Loading...
11-23-15 CC WS MinCITY OF SHOREWOOD CITY COUNCIL WORK SESSION MONDAY, NOVEMBER 23, 2015 MINUTES 1. CONVENE CITY COUNCIL WORK SESSION 5755 COUNTRY CLUB ROAD COUNCIL CHAMBERS 6:30 P.M. Mayor Zerby called the meeting to order at 6 :30 P.M. A. Roll Call Present. Mayor Zerby; Councilmembers Labadie, Siakel, Sundberg, and Woodruff; Administrator Joynes; City Clerk Panchyshyn; Finance Director DeJong; and Director of Public Works Brown Absent: None B. Review Agenda Sundberg moved, Labadie seconded, approving the agenda as presented. Motion passed 510. 2. 2016 GENERAL FUND BUDGET REVIEW Administrator Joynes stated the purpose of this work session was to review the information that would be presented during the December 7, 2015, Truth -in- Taxation hearing about the 2016 General Fund Budget. The format is very similar to that used in past years. He noted Council will be asked to approve the Capital Improvement Program (CIP) and the Enterprise Funds during its December 14 meeting. Director DeJong noted that the 2016 General Fund Budget he was going to highlight is the same preliminary budget that was adopted during Council's September 14, 2015, meeting. DeJong highlighted certain aspects of the Budget. The Budget reflects a 3 percent increase in the tax levy when compared to 2015. Based on recently released information from the Minnesota Department of Revenue, the average tax levy for the cities around Lake Minnetonka and next to Shorewood in Carver County the average increase is 4.8 percent. The Budget includes a 2.5 percent increase in wages and benefits for non - union personnel. The wage increase for Public Works employees union represented by AFSCME (American Federation of State, County and Municipal Employees) Local 224 is 2 percent per the contract negotiated for 2015 and 2016. The increase in the City's insurance contribution has not been determined yet. There is a $30,000 increase in the transfer to the CIP — $15,000 to the Equipment Replacement Fund and $15,000 to the Street Reconstruction Fund. Those are needed to try to balance the Funds out over a number of years. It includes a $42,000 transfer to the Park Capital Improvement Fund and a $70,000 transfer to subsidize Southshore Center operations; they are the same as in 2015. Mayor Zerby stated Council agreed to the preliminary certification of a 3 percent tax levy increase with the understanding that it would likely want the final levy to be less than that and that it would be accomplished by using more of the General Fund reserves. CITY OF SHOREWOOD WORK SESSION MEETING MINUTES November 23, 2015 Page 2 of 4 Director DeJong explained the proposed 2016 budget reflects the use of $180,148 in reserves. About $50,000 of that is for one -time expenditures — succession planning, training and position evaluations. If the levy were to be reduced the budget deficit would be increased and therefore the use of reserves would be higher. For the past four years the budget reflected that reserves would have to be used to offset deficits in the budget. There was only one year where the year ended with a budget deficit; it was about $30,000. He then explained the adopted 2015 Budget anticipated the need to use $142,178 from reserves. He anticipates 2015 would end would with an approximate $50,000 deficit. Director DeJong highlighted some of the PowerPoint slides that will be part of the presentation during the December 7 Truth -in- Taxation hearing. ➢ The General Fund funds services in the areas of police protection, fire protection, snow plowing, street maintenance, parks and recreation, building inspections, and other City services (e.g., administration, finance, planning and zoning, and elections). ➢ 2016 budget assumptions used are: ■ A 3 percent levy increase over 2015 for general operations. ■ A new full -time city administrator partially offset by a reduction in contract services. Other staffing levels remain the same from 2014. ■ A 2.5 increase in salaries and benefits for non - union personnel. ■ A $50,000 budget for succession planning, a compensation study and transition costs. ■ There is a $1.5,000 transfer increase to both the Equipment Replacement Fund and Street Reconstruction Fund. ■ The budget anticipates the use of $184,148 to balance the budget; up from $142,178 for 2015. ■ The budget includes $40,000 for forester / arborist services; the same as in 2015. ➢ The General Fund reserves were $4,085,471 at the end of 2014. The planned use of reserves for 2015 is $50,000. Therefore, the reserves are estimated to be $4,035,471 in reserves at the end of 2015. The proposed 2016 expenditures are $5,857,081. That means the anticipated 2015 year -end reserves would be 68.9 percent. The City's General Fund Balance Policy stipulates a reserve level of 55 — 60 percent of the next year's operating expenditures. Sixty percent of the 2016 expenditures would be $3,514,252. The anticipated 2015 year -end balance of $4,035,471 minus $3,514,252 leaves $521,219 in excess reserves. For 2015 the budget anticipates the use of $180,148 in reserves. That leaves an undesignated balance of $341,071 above the 60 percent that could be available for use. ➢ He displayed graphs showing: transfers and expenditures for 2007 — 2015; the breakout of the proposed 2016 expenditures by broad categories; revenues for 2007 — 2015; and, the breakout of the anticipated 2016 revenues by broad categories (86.7 percent comes from taxes). ➢ The tax assessment and levy timeline for residential property taxes payable in 2016 began when Hennepin County started to collect data on property sales from October 1, 2013 — September 30, 2014, The County then reviewed the sales data to determine if a sales transaction should be used when making comparisons. The Board of Review process to hear appeals took place from April — June 2015. 