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HomeMy WebLinkAbout11-29-11 Worksession Packet CITY OF OAK PARK HEIGHTS CITY COUNCIL WORKSESSION TUESDAY, NOVEMBER 29, 2011 . 6:00 P.M. I. Call to Order II. 2012 Water and Sewer Rate Study III. TNT /Budget Review IV. Consider Request for NLC Expenses V. St. Croix River Crossing; VI. Adjourn Memo November 22, 2010 To: Mayor and Council t From: Betty Caruso, Finance Director ` Re: 2012 Water and Sewer Rate Study Proposed For November 29, 2011 Council Meeting Attached is the 2012 Water and Sewer Rate Study. The rate study is based on estimated revenue and expenses for 2011 and budgeted revenues and expenses for 2012. The water and sewer usage calculations for 2012 are based on actual usage from 2007 through 2011. 2010 and 2011 have similar consumptions for the year. This is a 10% reduction in consumption since 2009. There were abnormally heavy rain falls during these years which may account for the reduction in usage. This resulted in customer's bills being calculated based on lower tier consumption and therefore a Iower amount of revenue was generated. The 2011 rates were calculated on 200,000,000 gallons while actual amounts are estimated at 188,000,000. For the 2012 proposed rates, 188,000,000 gallons of water usage was used. The results of the Water Utility Rate Study indicates the revenue for 2010 and projected 2011 provide the needed amount to cover operating expenditures and will add to the reduction of the 2008 cash deficit of $170,357. The replenishment of this deficit over a 4 year period was included in the 2010 -2011 water rate studies and included in the 2012 rate increase. Findings of the study includes: The fluctuations of revenue are not directly proportionate to the fluctuation in consumptio». This is due to the disparity is the tier rates. As consumption drops in the high end users, revenue drops at a higher percentage. A flat rate could help to stabilize this fluctuation, however the consumption mix of 30% < 15,000 gallons/qtr, 35% 16,000- 200,000 gallons/qtr and 35% > 200,0000 gallons/qtr, as compared to the consumer mix of approximately 85% residential and 15% commercial/industrial/public institution would cause a large increase to residential customers. Therefore I am recornmending that we do 1 not continue to grow this disparity in rates too aggressively. 'The revenue projections at this time are very vulnerable to a loss of a large consumer or even conservation methods used by the customers. The results of the Sewer Utility Rate Study shows a rate increase is not necessary to generate sufficient revenue for the operation of the Sanitary Sewer Utility Fund for 2012. This is due to a 9% reduction in the Met Council Environmental Services Fee. This is an unusual reduction and due in part to infiltration problems that other participating cities are having. This infiltration increases the flow readings and increases those cities participation percentages higher than Oak Parr Heights. As this is an unusual event, I am recommending that we base rates on a more consistent operating expense from the MCES. Billed sewer consumption in 2009 was 157,000,000 and is projected at 155,000,000 for 2010 and 2011. For the purpose of the study 155,000,000 was used. This stability in usage billed is due to residential customers being billed for April - December based on their January -March water usage. This produces more of a flat rate charge even though we have a tiered billing system. I am recommending that we increase the water and rates by a straight 2.8% to all tiers. This is based on the June 2011 implicit price deflator. This increase will assist in leveling future increases while keeping in line with increased costs that may be incurred. I am recommending adoption of the resolutions for the rate increases at the November 29, 2011 meeting. This will assist staff with the postcard mailing to the customers informing them of the change in rates. We could adopt the resolutions at the December 13` meeting if council would desire and still make the mailing before the 1." of the year, however it would be more difficult. 2 CITY OF OAK PARK HEIGHTS WATER AND SEWER RATE STUDY 2012 REPORT ON WATER AND SEWER RATE STUDY FOR OAK PARK HEIGHTS, MINNESOTA 2012 David Beaudet Mayor Les Abrahamson Council Member Mary McComber Council Member Michael Runk Council Member Mark Swenson Council Member Eric Johnson Administrator Pa- e 2 of 14 Table of Contents Introduction................................................. ............................... 4 Water User Charges ....................................... ............................... General.............................................. ............................... 5 Water Usage Estimates ........................... ............................... 5 CustomerBase ...................................... ............................... 7 Water Department Expenditures ................. ............................... S WaterRates ......................................... ............................... 9 Sewer User Charges ...................................... ............................... General.............................................. ............................... 10 System Flow Estimates ........................... ............................... 10 Sewer Department Expenditures ................. ............................... 12 SewerRates ......................................... ............................... 13 Conclusions and Recommendations ..................... ............................... 14 Page 3 of 14 INTRODUCTION The City of Oak Park Heights regularly reviews the water and sewer rate schedule to assure receipt of adequate funding for operation of the utility systems. This report represents the results of a study undertaken to review the costs to operate and maintain the water and sewer systems in the City of Oak Park Heights, The purpose of the study is to determine the user rates required to adequately and equitably finance the proposed 2012 operating budgets of the Water and Sewer Funds. This report contains an analysis of the past and projected flows, usages, and system connections as well as a review of costs and projected expenditures for operation and maintenance. In summary, this report contains a review of the past and present schedules and practices relating to water and sewer user charges in the City and recommendations for rates which will produce the required revenues in a fair and equitable manner. Page 4of14 Water User Charges General It is necessary to periodically study the water user rates to determine if adequate revenue is being produced to operate the water supply and distribution system and to meet other financial obligations for capital improvements and for renewal and replacement of infrastructure. The study contained in the following sections of this report reviews projected water sales as well as budgeted expenditures and other financial obligations. Using this information, rates are computed which will produce sufficient revenue to operate and maintain the waterworks system for the coming year. Water Usage Estimates Each dwelling and structure connected to the City waterworks