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HomeMy WebLinkAbout04.09.12 Work Session Minutes City Council Workshop Minutes April 9,2012 Mayor Larson called the workshop to order at 6:31 p.m. Present: Larson,Bartholomay,Donnelly, Fogarty,May(arrived 6:40 p.m.) Also Present: David McKnight, City Administrator;Teresa Walters,Finance Director;Randy Distad, Parks and Recreation Director;Cynthia Muller,Executive Assistant Shelly Eldridge,Ehlers&Associates;Parks and Recreation Commission members Dave McMillen,Dawn Johnson,Mike Haley,Randy Oswald MOTION by Fogarty, second by Donnelly to approve the agenda. APIF,MOTION CARRIED. Fiscal Disparities Discussion Ms. Shelly Eldridge, Ehlers&Associates,gave a history of fiscal disparities,how they are calculated,how they affect the City's tax rate, and their purpose. Fiscal disparities is a tax base sharing program that redistributes a portion of the growth in commercial/industrial property throughout the seven county metro area. The base year for fiscal disparities is 1971 which is when the law was passed. So 40%of the growth from 1971 is what is captured into the contribution. Every community in the region shares a portion of their commercial/industrial growth since 1971. It goes into the area wide pool,then it is redistributed according to a formula to each of the taxing jurisdictions. The purposes of fiscal disparities were to give the less affluent communities resources to attract business,to reduce the competition between communities,to support regional projects,provide assistance to older communities, gives a community incentive to keep open spaces,reduces urban sprawl and promote orderly regional development. The calculation is accomplished through a series of tables. Calculations are based on prior year's values, so for payable 2012 we are using market value of 2010 for taxes payable in 2011. The contribution starts with the county taking all the commercial/industrial value from the prior year, take out any tax adjustment or abatement, calculates the 40%and they send that information to the administrative county auditor who calculates it and that becomes the basis for the contribution pool. The contribution of the pool is value. Distribution from the pool comes out as dollars. Fiscal disparities is based on the City. Farmington's fiscal disparity contribution to the pool was$1,050,763. This is what all the commercial/industrial properties together pay to the pool. The distribution formulas have been set since 1977. Distribution is a two step process. The distribution value for the municipality is determined. This value times the prior year tax rate determines the dollars that will be certified to the pool. Fiscal capacity is indicated market value divided by the municipality's population as determined by the Met Council. Farmington 16 Council Workshop Minutes April 9,2012 Page 2 received a distribution value of 3,617,714 for 2012. Farmington received$2,016,261 in distribution dollars. The distribution dollars received from the pool will change depending on the size of the pool,the percentage of the pool to be received, and the City's prior year's tax rate. Ms.Eldridge presented a table showing the distribution value and dollars for Farmington from 2001 —2012. Each county auditor submits the distribution levy to Anoka County,who compiles the levies and calculates the tax rate. For 2012,the area wide tax rate that gets applied to the 40%that went into the pool is 142%. This includes city, county, school and all special taxing districts. The City's tax rate is calculated by taking the City's total value which is reduced by the contribution value. The City's total levy is reduced by the distribution dollars. Therefore, for 2012 the City's tax rate is 63.093%. On the tax statements there is a line for commercial/industrial for area wide taxes. When property taxes are paid,half of that amount will go to the pool and the rest gets distributed to the county,city, school. Each parcel gets a sharing factor. The county takes the total pool value,divides it by the total commercial/industrial tax capacity in the City and comes up with a sharing factor. That is the number that attributes each individual parcel to the pool. If fiscal disparities went away,the tax rate would go up 9.25%and would impact every property. So without fiscal disparities, Farmington's tax rate for 2012 would be 72.344%rather than 63.093%. Mayor Larson asked about the county building in Vermillion River Crossing and how does that building affect fiscal disparities for the commercial/industrial businesses. Ms. Eldridge stated it is tax exempt so it is not included in the contribution, and it is not included in fiscal capacity. If it was not tax exempt the value would be added to both the calculation for the fiscal capacity and the calculations for the contribution, so 40%would go towards the fiscal disparities pool. There is no impact on the fiscal disparities calculation for tax exempt properties. If a resident were to ask about fiscal disparities, Ms. Eldridge suggested explaining that Farmington is a net gainer from the tax. The City would be worse off