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12-5-11 CC Spec Mtg MinCITY OF SHOREWOOD CITY COUNCIL SPECIAL MEETING MONDAY, DECEMBER 5, 2011 MINUTES CONVENE CITY COUNCIL SPECIAL MEETING 5755 COUNTRY CLUB ROAD COUNCIL CHAMBERS 7:00 P.M. Mayor Lizde called the meeting to order at 7:02 P.M. A. Roll Call Present. Mayor Lizde; Councilmembers Hotvet, Siakel, Woodruff and Zerby; City Administrator Heck; and, Finance Director DeJong Absent: None B. Review Agenda Zerby moved, Woodruff seconded, approving the agenda as presented. Motion passed 510. Mayor Lizde noted two students are present this evening for a Westonka High School assignment. One of them is Deputy Clerk Panchyshyn's son. 2. TRUTH -IN- TAXATION PUBLIC HEARING A. Staff Presentation Mayor Lizde stated this evening Council is seeking resident input on the City's 2012 Proposed General Fund Operating Budget and the 2012 Tax Levy. This is not the forum to discuss the assessor's evaluation of a property for tax purposes. That took place at the Board of Review, which is generally conducted in the spring. Director DeJong stated the there is a legal requirement for the City to hold a Truth -in- Taxation Public Hearing. The requirements are to present the City's 2012 Proposed General Operating Budget and 2012 Tax Levy and to take public comment. DeJong explained there are a number of changes affecting the 2012 'Budget and ultimately taxes. Revenues are budgeted to increase (primarily due to an increase in building permits) and expenses are budgeted to decrease (primarily due to a reduction in personnel expenditures) when compared to the 2011 Budget. The proposed 2012 General Fund Budget anticipates the use of $87,000 in General Fund balance reserves to make revenues and expenditures equal each other. The City's taxable property value decreased 5.1 percent. That decrease is less than most surrounding communities. Unfortunately, that means the City will shoulder a larger portion of the property tax burden for overlapping districts such as Hennepin County. If the property values in the City go down less then those in other communities the City carries a proportionally larger share of the County tax. That also applies to the school districts and other metropolitan wide agencies. There are no levy limits in place for 2012. The City's tax levy has been flat since 2009. SHOREWOOD CITY COUNCIL. SPECIAL MEETING MINUTES December 5, 2011 Page 2 of 4 The City's portion of the property taxes pay for a number of services provided by the City. They include police protection, fire protection, snow plowing, street and parks maintenance, recreation programs, building inspections, and other valuable City services. The City's General Fund expenditures have been declining since 2010.The 2012 General Fund budgeted expenditures total $5,223,830. Of those expenditures 35 percent are for public safety services, 25 percent are for general government services, 18 percent are for public works, 17 percent are for capital transfers and 5 percent are for parks and recreation. The City's General Fund budgeted revenues total $5,223,830. Of those revenues 89 percent are from property taxes, 3 percent are from General Fund balance reserves, 3 percent are from transfers and miscellaneous revenues, 2 percent are from licenses and permits, 1 percent is from charges for services, 1 percent is from fines and forfeitures, and 1 percent is from intergovernmental. DeJong reviewed the tax assessment and levy timeline for residential properly taxes payable in 2012. Iennepin County collected data on property sales from October 1, 2009 — September 30, 2010. The County then reviewed the sales data to determine if a sales transaction should be used when making comparisons. The County then took properties with similar characteristics in the same neighborhood to determine the change in taxable property value. The Board of Review process took place from April 2010 — June 2011. That process equalized values among similar properties, and property owners were provided the opportunity to challenge the assessed value based on comparisons to other similar properties. The Comity then added the property values, the values established in September 2010, for every property in a taxing jurisdiction to determine what the property tax rate needs to be in order to collect the needed revenue for the next year. The tax rate was then applied to each property value and Truth -hr- Taxation notices were then mailed to property owners in November 2011. In 2011 final property tax bills will be mailed to property owners. DeJong then explained the 2011 omnibus tax act established a new property tax program called the homestead market value exclusion (HMVE) and repealed the existing market value homestead credit (MVHC). The repealed MVHC gave homesteads valued below a certain amount tax relief through a state -paid credit. The HMVE provides a tax reduction to all homesteads valued below a certain amount by shifting a portion of the tax burden that would otherwise fall on the homestead to other types of property. The State was supposed to be paying $261 million State wide for the MVHC. That wasn't happening. The State only paid approximately $89 million. Cities, primarily those in the metropolitan area, were not receiving what they were supposed to. hi Hennepin County $65 million in MVHC that should have been paid to cities in the County did not get paid to them. The HMVE reduces the property value shown on the property tax statements. It generally adds about a 1.5 — 2 percent increase from where the tax should have been. The HMVE system is very difficult to explain to property owners. The property value changes in City depend on the location. Lower value properties generally held their value. Non lakefront property