system is equipped with a water Teter to measure water usage. Each well supply is also equipped with a water meter to measure water produced. These two sources are then used to verify and estimate water consumption. It is very difficult to predict water usage with any accuracy for a given year because usage will vary greatly dependent upon climatic conditions during the summer growing season. It is an estimated average that 57% of our customers use 15,000 gallons or less of water per quarter in 2011 as compared to 56% in 2010 and 50% in 2009. The following is a consumption average for the last 3 years: Estimated Average Use Per Rate Tier -2011 ( ' ) Estimated Tier Total Usage/Tier ( ' } Customers Avg Use 0- 15,000 58,113,000 722 9,000 15,001- 50,000 30,844,000 429 24,000 50,001- 99,000 15,132,000 55 69,000 99,001- 200,000 16,868,000 22 138,000 200,001 - 999,999 67,381,000 34 701,000 188,338,000 1,262 Estimated Average Use Per Rate Tier -2010 ( ' ) Estimated Tier Total Usage /Tier ( ' , Customers Avg Use 0- 15,000 58,489,000 714 9,000 15,001 - 50,000 31,580,000 443 24,000 50,001- 99,000 15,185,000 52 70,000 99,001 - 200,000 16,629,000 24 136,000 200,001 - 999,999 66 947,000 32 723,000 188,830,000 1265 Page 5 of 14 Estimated Average Use Per Rate Tier -2009 ( ' ) Estimated Tier Total Usageffler " Avg Use 0- 15,000 60,575,000 643 9,000 15,001 - 50,000 40,486,000 510 26,000 50,001- 99,000 18,164,000 70 74 ,000 99,001 - 200,000 19,287,000 24 160,000 200,001-999,999 72, 594,000 33 749,000 211,106,000 1280 (1) Based on customers that ended in this tier levei On average, records indicate that normal water consumption in the City of Oak Park Heights is equal to about 118 gallons per capita per clay (2010 pop 4,339). This amount appears higher than other similar municipalities because oi'the large institutional users in the City. Actual residential customer consumption is calculated at approximately 68 gallons per day. Based on past records, it is projected water usage in 2011 will be approximately 188 million gallons. 2010 actual usage was 188,830,000 gallons. Water consumption has been steadily decreasing. The following chart shows gallons billed from 2007 to 2011. Million Gallons 3 225000 220000 �_V_f]y;,�,� w "z 215000 7' — 210000 .. -, _ ._. _._ . _ _......._.. . 205000 _........ _. _.-._ ........... ......._....------ ...._......._ -- f , , 2oaaoo :. F _.._._..... ...................... -...._ ._._. - - - - - 195000 :_.....__ _...... 1 Million Gallons 190000.. ... ... s 1850(}0 _. Y� 180000 175000 ...� 170000 2007 2008 2009 2010 2011 This reduction could be due to experiencing an above average rainfall for the summer of 2010 and the spring/summer of 2011, and /or the reduction may be due to conservation methods taken by the users. For the purposes of this study the 188 million gallons will be used to calculate the proposed rates. Page 6 of 14 Customer Base The city's customer base consists of residential, commercial /industrial, public and sprinkler- irrigation accounts. The chart reflects the billings /revenue generated compared to the consumption and the number of customers. Customers 100 3 P 90 ..... ....: e 80 - r 70 _ — - -- - -- - -- 50 i.... r 9 . .............. .......... ................ ................. .. _........._. ..... e ^ - � 'f. n ti 30 .: y aE ` 20 IN �y _ ..._ ..... _.. . g y e 10 A 0 Residential Comm /Ind Public Sprinkler it of Customers Consumption Billings i - -------- . . ... .--- ...... ....... .. ....... ......._....., `hype _ ##of Customers Consu (estimate) Billing (estimate) Residential 1, _ 99,382 $283,28 Comn 123 35,600 $118,516 Public 6 37,210 $165,611 Sprink 41 18,139 $ 81,289 `Dotal .....�.���_�. 1,277 190,331 _- $648,700 The chart indicates that the residential customer is approximately 85% of the total customers, while generating less than 44% of the revenue with approximately 52% of the consumption; Corrin generates 18% of the revenue with 18% of the consumption; Public generates 26% of the revenue with 19% of the consumption; and Sprinklers generate 13% of the revenue with 10% of the consumption. The variation in the amount of revenue based on the consumption is because the City has adopted a tier system of billing with high end consumption being charged at a higher rate. Page 7 of 14 Water .Department Expenditures To determine a water use rate schedule, it is necessary to estimate the amount of the expenditures anticipated or revenue required. Expenditures can be generally classified in the following categories: a. Operation and maintenance b. Reserve for capital improvements c. Administration, accounting and billing (reallocated in 2012) d. System renewal and replacement For 2012 Council directed that the Administrative Charge (7% of current expenditures) be allocated to the Renewal Replacement Fund. In prior years this was transferred to the General Fund for the Utilities share of administration, accounting and billing. This reallocation of funds does not increase the expenditures of the water fund. This amount is still calculated and transferred out to the Renewal and Replacement Fund instead of the General Fund. All of the expense items listed are related to capacity and usage. Operation and maintenance costs are to be included in the rate calculation and are taken directly from the City Budget. The City has issued bonds in the past to finance waterworks improvements with a portion of the debt service being paid from revenue. The City presently plans for current and future improvements within the current budget. Transfers for current capital outlay are transferred to the Budgeted Projects Fund. 'Transfers for capital improvements are transferred to the Capital Project Funds for Tower, Well and Renewal and Replacement for future improvements and replacement of facilities. Operation expenditures and capital improvement transfers result in the total estimated expenditures for the Water Department in 2012 of $600,494. A summary of those expenditures as well as previous years' expenditures is shown in the following tabulation. WATER DEPARTMENT EXPENDITURES 2008 2009 2010 2011 2012 Item Actual Actual Actual Budget Budget Operation & Maintenance $295,215 $318,407 $346,411 $370,355 $346,132 Renewal & Replacement 110,950 116,170 119,811 119,800 142,945 Capital Outlay 240,051 117,300 136,150 1 31,300 111,417 Total $646,216 $551,877 $602,372 $621,435 $600,494 The large increase in 2011 was for the addition of $15,000 for the well head protection update and $17,500 for increase in personal services due to step increase and unemployment expense. Budgets for 2011 and 2012 reflect an increase in expenses for an additional $20,000 transfer of fiends each year to fund the water meter change out plan. Page 8 of 14 Water Rates The estimated unit cost to produce and supply water in the City of Oak Park Heights can be determined by dividing the estimated operating expenditures by the assumed flow. In addition to the unit cost, the City is also required to submit $6.36 per water connection per year to the State of Minnesota for water connection service fees. The Water Utility Fund had a cash deficit for the year ending December 31, 2008 of $170,357. In the 2010 Water Rate Study it was established that