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 City certified its maximum 2016 tax levy of 3 percent for 2016 with Hennepin County in September 2015. The levy cannot be increased after that; it can be decreased. The County mailed out Truth -in- Taxation notices to property owners in November 2015. They reflect a 3 percent levy increase for the City tax. The Truth -in- Taxation hearing is scheduled for December 7, 2015. In 2016 final property tax bills will be mailed to property owners. ➢ The 2015 preliminary property tax distribution for a property in the City located within Minnetonka School District 276 was: 35.2 percent to the school district, 35.1 percent to CITE' OIL SHOREWOOD WORK SESSION MEETING MINUTES November 23, 2015 Page 3 of 4 Hennepin County, 22.5 percent to the City, and 7.2 percent to other smaller taxing jurisdictions. It is based on a home in the District valued at $360,000. ➢ The 2016 total preliminary property tax percent change compared to the 2015 total tax for residential homestead properties in the City based on statistics from the Hennepin County Assessor's Office is as follows. Approximately 57.0 percent of the parcels (13 87) will not see an increase. Approximately 21.1 percent of toe parcels (514) will see an increase of $0 — $300. Approximately 13.6 percent of the parcels (332) will see an increase of $301 — $600. Approximately 5.3 percent of the parcels (130) will see an increase $601 — $900. Approximately 3.0 percent of the parcels (71) will see an increase of more than $900. The recent referendum passed by the voters in the Minnetonka School District is not reflected in this change information. ➢ A lot of new development in the City could ultimately result in lower property taxes. ➢ The properties in the City experienced an average increase in value of 4.5 percent. That increase was about 1.5 years ago. The average City tax impact is as follows. For a property valued at $250,000 in 2015 its value increased to $261,250 for 2016, and the tax increased by $25. For a property valued at $375,000 in 2015 its value increased to $399,750 for 2016, and the tax increased by $38. For a property valued at $500,000 in 2015 its value increased to $533,000 for 2016, and the tax increased by $61. For a property valued at $750,000 in 2015 its value increased to $799,500 for 2016, and the tax increased by $88. For a property valued at $1 million in 2015 its value increased to $1,066,000 for 2016, and the tax increased $116. That will be different depending on the individual property value. ➢ There are three tax relief programs available through Hennepin County and the State. There is a homestead credit refund which is based on income and taxes paid. That refund is available if taxes exceed 2 percent of income for households with income up to $65,409 and 2.5 percent for those over $65,409 and below $105,500. There is a special property tax refund available if taxes increase more than 12 percent and the increase is over $100. There is a renter's refund for those with household income of $57,169 or less. Councilmember Siakel noted when the School District referendum is factored in it is possible that most property owners will experience a tax increase. Councilmember Woodruff explained he thought that Mayor Zerby questioning the need for a 3 percent increase in the levy was valid for two reasons. The City usually budgets for higher expenditures and lower revenues resulting in a smaller deficit. Based on history he thought there is little risk that all of the $180,149 reserves budgeted will be needed to balance the budget. If the levy increase was reduced to 2 percent taking an additional $59,000 out of the excess reserves would not be a problem. He noted that he supports reducing the levy increase to 2 percent. Councilmember Siakel stated she thought the scenario has been the same for the last three or four years with regard to the levy. She noted she has always supported taxing for what is needed. She asked if there is a specific need for the additional reserves besides reducing the levy increase by 1 percent. Administrator Joynes stated it is difficult to predict what it will cost to resolve the Southshore Center ownership issue or what capital improvements are needed for it. Councilmember Woodruff stated if there were excess funds he would increase the transfer to the Street Reconstruction Fund and advance some of the road projects a little bit. He did not think anyone would complain about that. Councilmember Siakel stated especially if it dealt with the roadways near the former Minnetonka Country Club property. CITY OF SHOREWOOD WORK SESSION MEETING MINUTES November 23, 2015 Page 4 of 4 Mayor Zerby encouraged Council to be somewhat cautious about doing that because there is still a desire to construct unfunded trails. Councilmember Woodruff stated Council has the latitude to decide to use additional reserves to fund an unplanned project in 2016 as long as the reserves remain within the range specified in the General Fund Balance Policy. Councilmember Siakel stated the Policy allows the reserves to go as low as 55 percent. She noted that she also supports reducing the levy increase to 2 percent. Councilmember Sundberg asked if during the Truth -in- Taxation hearings residents say how they would like to spend the levy. Mayor Zerby noted they usually don't want their money spent at all. Councilmember Woodruff stated he has been through eight of the hearings. Mayor Zerby stated he has been through 13. Woodruff stated that no one attended several of the hearings he attended and one or two people attended several of them to talk about their property valuation. He thought there were two or three hearings where someone questioned the spending. If people do complain most of the time it is about spending for other entities like the county; not the City. Sundberg stated she does not hear residents complain about the City not doing something other than roadway improvements. Councilmember Siakel stated the decision to reduce the levy increase does not have to be made this evening. Councilmember Woodruff reiterated he would support reducing the levy increase to 2 percent. Mayor Zerby concurred. Mayor Zerby noted Council cannot take action during a work session and stated he thought staff has direction to reduce the levy increase to 2 percent. Administrator Joynes stated staff will prepare two resolutions and Council can choose which it would like on December 7. 3. ADJOURN Woodruff moved, Siakel seconded, Adjourning the City Council Work Session of November 23, 2015, at 7:01 P.M. Motion passed 510. RESPECTFULLY SUBMITTED, Christine Freeman, Recorder ATTEST: Jean Panchyshyn, City Clerk