HomeMy WebLinkAbout2012/10/15 - ADMIN - Minutes - City Council - Study Session Jfl St. Louis Park OFFICIAL MINUTES
MINNESOTA CITY COUNCIL SPECIAL STUDY SESSION
ST. LOUIS PARK, MINNESOTA
OCTOBER 15, 2012
The meeting convened at 6:03 p.m.
Councilmembers present: Mayor Jeff Jacobs, Steve Hallfin, Julia Ross, Susan Sanger, Sue
Santa, and Jake Spano.
Councilmembers absent: Anne Mavity.
Staff present: City Manager (Mr. Harmening), Deputy City Manager/Director of Human
Resources (Ms. Deno), City Assessor (Mr. Bultema), Commercial Appraiser (Ms. Nathanson),
Controller (Mr. Swanson), Finance Supervisor (Mr. Heintz), Director of Public Works (Mr.
Rardin), Utilities Superintendent(Mr. Anderson), and Recording Secretary(Ms. Hughes).
1. Fiscal Disparities Overview and Information
Mr. Harmening presented the staff report.
Mr. Bultema explained that the Fiscal Disparities program was designed to even out the fiscal
capacities of communities in the seven county metro area. He stated that 40% of the growth in
the commercial-industrial tax base flows into the fiscal disparities pool and the average tax
capacity for all jurisdictions is calculated with tax capacity adjusted by contribution and
distribution of the pool. He indicated St. Louis Park is a net contributor to the pool and for every
dollar the City put into the pool for taxes payable in 2012 and 2013, it received $.63, noting that
County-wide the average is approximately $.75. He stated that Brooklyn Park has a similar total
valuation which, translated to tax capacity is a little lower than the City but because Brooklyn
Park has a much larger population it receives $1.73 because in terms of fiscal capacities,
Brooklyn Park is much poorer than St. Louis Park. He stated the Fiscal Disparities program is
generally a revenue sharing program and the City closely tracks the program due to its impact on
the City's budget. He stated the Tischler report which studied the Fiscal Disparities program
indicates that St. Louis Park pays 4.3% higher in taxes because that money is going to other
jurisdictions to offset their property deficits.
Councilmember Santa requested further information regarding the impact of fiscal disparities on
the City, noting that the City was hit hard a couple of years ago.
Mr. Bultema explained that the City's pre-1979 TIF districts which are accommodated in the
fiscal disparities calculations were coming back on-line for tax capacity; in addition, the City had
the West End development coming fully on-line and at that time most jurisdictions in the metro
area were decreasing in value whereas the City's value increased because of this new
construction which caused a 125% shift in the City's net flows.
Mr. Harmening indicated that he and Mr. Swanson participated in a workgroup for metro cities
regarding changes to the fiscal disparities law and discussion items included earlier distribution
of information from the County, changing the base year, and prospectively excluding tax
increment districts from having to contribute to the fiscal disparities pool, e.g., West End. He
stated the fiscal disparities for West End are being paid from within the district which means in
effect that district has less tax capacity and the City is not enjoying the benefits of tax capacity
from that property because 40%of its value goes into the pool. He added it is highly unlikely the
City will see any changes to the fiscal disparities law that impacts how cities enjoy it today
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particularly the net recipients and any change in the law has to be prospective with cities held
harmless for what they receive today.
Councilmember Sanger stated the City has to pay more for the infrastructure for its commercial
and industrial properties yet the City does not get any credits in the formula to cover those costs.
She requested information regarding the impact of a city's population on the fiscal disparities
pool.
Mr. Bultema advised that flow into the pool is 40% of growth and tax capacity while flow out of
the pool is based on per capita. He stated that St. Louis Park has a population of 45,000 whereas
Brooklyn Park is 2.5 times larger geographically with a population of 75,000 so even though the
cities have similar market values and tax capacities, Brooklyn Park is much less fiscally capable.
Mr. Harmening stated the City is sharing value as a net contributor so when the City matches its
property tax levy against its value, the City's value is lower because of fiscal disparities, which
means the City's tax rate goes up slightly and everyone in the City has to pay a little more. He
added that the City feels it is better to be a net contributor than to be a net recipient because it
means the City has a strong commercial-industrial tax base, which brings jobs and economic
vitality to the City.
2. 2013 Budget Discussion
Mr. Harmening presented the staff report.
