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Home My WebLink About2014-09-03 PACKET 08.A. REQUEST OF CITY COUNCIL ACTION COUNCIL AGENDA MEETING ITEM #� DATE � • PREPARED BY Finance Robin Roland ORIGINATING DEPARTMENT DEPARTMENT HEAD ***��*��**�**��****�***�********�*******�****** COUNCIL ACTION REQUEST Consider adoption 2015 Preliminary Tax Levy STAFF RECOMMENDATION Adopt resolution 2015 Preliminary Tax Levy BUDGET IMPLICATION BUDGETED AMOUNT ACTUAL AMOUNT ADVISORY COMMISSION ACTION DATE REVIEWED APPROVED DENIED ❑ PLANNING ❑ ❑ ❑ ❑ PUBLIC SAFETY ❑ ❑ ❑ ❑ PUBLIC WORKS ❑ ❑ ❑ ❑ PARKS AND RECREATION ❑ ❑ ❑ ❑ HUMAN SERVICES/RIGHTS_ ❑ ❑ ❑ ❑ ECONOMIC DEV. AUTHORITY ❑ ❑ ❑ ❑ ❑ ❑ ❑ SUPPORTING DOCUMENTS � MEMO/LETTER: � RESOLUTION: ❑ ORDINANCE: ❑ ENGINEERING RECOMMENDATION: ❑ LEGAL RECOMMENDATION: ❑ OTHER: ADMINISTRATORS COMMENTS i ' c� � � � ity Administrator Date �*:�*******�***�***�**�****�*********�*********** H:\Council items\council-action template.docx t�t � �rov� � Pride ar�d PC°�p�rity Nie�t To: Mayor and City Council Members Ryan Schroeder, City Administrator From: Robin Roland, Finance Director Date: August 28, 2014 Subject: Consider adoption: 2015 Preliminary Tax Levy INTRODUCTION The City is required to adopt a preliminary tax levy each year by September 30th. The preliminary levy is used by Washington County to prepare the notices of estimated property taxes that are mailed to property owners in November. The preliminary levy may not be increased but can be reduced prior to December 28' when the final levy is required to be adopted. PROPERTY TAX LEVY The City's tax levy of $12.2 million had remained flat from 2009 through 2013. During this time, debt service was retired on several bond issues and tax levy dollars were redirected to operations and an interfund loan which fmanced the construction of the new Public Safety/City Hall project. The City Council's desire was to `stay the course' during times of declining property valuation while keeping the City's tax rate among the average of peer communities. Although the levy was limited by state statute, the property tax levy increased by 3.74% for 2014 due to increased debt service obligations and an increase in operational support. The increase began to recover expense increases which had averaged 2.5% annually while revenue support remained flat over the previous five year period. - For 2015, the preliminary proposed tax levy is $13,402,100 or 5.5% more than the 20141evy. Levy limits imposed foi� 2014 have expired and there is no levy limit for 2015. Both General Fund revenues and operating expenditures are proposed to increase by 435% for 2015. Adopted Adopted Adopted Proposed Preliminary General Levies 2012 2013 2014 2015 2016 GeneralFund $ 10,929,100 $ 10,867,000 $ 11,265,030 $ 11,915,100 $ 12,842,500 Parlc shelter replacement/Landscape initiative 30,000 Future Municipal buildings � 30,000 Economic development 106,000 108,100 108,100 111,500 111,500 Public Safety/City Hall interfund loan 550,000 500,000 500,000 500,000 - 11,035,100 11,585,100 11,873,130 12,526,600 13,454,000 � Debt Levies � Ice Arena expansion bonds 240,000 240,000 240,000 290,000 290,000 Debt service mitigation 648,205 � All Pavement Mgmt debt 317,945 416,150 586,000 585,500 655,500 Total debt levy 1,206,150 656,150 826,000 875,500 945,500 Total Gross levy 12,241,250 12,241,250 12,699,130 13,402,100 14,399,500 Change in Gross levy 0.00% 0.00% 3.74% 5.54% 7.44% CITY OF COTTAGE GROVE • 12800 Ravine Parkway • Cottage Grove, Minnesota 55016 www.cottage-grove.org • 651-458-2800 • Fax 651-458-2897 • Equa) Opportunity Employer PRELII��TARY TAX RATE The City's estimated tax capacity value will increase by 13.2% in 2015; from $23,990,640 (2014) to $27,099,354. The 5.5% increase in the levy, combined with the valuation increase will result in an expected decrease in the tax extension rate from 43.73% in 2014 to 41.53% in 2015. Tax Extension Rates 46.00 44.80 44.00 41.4 . 42.00 40.00 38.00 . 