the city would fund this deficit over 4 years through the new rates. For operating rate purposes, $44,000 per year for the next 4 years was used in the calculation based on an additional expected deficit for 2009. The expected deficit for 2009 was not incurred, and the amount to recover has been reduced to $42,500 per year for the 4 year period. Due to reduced consumption in 2010 $26,000 of the expected $44,000 was recovered. Ail expected $42,500 is to be recovered in 2011. The $42,500 is included in the calculation of the 201.2 rates. The rates are calculated on conservative estimates and additional increases in revenue, if experienced will add to the reduction of this deficit. The resulting computations are as follows: (All gallons equal) Operating Rate - $600,494 _ 188,000,000 gallons $3.19/1,000 gallons Def=icit Recovery $42,500: 188,000,000 gallons mm $.23/1000 gallons State Water Connection Fee = $1.59 /quarter Using the minimum monthly flow of 15,000 gallons per connection results in the user rate schedule shown below: Operating charge — 15,000 gallons @ $3.19/1,000 gallons $47.85 /quarter Deficit Recover — 15,000 gallons @ $.2311,000 gallons $ 3.45 /quarter State Water Connection Fee $ 1.59/ uarter Minimum Charge $52.89 /quarter The current minimum monthly rates are as follows: Operating charge — 15,000 gallons @ $1.89/1,000 gallons $28.32 /quarter State Water Connection Fee $1.59 /quarter Current Minimum Charge $29.91 /quarter The current established water rates for all users are as follows: Minimum Charge $1.59 /quarter for State Water Connection Fee $28.32 /quarter for up to 15,000 gallons $2.48/1,000 gallons for usage from 16,000 to 50,000 gallons /quarter $297/1,000 gallons for usage from 51,000 to 99,000 gallons /quarter $3.81/1,000 gallons for usage from 99,000 to 200,000 gallons /quarter $4.61/1,000 gallons for usage over 200,000 gallons /quarter Page 9 of 14 Our present rate structure would generate enough revenue to fund the proposed Water Fund Budget for 2012 if consumption remains consistent with the past 2 years - approximately 188,000,000 gallons per year. As indicated in the chart of customers, a decrease in usage, especially by a high volume user could impact the expected revenue. For 2012 the City should raise the rates based on the implicit price deflator of 2.8% (June of 2011). This would help to level future increases. This proposed increase would result in the following scale of charges. Minimum Charge $1.59 /quarter for State Water Connection Fee $29.11 /quarter for up to 15,000 gallons $2.55/1,000 gallons for usage from 16,000 to 50,000 gallons /quarter $3.05/1,000 gallons for usage from 51,000 to 99,000 gallons /quarter $3.9211,000 gallons for usage from 99,000 to 200,000 gallons /quarter $4.74/1,000 gallons for usage over 200,000 gallons /quarter Sewer User Charges General The City of Oak Park Heights regularly reviews, adopts, and /or modifies its sewer user rate schedule to assure that sufficient revenue is being generated for the payment of all expenditures associated with the operation and maintenance of the sewage collection system and treatment facilities. `I review is also undertaken to verify that all classification of sewer users are charged for service in a manner which is fair and equitable as defined in State and Federal regulations. The following sections of this report will describe the system usage, financial obligations, and budgeted expenditures as well as a suggested rate schedule to provide adequate revenues to operate and maintain the system in 2012. System Flow Estimates Utility use rates can be established by equating the amount of service sold to the estimated expenditures anticipated by the utility. In the case of a sanitary sewer system, the use or service can be measured by sewage flow with projections for future use being dependent upon growth by number and type of connection to the system. The Metropolitan Council Environmental Services (MCES) maintains flow - measuring devices which are supposed to total all flows from the entire City. In the past, the recorded flows were very erratic, but between 1985 and 1993 there has been some fluctuation, but generally the now has been proportional to the number of connections and estimated population served. In July of 1994, the MCES replaced the metering equipment for the City of Oak Park Heights which resulted in a 16% increase in Oak Park Heights's flow. The installation of the new meter equipment resulted once again in wide fluctuations in recorded flows, which resulted in differences in estimated flows and recorded flows and resulting costs. In 1998 MCES initiated a new billing system where cities were billed based on metered flows with a two quarter lag rather than estimated flows with a two -year lag in adjustment. This did not change the accuracy of the metering but made the fluctuations less apparent. Beginning in 2005 the MCES adopted a "firm flow" allocation method in order to stabilize the flow revenue for the MCES and the charges to the rage 10 of 14 municipalities. This means instead of estimating a system flow, the MCES will use the last known flow numbers to allocate their budget for the coming year. To determine the annual billing amount, the calculation is based on flows from July 1 and ending Tune 30. An example of the amount billed for 2012 is based on the flows from July 1, 2010 through June 30, 2011. Since we know what our annual charge is, we are billed a flat amount each month for the calendar year. Because we no longer receive quarterly flow data from MCES showing the actual flows for Oak Park Heights and the estimated flows MCES uses for billing purposes, the flows estimated by the City based on number of connections, water sales, population, and similar data will be used for the sewer rate computations. For informational purposes, population estimates, metered sewage flows and estimates, and flow per capita data for billing years 2006 through 2012 are shown in the following table. Estimated MCES blows Year Population Blow (Mill. Gals.) Per�Canita/Day 2006 4,664 204.95 120 2007 4,676 211.00 124 2008 4,751 209.95 121 2009 4,653 208.74 123 2010 4,339 196.95 124 2011 4,339 201.05 127 2012 4,339 194.90 123 While the total sewage flow from the City is being metered with questionable accuracy, means are not available for measuring sewage flows from individual connections. Therefore, some assumptions and estimates must be used to apportion flows and resulting costs to the various types of users on the system. The estimate of billed flow for sewer for 2011 is 155,000,000 gallons which will be used for calculating 2012 rates. The difference in flow metered by MCES compared to the amount billed by the city results in a 20% discrepancy or 39,900,000 gallons. Water meters exist at each connection which measures the water purchased, but does not provide information on the quantity discharged to the sewer. Generally, almost all water purchased enters the sewer system with the exception of that water used for lawn irrigation. Lawn sprinkling is primarily confined to single family, townhouse, and similar land uses. Where large institutional facilities or other uses have high irrigation demands, separate meters