on Highway 10 or have the most potential for redevelopment.
Parcels that are away from highway 10 or have recently been fully developed are
candidates for de-certification.
A further consideration is that Ramsey County assesses administrative fees on the TIF
districts. It is an equal fixed fee on each property identification number (PIN) of
properties in the district regardless of the value of the property. So a small property
pays the same administrative fee as a huge property.
These administrative fees are a small consideration in the overall scheme of things, but
we want to reduce them while we have the change. This leads us to select PINs with
the smallest individual values.
Selection:
Based upon the criteria listed above, a set of properties was selected for consideration.
These include the Realife Coop condominiums, the Mounds View Animal Hospital, the
Minnesota Institute of Public Health, the Holiday Station, and seven single family homes
in the 7700 blocks of Groveland Avenue and Silver Lake Road.
The Mounds View Animal Hospital, Minnesota Institute of Public Health, and Holiday
Station all are properties that front on Highway 10. But they all are fairly new structures
that are unlikely to redevelop during the remaining lives of the TIF districts and they
don’t receive and developer pay-as-you-go payments or other current benefits from TIF.
The Realife Coop is mostly on property that is behind properties that face highway 10
and it is also a relatively new structure that is unlikely to redevelop during the remaining
life of its TIF district. Although it is one parcel, it has 74 PINS with small individual
values.
The seven single family homes in the 7700 blocks of Groveland Avenue and Silver Lake
Road are away from Highway 10 and don’t appear likely to attract a development that
would require TIF participation. They also have low value per PIN when compared to
the commercial properties that are being retained in the TIF districts.
Impact:
This group of properties has a total taxable market value for pay 2004 of $10,733,100.
That is 9.6% of the pay 2004 taxable market value in TIF. The TIF districts are
expected to collect $2,242,808 of increment in 2004. If the de-certification had been in
place for 2004, the $215,310 of that would have gone to the general tax rolls instead.
The impact would have similar to the following:
District: Tax Rate % of Total Collections MV Share MV Benefit
City 42.548 34.122% $73,468 100.00% $73,468
County 53.135 42.612% $91,748 1.89% $1,734
ISD 621 21.843 17.517% $37,716 10.60% $3,988
Other 7.169 5.749% $12,378 1.00% $124
Total 124.695 100.000% $215,310 $79,314
So if the de-certification had been in place for taxes payable in 2004, $215,310 of
captured TIF revenue instead would have been available to the general property tax
roles and $79,314 of that would have benefited Mounds View tax payers by increasing
the base upon which the taxes are spread.
It is reasonable to assume that the impact for taxes payable in 2005 will be similar.
Balancing draft #1 of the budget entirely with a tax increase results in a levy of
$3,838,715, or $827,966 more than the 2004 levy of $3,010,749. De-certifying this
group of properties would allow them to shoulder about 10% of the increase rather than
passing it onto the taxpayers who are outside of the TIF districts.
If the City Council is in favor of this approach, staff can investigate the required actions
and bring them back at a regular meeting for City Council action.
Memberships:
Another area that often generates discussion during budget is memberships. The detail
of all memberships is listed in the first draft presented on August 2nd and will be
presented again at the work-session on September 7th. Memberships provide access to
research done by the associations and staff training at reduced cost. Memberships are
also an important means of networking with other cities, improving cooperation between
cities, and the sharing of ideas and information.
I am currently focusing on item that will have a significant impact on the budget. A list of
General Fund memberships costing at least $250 each is provided below.
Department Group Annual Cost Notes
City Council N. Metro Mayors $3,300 Other half in EDA
City Administrator ICMA $650
Central Services RCCLLG $750
Central Services League of MN Cities $8,292
Community Dev. Amer. Planning Assoc. (2) $450
Police POST Licenses (9) $900
Parks MN Recreation & Park Ass. $400
Public Works Admin APWA $490
Public Works Admin MN Coop Purchasing $500
Public Works Admin MN Safety Council $275
Snow & Ice Control APWA $400
Referendum Questions on the November Election Ballot
There has been some discussion of putting questions on the election ballot for a
decision directly by the voters. This would be similar to last year when the voters were
asked to decide the question of adding two police officers to the department.
Ramsey County has set a September 9, 2004 deadline for submission of any questions
to appear on this November’s general election ballot. To meet this deadline, a
consensus would need to be reached regarding the question and work completed on its
exact wording.
Questions from prior meetings:
Recreation profits:
At the last meeting, the City Council asked how surpluses on the recreation programs
are shared between the City and the YMCA. According to the contract, Article IV.B, the
first $25,000 of surplus (in 1999, adjusted for inflation) will be paid to the City to assist in
funding the building reserve fund and support recreation program costs paid by the City.
Any surplus in excess of $25,000 will be split equally between the City and the YMCA.
County & School tax increases:
Ramsey County has a preliminary budget that calls for their property tax levy to
increase 5%, from $193,300,000 in 2004 to $202,900,000 in 2005.
Mounds View School District 621 hasn’t unveiled their proposed 2005 budget and isn’t
willing to comment on their proposed property tax levy.
Respectfully Submitted,
Charles Hansen