36.00 34.00 37.93 35.81 35.19 34.64 32.00 30.00 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 7ax Payable Year 2015 OPERATING BUDGETS GeneYal Funcl Currently the general fund budget is in a"balanced state" - revenues equal expenses for 2015 and 2016. The following items are of note: • Char�es for services — both 2015 and 2016 reflect static administration and financing fees for developments due to the anticipated level of development activity. • Intergovernmental — in 2014, the City received Local Government Aid (LGA) for the first time since 2003. The 2015 allocation of $72,500 is an increase of $12,900 over 2014. • Investment earnin s�— Investment earnings have been calculated at 0.75% for 2015 and 2016 to reflect continuing low interest rates. • Cost of Livin� Increases — The budgeted cost of living increase for salaries is 2.5% for 2015 and 2016. • PERA Chan�es - budget amounts include increases in the PERA rates for 2015 for the both the Coordinated plan and the Police and Fire plan. PERA rates are statutorily determined. Current mandated employer contribution rates of 7.25% for those employees in the Coordinated plan will increase to 7.50% in 2015. Adjustments to the Police and Fire plan rates will be as follows: , Employee Employer contribution contribution 2014 10.2% 1530% 2015 10.8% 16.20% This change increases the General fund budget by $41,600 for 2015. • Police Officer / Paramedic Allocation- The allocation of the Police Officer/Paramedic time to the ambulance fund was adjusted to 5% in 2013 and 2014. In 2015 however, police officers are budgeted 100% in the General Fund, with the exception of contractual pay differential, completing the transition to a Firefighter/Paramedic model. • Fuel Allocation- The 2015 budget includes an assumption of $3.60 per gallon for gasoline and diesel. This is an increase from the 2014 budget assumption of $3.50. • Staffin� — No new fiill time staff is proposed for 2015. Increases in part time staffing include a facilities ', coordinator, increased CSO hours in police patrol and animal control and increased clerical hours in public safety. 2016 will include an additional full time Firefighter/Paramedic as included in the EMS transitional plan. • Transfers from Enterprise Funds - The charges to Enterprise funds (water, sewer, storm water and street light utilities) for administrative services were previously reflected in the Charges for Services revenue category. Although categorization has changed, the amount of this revenue source remains constant at $520,710 for 2015. Snecial Revenue Funds Seal Coating Fund An agreement reached with Xcel Energy will cause a decrease in Franchise Fee revenues for the 15 month period October 2014 to December 2015. As a result of this decrease, sealcoating expenditures will need to be curtailed by an estimated 50% in 2015 to assure adequate cash reserves in the fund. Franchise fees will return to pre-October 20141evels for 2016. Ice Arena Revenues are budgeted to increase by 5% in 2015. Expenses include replacement of the furnace and $115,000 for installation of indoor turf in the West rinlc. Rink space with turf would be used to accommodate various groups who might otherwise never utilize the Ice Arena. Cost recovery through increased revenue from these groups is anticipated. Discussions continue regarding funding the replacement of the chiller and over $1.2 million in capital outlay items over the next five years. Recvcling � ° The revenue is the recycling grant amount expected to be received from Washington County. EDA and Economic Develo�ment Trust Funds The EDA property levy increases from the 2014 levy at $108,100 by 3% to $111,500 for 2015. The EDA budget includes a full year of revemie and expenditure impacts of the operation of the Business Enterprise Center (BEC). Golf Course Fund The Golf Course fund became a Special Revenue fund in 2013 in recognition of its on-going need of support fi•om sources other than existing or expected revenues. A detailed business plan for 2015-2019 was adopted which included increases to greens fees for 2014 and 2015 and a plan to update facilities to insure continued ability to compete with similar venues. Capital Proiect Funds Equipment Replacement Fund The budget document includes a five year equipment replacement plan totaling $3.5 Million, along