are becoming common so that sewer billing is limited to the non- sprinkler water usage only. Based on the above comments, sewage flows from residential connections are assumed to be equal to the quarterly water usage experienced during the winter months when no lawn sprinkling occurs. However, each monthly water meter reading is used for sewage discharge billing for all commercial, industrial, institutional and high end residential connections. Wage I I of 14 Sewer Department Expenditures In addition to estimating the volume of sewage flow, the other basic factor required in establishing user rates is the amount of expenditures anticipated and revenue required. Expenditures can be generally classified in the following categories: a. Metropolitan Council Environmental Services billing b. Local operation and maintenance c. Administration, accounting, and billing e. System renewal and replacement For 2012 Council directed that the Administrative Charge (7% of current expenditures) be allocated to the Renewal Replacement fund. In prior years this was transferred to the General fund for the Utilities share of administration, accounting and billing. This reallocation of funds does not increase the expenditures of the sewer fund. All of the expense items listed are related to capacity and flows . The Metropolitan Council Environmental Services fee is based on the "firm flow" allocation method and will be $361,275 for 2012 as compared to $407,280 for the year 2011. This represents a 9% decrease in MCES fee. This is due to reduced flows as compared to other cities that have an infiltration problem. The calculation period for the 2012 fee included an extreme amount of rainfall, which produced a reduced percentage of total flow for the City as compared to the other communities. Local operation and maintenance costs are incorporated into the rate structure and have been taken directly from the City Budget or from actual expenditures when available. Combining all of the data described above results in the total estimated expenditures for the Sewer Fund. A summary of 2012 Budgeted expenditures as well as previous years' expenditures is shown below: Sewer Department Expenditures 2008 2009 2010 2011 2012 ;Item Actual Actual Actual Budget Budget MC E5 Billing $ 356,245 $ 366,195 $ 390,106 $ 407,280 $ 361,275 . ;Operation & Maintenance 233,000 228,148 283,965 257,365 223,137 Capital Outlay 33,800 31,216 36,150 56,500 56,530 Renewal & Repiacement 81,416 81,557 81,720 81,577 122,417 Total ; $ 704,461 ;, ! $ 707,116 $ 791,931 $ 802,722 $ 763,359 Page 12 of 14 Sewer Rates Sewer user rates can be computed by simply dividing the various operating costs by the estimated flow. MCES Charge $361,275 — 155,000,000 $2.3311,000 gallons Local Cost $402,084 - 155,000,000 $2.5911 000 rallons Operating Rate $4.9211,000 gallons At the present time, the minimum charge is based on the discharge of 15,000 gallons per quarter per account. Using the rates established above, the minimum charge is shown in the following computation. MCIJS Charge 15,000 gal, a $2.3311,000 gallons $3495 /quarter Local Charge 15,000 gal. @ $2.5911,000 gallons 38.85 / quarter $73.80 /quarter In all cases, it is assumed that the billing to single family, townhouse, condominium and other similar residential units will be based on the winter quarter water meter reading. All other land uses such as apartments, institutions and commercial and industrial facilities will be billed quarterly based on actual meter readings. Current sanitary sewer rates are as follows: Revenue — customer billings $773,000 Minimum charge $60.4 ]/quarter for up to 15,000 gallons $4.31/1,000 gallons for usage over 15,000- 50,000 gallons $4.77/1,000 gallons for usage above 50,000 gallons The existing sanitary sewer rates along with additional revenues from interest and permits will be sufficient to fund the 2012 projected expenditures. 'this is in part due to the reduction of $46,005 in the MCES billing. This is an unusual reduction and should be considered an irregularity in the expenditures for 2012. A straight 2.8% increase in the present rates based on the June 2011 implicit price deflator would enable the City to meet the 2012 operating and capital needs for the Sewer Utility Fund, with a projected overage of $45,000. The sewer rates would be as follows: Proposed sanitary sewer rates are as follows: Revenue — customer billings $793,600 Minimum Charge $62.10 /quarter for up to 15,000 gallons $4.43/1,000 gallons for usage over 15,000- 50,000 gallons $4.90/1,000 gallons for usage above 50,000 gallons Page 13 of 14 Revenue generated by tier is estimated to be as follows: Total Average No. of Revenue Bill Customers Minimum < 15,000 $ 305,316 ; $ 62.10 ' 851; 15,001- 50,000 $ 90,464 $ 93.11: 305; X50,000 $ 397,836 $1,584.25 75' $ 793,616 1231; Conclusions and Recommendations Based on the studies reported on herein, it is concluded that a rate increase is required to generate adequate revenue and to level fixture rate changes for the operations of the Waterworks Fund and the Sanitary Sewer fund. The above amounts were determined based on prior year's history and usage. A change in consumption can have a major effect on the amount of revenue generated. if customers shift to lower tiers based on reduced consumption because of conservation methods, revenue for the Waterworks fund could fluctuate from the projection for 2012. This is due to the billing rate disparity in the lower tiers. The only way to stabilize this would be to increase a base rate for all customers. At this time, it would result in a large increase to residential customers. Likewise if MCES flows continue to vary with actual billing flows (based on water consumption), we will have to continue to increase our billing rates. In order to help sustain the water and sewer funds during fluctuations in consumption it is recommended that there be an increase with less disparity in rates. The proposed increase would raise all customers by 2.8% for water and sewer. It is recommended that the following water and sewer user rates be adopted as of January 1, 2012 to operate the Utility Funds of the City of Oak Park Heights in 2012: Rate Schedule Water Rates Minimum Charge $29.11 /quarter for up to 15,000 gallons $ 1.59 /quarter for State Water Connection lee $ 2.55/1,000 gallons for usage from 16,000 to 50,000 gallons /quarter $ 3.05/1,000 gallons for usage from 51,000 to 99,000 gallons /quarter $ 3.92/1,000 gallons for usage from 1000,000 to 200,000 gallons /quarter $ 4.74/1,000 gallons for usage over 200,000 gallons /quarter Sanitary Sewer Rates Minimum Charge $62.10 /quarter for up to 15,000 gallons $ 4.43/1,000 gallons for usage from 16,000 to 50,000 gallons /quarter $ 4.90/1,000 gallons for usage over 50,000 gallons. Page 14ofI4 � Oak Park Heights Request for Council Action Meeting Date November 29 2011 Time Required: 15 minutes Agenda Item Title Proposed 2012 Budget and Tax Levies - Review and Discussion Agenda Placement Old Business Originating Department/ Requestor Finance - Betty Caruso, Finance Director Requester's Signature Action Requested Review and public discussion of 2012 budget and tax levies Background/ Justification (Please indicate if any