values decreased about 2 percent. Lakefront property values decreased approximately 11 percent. Before, lakefront properties held their value. The average City tax impact is as follows. For a property valued at $250,000 in 2011 its value decreased to $221,363 in 2012, and the tax decreased by $8.64. For a property valued at $419,000 in 2011 its value decreased to $350,664 in 2012, and the tax decreased by $16.10. For a property valued at $500,000 in 2011 its value decreased to $474,500 in 2012, and the tax decreased by $0.64. For a property valued at $750,000 in 2011 its value SHOREWOOD CITY COUNCIL SPECIAL MEETING MINUTES December 5, 2011 Page 3 of 4 decreased to $711,750 in 2012, and the tax decreased by $20.15. For a property valued at $1 million in 2011 its value decreased to $949,000 in 2012, and the tax decreased $20.55. The 2012 property tax distribution for a property in the City located within Minnetonka School District 276 is as follows. The distribution is: 36.6 percent to Hennepin County, 34 percent to the school district, 22 percent to the City, and 7.4 percent to other. The 2012 total property tax percent change compared to the 2011 total tax for residential homestead properties in the City based on statistics from the Hennepin County Assessor's Office is as follows. Approximately 38.4 percent of the parcels (879) will see a decrease or no change. Approximately 54.6 percent of the parcels (1250) will see an increase of 0 — 4.9 percent. Approximately 6.7 percent of the parcels (154) will see an increase of more 5 — 5.9 percent. Approximately 0.3 percent of the parcels (8) will see an increase of 10 percent or more. The 2012 total tax dollar change compared to the 2011 total tax dollar is as follows. Approximately 38.4 percent of the parcels (879) will see a decrease or no dollar change. Approximately 25.6 percent of the parcels (588) will see a tax dollar increase of $1— $150. Approximately 19.0 percent of the parcels (435) will see a tax dollar increase of $151 — $300. Approximately 8.0 percent of the parcels (184) will see a tax dollar increase of $301 — $450. Approximately 3.3 percent of the parcels (75) will see a tax dollar increase of $451 — $600. Approximately 1.8 percent of the parcels (40) will see a tax dollar increase of $601 — $750. Approximately 3.9 percent of the parcels (90) will see a tax dollar increase of $751 or more. This concludes Director DeJong's presentation. B. Public Hearing Seeing no residents present at the Public Hearing this evening, Mayor Liz& opened and closed the Public Hearing and Public Testimony portion of the Public Hearing at 7:18 P.M. C. Council Deliberation/Decision to Reconvene Councilmember Zerby stated he is very pleased with the Budget as presented. He expressed his pleasure that the levy has not increased the last three years. Zerby moved, Woodruff seconded, Adopting RESOLUTION NO. 11 -068 "A Resolution Adopting the 2012 General Fund Operating Budget and Approving the 2011 Property Tax Levy Collectible in 2012." Motion passed 510. 3. TREE SALE Administrator Heck explained that Communications and Recycling Coordinator Moore recently found out that the City of Minnetonka conducts a tree sale annually for their residents. The trees are balled and burlapped; they are not bare root. The trees are sold at their wholesale price which ranges from $31 to $74. There are 15 varieties to choose from. Minnetonka sells all of the trees it purchases for sale each year (approximately 1500 of them). The City of Shorewood has an opportunity to participate in the program and offer this to its residents. If the City participates the City of Minnetonka would manage the distribution of the trees to Shorewood residents. Shorewood would accept the orders from its residents and pass those orders on to Minnetonka. Shorewood would have to front the cost of the number of trees it preorders and recover the dollars upon the sale of trees to residents. There is no net cost to the City. SHOREWOOD CITY COUNCIL SPECIAL MEETING MINUTES December 5, 2011 Page 4 of 4 Heck stated if Council chooses to offer this to residents Staff recommends the City order 100 trees for the first trial year. He noted there are a number of diseases affecting the various types of trees planted in the City. In response to a comment from Councilmember Woodruff, Administrator Heck explained the City would preorder a certain number of trees of different varieties offered and it would pay for that preorder. The residents would pay for the trees when they place the order. Councilmember Woodruff stated lie thought this would be a great program to offer residents and he expressed hope that residents would take advantage of it. Woodruff moved, authorizing Staff to preorder 100 trees of various varieties for an amount not to exceed $7400 and directing Staff to work with the local gardeners to offer a program in the spring to educate residents on how to plant the trees before they are delivered. Councilmember Hotvet asked why the City couldn't allow residents to preorder and pay for the trees before the City places its preorder with Minnetonka. Administrator Heck stated that could be considered in 'future years. Zerby seconded the motion. Zerby expressed a little concern about preordering 100 trees. He stated it would be nice to be able to get some idea of how many residents would purchase the trees. Councilmember Siakel stated she thought offering this to the residents would be a good idea. She likes the idea of putting on a tree planting class. Motion passed 5/0. 4. ADJOURN Zerby moved, Woodruff seconded, Adjourning the City Council Special Meeting of December 5, 2011, at 7:27 P.M. Motion passed 510. RESPECTFULLY SUBMITTED Christine Freeman, Recorder ATTEST: cl h6�'- elll� Christine Lizde, Mayor