Mr. Swanson reviewed the budget analysis snapshot for years 2011-2013 and assumptions used
for preparing the 2013 budget, noting that the General Fund and Park and Recreation Funds
show a balanced budget for 2013. He stated the 2013 budget does not use any fund balances and
includes elimination of transfers from the Housing Rehab Fund to the General Fund of$99,000
as well as unwinding of the police and fire pension transfer of$134,000 and unwinding of the
Cable TV transfer of$25,000. He indicated that funds for the community survey are included in
the Development Fund and any additional expenditure for Council-driven environmental
programs would come from the Solid Waste Fund. He added the 2013 budget shows an overall
4.0% levy adjustment as adopted by Council in September and a 4.0% levy adjustment provides
discretionary funds for other opportunities or as a buffer for unforeseen issues. He pointed out
the 2013 budget is also balanced with a 2.88% levy adjustment but would contain no
discretionary funds.
Councilmember Santa requested confirmation that a 4.0% levy increase will help project the City
into the future on a more solid basis.
Mr. Swanson stated that this was correct and added that a 4.0% levy increase provides
approximately $265,000 in discretionary funds and if Council chooses not to use these
discretionary funds, the final levy could be set at 2.88% to achieve a balanced budget.
Councilmember Sanger asked if the budget includes funds either within the discretionary amount
or elsewhere for things like consultant services related to the DEIS or the civic center project as
well as the sidewalks and trails project.
Mr. Harmening advised that expenses associated with the DEIS will come out of the
Development Fund and funds have been included in that budget. He stated that the sidewalks
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and trails project is being handled as a capital project not funded out of the General Fund and
extra levy dollars could be used to fund additional staff needed to maintain the sidewalks and
trails. He agreed to verify that sufficient funds for the civic facility are included in the budget.
He stated that the City will expend capital costs beyond 2013 particularly related to the
sidewalks and trails project or civic facility project and Council could use part or all of the
$265,000 set aside in the levy base.
Mr. Swanson reviewed the residential estimated City share of property taxes based on a 4.0%
levy increase and a 2.88% levy increase and noted there would not be a significant reduction in
the City share of property taxes between a 4.0% levy increase and a 2.88% levy increase.
Water Availability Charge(WAC)
Mr. Heintz advised that the City's infrastructure for water is paid for by existing customers
through the City's utility rates and when adding a large amount of hookups, the current capacity
is being taxed and if this continues the City will need to expand its capacity. He stated the
proposed WAC fee of$750 would be charged to new residential developments starting January
1, 2013, and would be tied to the SAC charge calculation.
Mr. Harmening pointed out that the WAC fee would not be charged in a situation where a home
was torn down and a new home built. He added that in a situation like the Eliot School site,
there would be some credits on the property because of the existing use, which would be
subtracted from the total WAC charge.
Councilmember Sanger expressed support for the WAC charge and asked why the City was
limiting the charge only to water, stating there are other one-time capital costs with a new
development such as sanitary sewers and water mains.
Mr. Harmening indicated street and sewer costs are built into the cost by the developer and it is
common for a developer to pay those costs. He added that some cities charge impact fees noting
there have been some legal challenges to those charges and agreed to have the City Attorney
provide background information to Council regarding the City's ability to charge an impact fee.
Mr. Anderson stated that the City's infrastructure for sewer is in place now and all necessary
repair and upgrading is done through the operating budget and incorporated into the sewer rates.
Mr. Swanson advised that the Water Fund needs assistance and the WAC charge is one way to
achieve long term sustainability in the fund and create a sense of fairness.
It was the consensus of the City Council to set the 2013 Final Property Tax Levy at $24,712,941
or approximately 4.0% over the 2012 Final Property Tax Levy. It was also the consensus of the
City Council to move forward with the WAC charge.
The meeting adjourned at 6:55 p.m.
Written Reports provided and documented for recording purposes only:
3. Minnehaha Creek Remeander and Trail—Progress Update
Mr. Harmening indicated the remeander project is currently out for bids and the project will be
done this winter and next spring. He stated the Watershed Distnct wants to partner with the City
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on the construction of the trails and bndge and those improvements are in the City's proposed
sidewalks and trails plan, adding that this would be the time for the City to build these
improvements but the City does not currently have the money available. He stated the
Watershed District has indicated it is willing to front the cost and the City would work out a
payment plan with the Watershed District if acceptable to Council.
It was the consensus of the City Council to direct the City Manager to partner with the
Watershed District on the construction of the trails and bridge as part of the remeander project
and to work out a payment plan with the Watershed ID ist` tnc for th ompletion of this work.
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Nancy Stroth, City Clerk Jeff Jac s, ayoi•