previous action has been taken or if other public bodies have advised): See attached - City of Oak Park Heights 2012 Annual Budget information TNT Letter 2012 General Fund Revenue & Expenditure Summary Budget 2012 Tax Impact Worksheet , r City of Oak Park Heights 9/15/11 Dear City of Oak Park Heights Taxpayer: The purpose of this letter is to provide you a briefing on the City's proposed 2012 Budget and anticipated Tax Levy. The City's 2012 Proposed Tax Levy offers a significant increase in the total amount levied as compared to 2011. This is primarily due to a proposal to levy taxes to offset the water and sanitary sewer user charges. This tax increase would provide funds to the utilities and would result in a decrease in the amount needed from utility billings. While this proposal would raise your property tax, it would reduce all utility users' quarterly utility bills and for most residents will result in an overall savings of $100 or more . The following is an explanation of the proposed plan. TAX LEVY FOR UTILITY MINIMUM BILLING For 2012, the planned minimum utility bill for water and sewer services is $364.84, ($29.11 /quarter for water and $62.10 /quarter for sanitary sewer). This is the minimum billing for up to 15,000 gallons of usage and is charged to all consumers. A unique proposal in the 2012 Budget is shifting this minimum billing to the tax statement which increases taxes but results in an estimated net savings (combining property taxes and utility bills) as follows: Estimated Increase In No Longer Charged - Market Value of Home Taxes to Cover Utility Shift Minimum Utility Biil Net Savings $100,000 $ 41,92 $364.84 $ 322.92 $150,000 $ 73.76 $364.84 $ 291.08 $250,000 $ 137.45 $364.84 $ 227.39 $300,000 $ 169.29 $364.84 $ 195.55 $450,006 $ 262.90 $364,84 $ 101.94 (Please be aware that this is to shift only the minimum amount of your utility bill. You will continue to be b €fled for all usage above 15,000 gallons /quarter along with the storm water charge and state water connection charge.) The spreadsheet below outlines the totality of the anticipated changes and the anticipated savings. For example, a homeowner with home value of $150,000 would realize a total savings of $218.69 in 2012 compared to 2011 when property taxes and utility billings are combined. Similarly, a home with a value of $250,000, would realize a total savings of $97.56 per year, compared to 2011. RESIDENTIAL MARKET VALUE MARKErVALUES $ 100,000 $ 150,000 $ 250,000 $ 300,000 $ 450,000 2011 SERVICE CHARGES 2011 PROPERTY TAXES $ 337.79 $ 591.21 $ 1,098,07 $ 1,35.1.00 $ 2,091.10 MINIMUM UTILITY BILLS - 2011 RATES $ 354.92 $ 354.92 $ 354 -92 $ 354.92 $ 354.92 TOTAL 2011 $ 692.71 $ 946.13 $ 1,452.99 $ 1,705.92 $ 2,446.02 2012 SERVICE CHARGES 2012 PROPERTY TAXES $ 413.44 $ 727.44 $ 1,355.43 $ 1,669.43 $ 2,592.63 2012 MINIMUM UTILITY BILLING - 2012 RATES S 0.00 $ 0,00 $ 0.00 S 0.00 $ 0.00 TOTAL 2012 $ 413.44 $ 727.44 $ 1,355.43 $ 1,669.43 $ 2,592.63 tan d,utlhtiesca.mhined} ?..... , . 279 27,, $ 218 69 $; COMPONENTS OF 2012 PROPERTY TAXES 2011 PROPERTY TAXES $ 337.79 $ 591.21 $ 1,098.07 $ 1,351.50 $ 2,091.10 2012 CHANGES IN MVHC/TAX VALUATIONS $ 9.54 5 19.90 $ 40.62 $ 50.98 $ 86.96 2012 INCREASE IN OPERATIONS BUDGET $ 24.19 $ 42.57 $ 79.29 S 97.66 $ 151.67 2012 INCREASE TAXES FOR UTILITY CHANGE $ 41.92 $ 73.76 $ 137.45 169.29 $ 262.90 TOTAL PROPERTY TAXES $ 413.44 $ 727.44 $ 1,355.43 $ 1,669.43 $ 2,592.63 TURN OVER FOR MORE INFORMATION ON BACK WHILE THIS MINIMUM UTILITY BILLING SHIFT IS UNIQUE THERE ARE TWO ADDITIONAL THINGS OCCURRING IN THE 2012 BUDGET. TAX LEVY FOR OPERATIONS BUDGET The 2012 Operational Expenditure Budget for the City has a proposed increase of 2,7% or $92,000. This increase consists of various additions and deductions as compared to 2011. Changes include $5,000 for Parks Programs, $7,000 for Waste Removal, $8,800 in Street Maintenance /Snow Plowing, $48,000 in Public Safety due to a retirement and replacement hiring of an officer, $8,000 in insurance, and other contractual and supply expenditures. Along with the above increases the City is experiencing a reduction of revenues in the following amounts: a $100,000 decrease in the use of Fund Balance, $65,000 reduction in Administrative Charges and a loss of $30,000 in State and County Revenues /Grants. This results in an increase in the property tax levy of $263,000, or 6 %, For a detailed explanation of the operations budget see the City's website at www.cityofoakparkheights,com MARKET VALUE HOMESTEAD CREDIT VERSUS MARKET VALUE HOMESTEAD EXCLUSION For 2012 the State of Minnesota repealed the Market Value Homestead Credit (MVHC) program and created a new Market Value Exclusion for qualifying homes. These changes are effective for taxes payable in 2012. In place of the MVHC program, homeowners will receive an exclusion of a portion of the market value of their house from property taxes. The exclusion is computed in a manner similar to the market value homestead credit. However, the impact of the change varies from community to community, depending on a number of factors, including tax base of the community and the local tax rate. For the taxpayers of Oak Park Heights this will result in a 34% increase in your property taxes due to the State of Minnesota changing the MVHC program and shifts the State's former tax burden onto the local property tax. SUMMARY The 2012 Proposed Tax Levy is $4,684,562 as compared to $3,964,704 for 2011. This is an increase of $719,858 or 18 %. This increase is a combination of $263,358 for operations and $456,500 for supplementing the utility charges. These proposed levy increases along with the state change in the MVHC to the Market Value Exclusion are the calculations that were utilized in the preparation of the Truth In Taxation Notices. The City is working hard so that most homeowners will see a total cost reduction between their utility bills and their general property taxes when compared with 2011. Final Budgets have not been adopted. The Truth In Taxation Hearing is scheduled for November 29, 2011, 7:00 pm, City Hall, 14168 Oak Park Blvd. N. where the City Council will further discuss the 2012 Budget and its concepts and will take public input. As more information becomes available and the budget process develops between now and December, the City wi{I provide further outreach and information. In the interim, please feel free to call City Finance Director Betty Caruso or City Administrator Eric Johnson @651- 439 -4439 for questions FINAL NOTE: At this time the City has not yet been provided many of the final valuation numbers from Washington County upon which to craft a final budget proposal as this data is not yet available. As in previous years and because of this incomplete data, the City typically sets a HIGH number for its tax levy as it may only be reduced in the final levy which is set in December. 