with the funding source. A summary list of purchases by year is included totaling $291,100 for 2015 and $645,000 for 2016. The 2015 equipment purchases include: Squad for canine officer (police) SUV (Fire) Car/Truck/SLTV (engineering) Self-Propelled Asphalt paver (streets) Trailer (streets) Mower 11 ft. rotary (Parks) Utilitv and EnterpPise Funds Storm Water Utilitv Fund The rates are proposed to increase from $50.40 annually to $52.80 (or $0.20 per month) per residential customer for 2015 and to $55.20 for 2016. These increases are necessary to maintain the viability of the fund so the next five years of the storm water utility plan can be financed. Water Fund The 2015 expenses inchide the third year of the water meter replacement program, the painting of the Innsdale 3M gallon water tower and expenses for the 2014 Pavement Management project. Staff is not proposing a rate increase for the Water utility in 2015. However, we are proposing a shift in the tier structure for billing usage as follows: Current Proposed 0 to 15,000 gallons 0 to 10,000 gallons 15,001 to 30,000 gallons 10,001 to 20,000 gallons Over 30,000 gallons Over 20,000 gallons This structure would not have an impact the City's average monthly user, but would encourage conservation of water by increasing the financial impact of water iisage at levels greater than average usage. Sewer Fund Staff is proposing an increase of the Sewer rate as follows: Current Proposed Base $1.65 per inonth $1.75 per month 0 to 30,000 gallons $3.00 per 1,000 gal $3.15 er 1,000 gal Over 30,000 gallons $3.60 per 1,000 gal $3.70 per 1,000 gal Met Council sewer services charges are increasing by 3% for 2015 and a similar increase is budgeted for 2016. The 2015 and 2016 budgets include capital otrtlay items from the respective pavement management projects far those years. Street Li�ht Fund Staff is proposing to increase Street Light fees by 5% annually beginning in 2015 to assure financial resources are available for the replacement of streetlights as part of future pavement management projects. City owned Residential streetlight charges will increase from 2014 rates of $2.45 plus $0.85 per month to the 2015 rate of $2.57 plus $0.89. The 2016 rate will be $2.70 plus $0.94 per month. Ambulance Fund The budgeted 2015 revenue includes an increase of 3% in the rates; the 2016 rates would increase by an additional 3 %. i A change in the staffing strategy which was adopted by the City Council in 2013 will move away from a police/paramedic model and towards a firefighter/paramedic model. Three fiill time firefighter/paramedics were added in 2013 to begin this implementation and two more were added in 2014. Full transition will be completed with an additional firefighter/paramedic in each 2016 and 2017. ACTION REQUESTED Adopt the attached resolution adopting the proposed preliminary 2014 tax levy collectible in 2015. Once the preliminaiy levy is adopted, City staff will certify the amounts to Washington County and the County will prepare the notices to be sent to individual property owners in November. The notices will identify the proposed taxes paid by each property owner based on the property's classification. In addition, the notice will identify the meeting date (Deceinber 3rd) when public coinment on the levy and the budget will be talcen. RESOLUTION NO. 14- ; RESOLUTION ADOPTING THE PROPOSED 2014 TAX LEVY ' COLLECTIBLE IN 2015 I NOW THEREFORE BE IT RESOLVED, the City Council of the City of Cottage Grove, County of Washington, State of Minnesota, that the following amounts are the proposed to be levied for the current year, collectible in 2015, upon the taxable property in the City of Cottage Grove for the following purposes: General Levv General Fund $ 11,915,100 PS/CH interFund loan 500,000 Economic Development 111,500 Subtotal General Levy 12,526,600 Debt Levies Ice Arena Expansion 290,000. Pavement Management - 08 175,000 Pavement Management - 2011 80,500 Pavement Management - 2013 330,000 Subtotal Debt Levy 875,500 Total Property Tax Levy $ 13,402,100 Passed this 3rd day of September 2014. Myron Bailey, Mayor � Attest: ' Caron Stransky, City Clerk