without it. Budgeting is a policy decision and you need to determine your goal. Some communities have a goal of keeping the levy stable, some want the tax rate down, some say this is what we need to operate and the tax rate will be what it will be. Fiscal disparities may not be the tool to use to become more competitive with other cities. Parks and Recreation Commission a. Empire Ballfield Complex Proposal The ballfield complex in Empire Township is up and they expect to be open in 2013. The fields are built for adult softball. The commission met with the Empire Park and Recreation Commission last November to discuss the ballfield complex. During the discussion the City asked if Empire would be open to the City running the complex which includes running adult softball leagues, other programs, maintenance. Empire was open to receiving a proposal. A draft proposal was presented to the Council for their comments. The proposal includes qualifications,programming proposal, operation and maintenance proposal, scheduling and budgeting. The budgeting includes a 50/50 split 17 Council Workshop Minutes April 9,2012 Page 3 for revenues and expenses. If there is a profit,that would also be split. Whatever City costs would be,we would cover those costs through adult softball league fees. We do not have to add staff. We would use existing equipment and staff for maintenance and programming. Operations from the Rambling River fields would be moved to Empire. Youth baseball would use the Rambling River fields. Empire is aware of this proposal and is very excited for it. The first step is to submit the proposal,then a memorandum of understanding would be prepared for managing the complex. Council agreed with starting negotiations with Empire Township. b. Liquor Store Profits The Parks and Recreation Commission noted a lot of money for park and rec comes from liquor store profits. They realize the issue regarding whether to remain in the liquor store business. If we get out of the business,where would the funding for park and rec come from? Councilmember May noted our concern is it has to make money. If we don't have that,then funding would have to come from the general levy. Councilmember Fogarty felt they were asking if there is support to continue to fund park and rec despite the funding source. She felt park and rec is important to the community. Councilmember Donnelly asked what percentage of the budget comes from liquor stores. Parks and Recreation Director Distad stated we get$20,000;it used to be$60,000. Mayor Larson felt parks and rec is safe. Councilmember May stated we need to be careful. We all agreed it is important,but it is more want than need. There has to be some return. We have to make sure we offer things that work and we are not just spending money. Councilmembers have asked for more detail on programs to take a closer look. Staff is working on providing that detail so Council has answers for residents. Councilmember May noted we have been looking at trail maintenance and where that money will come from. c. 2013 Improvement Project Parks,Trails and Facilities The commission has identified Pine Knoll Park for their next project. Improvements include new playground equipment, new basketball court surface and a new hexagon shelter. The estimated cost is$120,000. This will leave a remaining balance in the park improvement fund of$27,677. Remaining parks marked for improvements include Troy Hill, Hill View, and Prairie View. Councilmember May did not know about the shape of the equipment, but asked if the money would be better spent on trails than equipment. Staff noted this is development money and you cannot spend it for maintenance; it has to be for development. In the community survey,parks and trails were the top two items. When neighborhood parks are done, it brings people out and is a good community builder. d. Fairhill Development 43-Acre Community Park Initial Development Timeline Staff suggested in the next couple years to grade and seed the park area. It could be left open for green space and used for soccer or LaCrosse practice. Currently someone is farming the area and staff will need to look into charging rent for the land. 18 Council Workshop Minutes April 9,2012 Page 4 City Administrator Update Mayor Larson, Councilmember May, City Administrator McKnight, and Parks and Recreation Director Distad met with the Minnesota Municipal Beverage Association to perform an analysis of the City's liquor operations. The report will be received soon. It will be brought to Council the first meeting in May. The lease for the downtown store expires in August. City Administrator McKnight asked if we want to extend the lease by six months. Councilmember May stated we discussed giving the landlord a number and if he does not accept it,then it doesn't work. We need a$20,000 reduction to break even. At the current lease rate we lose money. Council agreed with staffs approach to go to the landlord with a number for the lease rate. MOTION by Fogarty, second by Bartholomay to adjourn at 8:22 p.m. APIF,MOTION CARRIED. Respectfully submitted, Cynthia Muller Executive Assistant 19