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L' M M V tO Lf) LO - r r N t r r (O O N 07 CO U3 M M V Iv M M { Lri 0i t`. _ M (O r N M Ln i` 0) M i N Ln •" -i tv t` V• V M m N N m V' N U1 V3 t O (D a N U3 m O M p p Q U3 (ff 0U N U3 N ffl (!i M EA U-) m (f) Ua U7 M h o0 In N o ❑ (!i (H Ui M U) Ui v3 ( ,.j F- U3 U ¢ r q w a a W x {� z w z z O (1) w w a z a m z o M Z (q w J z z F X F > w W W It Z W W U a LL w ,-i z z w w O U Z Z U -1 (n 0 (!1 ¢ U ❑ u.l O O w O ( u} 6 3: -1 z D z (n 2 O Z w z w z z z Q �� 06- O w -i ¢ O z w w z z w O (9 - u��� (t_n O w w C� o' F- �¢ z z a F z w a? o¢ O U O W Q� (� 0( ° _ _ w Z �- W Z ¢ ❑ o o J W -J � � m m m f Z W (if Z 1�3 w¢ w z O 7 0 z O w 5 z 5 5 x¢�¢ O o O ¢ C9 - w U d U - U¢ Z¢ w m LL m O Q a 0. CL ¢ U F a U F- G tu O U F- Z Proposed Pay 2012 Property Tax Impact Worksheet Taxing District: 1700 Oak Park Heights - GENERAL LEVY & DEBT LEVY Step 1- Calculate the Taxing District' s Tax Rate - Total General and Debt Levy PRELIM BGT w /Utility Actual ltertt Pay 2011 Pay 2Q12 Change 1. Levy before reduction for state aids $3,964,704 $4,684,562 18.2% 2. State Aids $0 $0 0.0% 3. Certified Property Tax Levy $3,964,704 $4,684,562 18.2% 4. Fiscal Disparity Portion of Levy $222,950 $182,726 -18.0% 5. Local Portion of Levy $3,741,754 $4,501,836 20.3% 6 Local Taxable Value $8,309,844 $7,813,846 -6.0% 7 Local Tax Rate 45.028% 57.614% 28.0% Step 2 - Calculate the Impact of the Taxing District's Rate on Residential Homestead Taxes: S. Assumes a -311% change in market value from 2011 to 2012, which is the city median change tvlarket Value Homgsteatl faxing Total Taxing Taxing t3efore xclusion Value Taxable District ! Nikt valueDistrict prstr3ct „ E 1 xl�tior�s Market Tax Gross Hsttl share of `Net Value Value .. T re axing Credit Cdit Tax. value , CapacEty cfuaLRay 201 i ... 500,000 @ 1,0 A7 x 7, .4() 7 6 , o rem @ 1.25% rem @ .09% rem @ .09% 9. Estimated Tax District rate as % of total rate: 45% 10. 103,200 NA 103,200 1,032 464.69 $ 279.52 $126.90 $337.79 11. 154,800 NA 154,800 1,548 697.03 $ 233.08 $105.82 $591.2.1 12. 258,000 NA 258,000 2,580 1,161.72 $ 140.20 $63.65 $1,098.07 13. 309,600 NA 309,600 3,096 1,394.07 $ 93.76 $42.57 $1,351.50 14. 464,400 NA 464,400 4,644 2,091.10 $0,001 $2,091.10 . .;� __.,,..: .,.._... _ .,....::..• ...• `:Fro Psed�ay- 2012.. Fay 969 1 .40% x + ° X 0. rem @ .09% (1312 x D) rem @ 1.25% (G) x % (F) - (H) 18• Estimated Tax District rate as % of total rate: 58% 19. 100,001 28,240 71,761 718 413.44 NA NA $41.3.44 20. 150,001 23,740 126,261 1,263 727.44 NA NA $727.44 21. 250,002 14,740 235,262 2,353 1,355.43 NA NA $1,355.43 22. 300,002 10,240 289,763 2,898 1,669.43 NA NA $1,669.43 23. 450,004 450,004 4,500 2,592.63 NA NA $2,592.63 Petcenfage Change_from. 201.1 to�2012.... -, � : ., ..... $ Inc _ 27. 3.1/0 30.5/0 -30.5% 11.0% ,..... ..•. o _ ..,.. _. .,., .. ••._. ° ° • _:. 22.4% $75.65 28. -3.1% - 18.4% - 18.4% 4.4% 23.0% $136.22 29. -3.1% -8.8% -8.8% 16.7% 23.4% $257.36 30. - 3.1% -6.4% -6.4% 19.8% 23.5% $317.93 31. 3.1% 3.1% 3.1% 24.0% 24.0% $501.53 Proposed Pay 2012 Property Tax Impact Worksheet Taxing District: 1700 Oak Park Heights - GENERAL LEVY & DEBT LEVY Step 1- Calculate the Taxing District' s Tax Rate - Total General and Debt Levy PRELIM BGT -No Utility Chg Actu al- ro ose item Pay 2031` Pay 2012 Change " (A) 1. Levy before reduction for state aids $3,964,704 $4,228,062 6.6% 2. State Aids $0 $0 0.0% 3. Certified Property Tax Levy $3,964,704 $4,228,062 6.6% 4. F €scat Disparity Portion of Levy $222,950 $182,726 - 18.0% 5. Local Portion of Levy $3,741,754 $4,045,336 811% 6 Local Taxable Value $8,309,844 $7,813,846 -6.0% 7 Local Tax Rate 45.028% 51.771% 15.0% Step 2 - Calculate the Impact of the Taxing District's Rate on Residential Homestead Taxes: 8. Assumes a -3.1% change in market value from 2011 to 2012, which is the city median change 14 E Market Value Homestead Taxing Total Taxing Tax ng 1 xcl ore Value Taxable District N1kt Value` District q�stnc# Se. usian i xclutions 1Viarket Tax ross Hstd sYiare of Net Value.. Capacity.... Taxing Credit Credit Value UaJue x Ta _; Actual,Pay 201 >' 500,000 (Y ° o I JAI x o A °° rem @ 1,25% rem @ .09% rem @.09% 9. Estimated Tax District rate as %of total rate: 45% 10. 103,200 NA 103,200 E4,644 032 464.69 $ 279.52 $126.90 $337.79 11. 154,800 NA 154,800 548 697.03 $ 233.08 $105.82 $591.21 12. 258,000 NA 258,000 580 1,161.72 $ 140.20 $63.65 $1,098.07 13. 309,600 NA 309,600 096 1,394.07 $ 93.76 $42.57 $1,351.50 14. 464,400 NA 464,400 2,091.10 $0.001 $2,091.10 P ay ° x ° X 0.969 rem @ .09% (B12 x D) rem @ 1.25% (G) x % (F) - (H) 18. Estimated Tax District rate as % of total rate: 52% 19. 100,001 28,240 71,761 718 371.52 NA NA $371.52 20. 150,001 23,740 126,261 1,263 653.67 NA NA $653.67 21. 250,002 14,740 235,262 2,353 1,217.98 NA NA $1,217,98 22. 300,002 10,240 289,763 2,898 1,500.14 NA NA $1,500.14 23, 450,004 450,004 4,500 2,329.73 NA NA 52,329.73 Inc :.:. P. ercen "tage "Change from 2D11 "to 2012 27. -3.1% -30.5% -30.5% -20A% 10.0% $33.73 28. -3.1% -18.4% - 18.4% -612% 10.6% $62.46 29. -3.1% -8.8% -8.8% 4.8% 10.9% $119.91 30. -3.1% -6.4% -6.4% 7.6% 11.0% $148.64 11.4% 11.4 $238.63 Proposed Pay 2012 Property Tax Impact Worksheet Taxing District: 1700 Oak Park Heights - GENERAL LEVY & DEBT LEVY Step 1- Calculate the Taxing District's Tax Rate - Total General and Debt Levy Base - No change to 2011 ct 9 u Iterrt Pay 2031 Pay 2012 Change 1. Levy before reduction for state aids $3,964,704 $3,964,704 0.0% 2, State Aids $0 $0 0.0% 3, Certified Property Tax Levy $3,964,704 $3,964,704 0.0% 4, Fisca( Disparity Portion of Levy $222,9501 $182,726 - 18.0% 5. Local Portion of Levy $3,741,7541 $3,781,978 1.1% 6 Local Taxable Value $8,309,8441 $7,813,846 -6.0% 7 Local Tax Rate 45.028% 48.401% 7.5% Step 2 - Calculate the Impact of the Taxing District's Rate on Residential Homestead Taxes: 8. Assumes a -3.1% change in market value from 2011 to 2012, which is the city median change Market:Valae Homestead Taxing `Total Tax3n Tarn Be ore Ualue Tax -ble i]istrict MktValue D'istnt t7istric Exclusion Exclutlans Market Tax Gross ; Hstd share of Net value Value i!lue . Capacity. ;? Taxing:'•Cr�dit Credrt..... ACtual:Pay2031.. 500,000 @ 1.0 x 76 .4 6 rern @ 1.25% rem @.09% rem @.09% 9. Estimated Tax District rate as % of total rate: 45% 10. 103,200 NA 103,200 1,032 464.69 $ 279.52 $126.90 $337.79 11. 154,800 NA 154,800 1,548 697.03 $ 233.08 $105.82 $591.21 12. 258,000 NA 258,000 2,580 1,161.72 $ 140.20 $63.65 $1,098.07 13. 309,600 NA 309,600 3,096 1,394.07 $ 93.76 $42.57 $1,351.50 14. 464,400 NA 464,400 4,644 2,091,10 1 $0.001 $2,091.10 Aroposed,Pay.20 Pay 6 x + 6 X 0.969 rem @.09% {612 x D) rem @ 1.25% (G) x % (F) - (H) 18. Estimated Tax District rate as % of total rate: 48% 19. 100,001 28,240 71,761 718 347.33 NA NA $347.33 20. 150,001 23,740 126,261 1,263 611.12 NA NA $611.12 21. 250,002 14,740 235,262 2,353 1,138.69 NA NA $1,138.69 22. 300,002 10,240 289,763 2,898 1,402.48 NA NA $1,402.48 23. 450,004 450,004 4,500 2,178.06 NA NA $2,178.06 Perceiita'ge Cha'n.g'« frorn.2011 to212.... $ Inc 27. -3.1% - 30.5% -30.5% - 25.3% 2.8 %° $9.54 28. - 3.1 °/6 - 18.4% -18.4% -12,3% 3.4% $19.90 29. -3.1% -8.8% -8.8% -2.0% 3.7 $40.62 30. -3.1% -6.4% -6.4% 0.6% 3.8% $50.98 31. -3.1% -3.1% -3.1% 4,2% 4.2% $86.96 City Of Oak Park Heights 2012 annual .budget Page 1 2412 Annual Budget Table of Contents City Officials 3 Budget Process 4 General Fund Revenues 6 General Fund Expenditures 8 Tax Levies, Tax Capacity and Tax Capacity Rate 10 Utility Fund Revenues and Expenditures 13 Debt Service Funds 14 Budgeted Projects Fund 15 Page 2 Oak Park :Heights City Officials Position Term Expires Mayor David Beaudet 12/31/2012 Councilmember Les Abrahamson. 12/31/2014 Councilmember Mary McComber 12/31/2012 Councilmember Mike Runk 12/31/2012 Councilmember Mark Swenson 12/31/2014 City__Staff Eric A. Johnson -- City Administrator Betty Caruso -- Finance Director Brian DeRosier — Police Chief Andrew Kegley- Public Works Director David Mol — City Auditor Mark. Vierling -- City Attorney Christopher Long -- City Engineer Page 3 Budget Process The annual budget process is a thorough review of all City revenues and expenditures for the current and upcoming year. There are many uncontrollable factors the City must comply with that affect both the amount of revenues the City receives and the amount the City must expend in order to provide the current level of services. There are also numerous unfunded mandates the City roust comply with, such as: Revenues • Tax exempt property — City must still maintain police /fire protection, streets, etc. • Limitations of local special assessments. • Local improvement feasibility reports requirements. • Limitation of maximum penalties and fines for ordinance violations. • Truth in taxation requirements. • Limitation on fees for licenses, i.e. oft' -sale and Sunday on -sale liquor, fireworks. Expenditures • Pay equity, implementation and reporting. • Worker's compensation. ® Public pensions. • Continuation of health and life insurance coverage. • Prevailing wages paid on public contracts. + Veterans preference. • Mandatory binding arbitration for employee classes such as police and firefighters. • Various public safety requirements i.e. Peace officer standards and training, confined space entry, suspense file reduction, tobacco compliance checks. • Building code administration and limits to permit fees for minor improvements. • Numerous environment requirements i.e., wastewater treatment standards Wetland Conservation Act, recycling programs, waste collection practices, drinking water standards, surface water management plans, federal Clean Water Act, Wastewater permit requirements, and storing of hazardous substances reporting. • Planning requirements for land use, zoning, building codes. + Comprehensive plan updates. • Conducting elections including paying judges, absentee ballots and recounts. • Record keeping requirements for Data Practices Act and retention schedules. • Competitive bidding. • Open Meeting Law notices, agendas and minutes. • Various financial reporting requirements, i.e. budget, audit reports, TIF reports, building inspection fee reporting, business subsidy reports, outstanding debt reports, continuing disclosure reports. Page 4 Budget Process The City Council and staff engage in a thorough budget process each year in order to present a fair and balanced budget for the citizens of Oak Park Heights. 1. The annual budget process commences in July of each year with the Finance Director distributing budget worksheets to the department heads for completion. The City Council is requested to inform the Finance Director of any special requests they may have for the budget. 2. The department heads determine the anticipated expenditures and budget requests for the upcoming year. These requests are submitted to the Finance Director and Administrator for review by the end of July. 3. The Finance Director compiles a draft of the preliminary budget and submits it to the City Council. 4. The City Council schedules workshops for discussion and review of the preliminary budget. There are usually 2 to 3 workshops held during the month of August and the first week in September. All workshops are public meetings and the public is welcome to attend. 5. After all input and requests have been considered, the Finance Director makes revisions to the preliminary budget and submits it to Council for approval of the proposed budget and tax levy. Per Minnesota State Statute this must be completed and certified to the County no later than September 15. 6. The City Council sets the date for the 'Truth in Taxation meeting requirements. The City is required to hold a meeting in which the public is allowed to speak and the budget and levy is discussed. The hearing may be a part of a regularly scheduled meeting. The dates must be certified to the County no later than September 15. 7. Council conducts additional workshops to discuss any additional changes to the budget due to updated revenue and/or expenditure information, i.e. insurance rates, contract fees, etc. 8. The Truth in Taxation meeting is held. 9. The final budget and levy must be certified to the County by December 28, 2011 and to the Minnesota Department of Revenue after the levy is adopted. Page 5 General Fund Revenues The City Council and the residents of Oak Park Heights are aware of is the trend towards relying more on the tax Levy for the City's source of revenue. In 2009 the tax levy consisted of 8 1.7% of the City's revenue source. For the 2012 proposed tax levy, taxes are 91.4% of the City's projected revenue. There are several factors that contribute to this change: Licenses and Permits have decreased; The City has reduced the utility fund administration fee from 7% to 0% of the current utility expenditures as a change in policy which no longer charges this fee to the Water and Sewer Funds,; The State has limited the agility of Cities to increase fees for certain services, i.e. various liquor license fees, sale of fireworks fees, and permit fees for minor improvements; In 2009 and 2010 the City received Utility Valuation Transition Aid from the State of $178,390 and $102,947 respectively. ']'])is revenue was not collected in 2011 and not Budgeted for in 2012. The Other Revenue cateo ol for 2010 and 2011 reflects the use of $193 and $100,000 of December 31, 2009/2010 tlndesignated fund balance. " ]'his is allocated to offset the amount needed to balance to the 2010 and 2011 expenditure budget. The 2012 Budget does not Propose to use unrestricted fiend balance to balance or supplement the current year's expenditures budget. The following charts show the shift in revenue sources over the past few years. Actual Actual Midget 1:3udgC1 2009 2010 2011 2012 ' 1 "I'Nes 81.7%, 81.3% 86.4% 91.4% t�iCenScS e1 2.6% 2.0% 2.1 % 2.0% 1"ines and Forfeits 1.8% 1.7% 1.5% 1.2% 1nte t- overnmentai izeven 7.1% 4.5 %, 2.2" /cr l.G` %, Charges for Services 1.8 %r 1.8 %, 1.8 %, 0.3% Other Revenue 5.0% 8.7 6.0% 3.5% E 13ud < adjiastcd #'trr chjtn,cs in lx>lic� rcgarding wililics and debt levy. 100.00% Genera! Fund Revenues 90.00% 80.00% 70.00% iA Taxes 60.00% a Licenses /Permits 50.00% .... 40.00% Fines &Forfeits 30.00% va Intergovernmental 2{}.00% ''_ R evenue 10.00% ...: - Charges for Services Actual 2009 Actual 2010 Budget 2011 Budget 2012 ... ......... ....._____ .._....._._.. Page 6 The proposed 2012 budget includes additional revenue amounts for the proposed changes to the General Fund tax levy for transfers to the Water and Sewer Funds and the inclusion of the debt levy for the G. O. Capital Improvement Bonds of 2008. The transfer to the Water and Sewer Funds is to offset the water and sanitary sewer user charges. The debt levy was included in the total tax levy in prior years but was not budgeted for in the General Fund. For 2012, the debt levy of $400,000 was added to General Fund Levy with a corresponding expenditure of $400,000 transfer to the debt service fund. The actual and budgeted amounts for 2010 and 2011 are adjusted to show this change in policy and to reflect a more comparable budget for analysis. General Fund Revenue Summary (Adjusted for 2012 Changes in Budgeting Policy) 2011 /2012 2010 2011 2012 Budget Actual Budget Budget Inc (Dee) "faxes Operations $ 3,252,704 $ 3,440,704 3,692,062 $ 251,358 Debt Levy 122,000 134,000 536,000 402,000 Debt Levy - Debt Fund 380,000 300,000 (390,000) Water /Sewer User Charge Offset - - 456,500 456,500 Total `faxes $ 3,754,704 $ 3,964,704 $ 4,684,562 or $ 719,858 Other Taxes 29,550 49,000 59,000 10,0 ()0 Business Licenses- 1'erniits 31,650 33,800 36,300 2,500 Non - Business I.,icenses- Permits 50,000 53,500 47,100 (6,400) Fines & Forfeits 67,700 60,500 50,500 (10,000) Intergovernmental Revenues 185,987 88,040 70,040 (18,000) Charges for Services 72,420 73,425 13,132 (60,293) Miscellaneous Revenues 162,580 145,500 150,550 5,050 Undesignated fund Balance 193,635 100,000 - (100,000 Total Revenues $ 4,548,226 $ 4,568,469 $ 5,111,184 $ 542,715 The total 2012 Revenue Budget is $5,111,184. This is an increase of 11.9% or $542,715 over the 2011 revenue budget. $456,500 or 10 % of the increase is due to the proposed change to increase the tax levy for the offset of the minimum water and sewer utility billing Page 7 The chart below shows the anticipated revenues for the budget year 2011. ............... . I 2012 Revenue Distribution 1 i E Iq Operating Taxes I Other l e Taxes -� Debt Taxes z 1% �r /�vr Off et Water /Swr Offset t ��t l -1� Other Taxes Y', E Other Business Licenses- Permits l � j 6 Other Non - Business Licenses- ! i Permits Other Fines & Forfeits i ` Other Intergovernmental E Revenues General Fund Expenditures The Proposed 2012 budget for expenditures is $5,111,184. 'Phis amount includes transle:rs to other funds of $1,713,725. The operations budget net of these transfers is 43,397,459 as coinpared to the 2011 operating budget of $3,305,477, or a 2.8% increase. 2011 2012 % Increase U gCt Budget (Decrease) General Government $ 1,222,190 $ 1,273,824 4.2% Public Safety 1,422,750 1,463,929 2.9% P LIbllc Works 304,805 311,435 2.2% Parks 164,932 150,471 -8.8% Sanitation 190,800 197,800 3.7% General Operations 3,305,477 3,397,459 2.8% Transfers 780,740 1,713,725 119.5% Total Expenditures $ 4,086,217 $ 5,1 1 1,184 25.1% Page 8 The General Expenditures are distributed as follows. This is reflective of operations only and does not include the transfers to other funds. Actual Budget Budget 2010 2011 2012 General Government 39.0/0 37.0% 37.5% Public Safety 41.1% 43.0% 43.1% Public Works 9.3% 9.2% 9.2'/0 Parks 4.6 % 5.0% 4.4% Sanitation 6.0% 5.8% 5.8% The chart below reflects where the City will incur its expenditures in the 2012 budget year. ........... ....... . 2012 Expenditure Distribution Sanitation 5.8% Parks General 4.4% Government M General ` 37.5% Government c Pubiic Works Safety 9,2% r Public Works �n Parks i� ., . ............4 ....... .... ..._.................... _.- Page 9 The total 2012 Proposed Budget reflects an increase of $1,024,967. The Operating Expenditures for 201.2 increased $91,982 and the Proposed Budgeted Transfers increased $932,985. The Transfer increase includes the amount of the tax levy that is directly related to the increase in the debt levy and the proposed change to offset the minimum water and sewer bill. The summary of the transfers as compared to 2011 are as follows; Transferto Budgeted Projects Fund $ 248,740 $ 314,225 $ 65,485 Transferto Debt Funds 134,000 536,000 $402,000 Transferto Water Fund - Min Bill - 149,000 $ 149,000 Transferto Sewer Funs! - Min Bill - 307,500 $ 307,500 Capital Projects - Long Term $ - .ransferto Street Reconstruction Fund 320,000 329,000 $ 9,000 ransferto Storm Sewer Renewal Fund 78,000 78,000 $ - Total Transfers $ 780,740 $ 1,713,725 $ 932,985 Tax Levies, Tax Capacity and Local Tax Rate "Tax Levies The proposed payable 2012 general levy for the City of Oak Park Heights that was submitted to Washington County for the TN'I' parcel specific notices was $4,684,562. The City included the amount for the general obligation debt levies of $536,000 which is a change from prior years in which the City would levy the debt portion as a separate levy from the General Fund levy. The comparison levy for 2011 and 2012 is as follows: 2011 2012 Inc Dec General Fund $3,440,704 $4,148,562 $ 707,858 Debt Levy added to Gen Fund 134,000 5.3.6_,000 $ 402,000 Total General Fund Levy $3,574,704 $4,684,562 $1,109,858 Deb Levy 390,000 -0- $390 000 Total Tax Levy $3,964,704 $4,684,562 $719,858 A Summary of the Proposed increase for 2012 is made up of the following changes: Debt Service $ 12,000 Transfer for Min Water Bill $ 149,000 Transfer for Min Sewer Bill $ 307,500 Inc. Trans for Capital Projects $ 74,500 Adm Fees - Not Charged $ 69,500 Fund Balance Not Applied To Budget $ 100,000 Reduction in Revenues $ 6,500 Increase in Expenditures $ 92,000 Market Value Homestead Credit- not received $ 92 000 Total $ 719,000 Page 10 Tax Levy Components 'fax Levy Operations Debt Levy Utility Levy 2012 - -' - ( � I I � 3 2010 �..; - I $ $500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000 $3,000,000 $3,500,000 $4,000,000 $4,500,000 $5,000,000 1 a_ x C"at 7i�cz `hhe City's estimated 2012 tax capacity value is $7,813,846. ']'his represents a 6.0% decrease in tax capacity value of over the 2011 value of $8,309,844. Tax capacity value is market value of the property times the class rates. Class rates are established by the State of Minnesota and have not changed since 2002. "hhe current class rates for residential property is I% of market value for the Iirst $500,000 of value and then 1.25% on the remaining value of the property Example of a $600,000 home I tip of first $500,000 — 45.000 1.25% of Balance ($ 100,000) — $1,250 Total Tax Capacity $6,250 The current class rates for commercial property is 1.5% of market value for the first $150,000 of value and then 2% oil the remaining value of the property — Example of a $600,000 commercial business — 1.5% of first $150,000 $2,250 2% of balance ($450,000) - -- $9,000 Total Tax Capacity — $11,250 For 2012 the State repealed the Market Value I Credit Program (MVHC) and created a new Market Value Homestead Exclusion for qualifying homes. In place of the MVHC, the homeowners will receive an exclusion of a portion of the market value of their house from the property taxes. The exclusion is computed in a manner similar to the market value homestead credit.(40% of the first $76,000: $304 - (ENV- $76,000)X .0009; Maximum EMV $413,800) The impact of this change will vary in each community. For the qualifying taxpayers in Oak Park Heights, this has increased your taxes by 34%. It reduces the total tax capacity of the city, reducing the total that is available to allocate taxes upon, therefore increasing individual tax bills. Page ] I The chart below shows the change in Tax Capacity Values frorn 2010 through Proposed 2012 11.11....... 1111_ . . .... 1111 _ . 8,400,000 ua s,2oo,ao© u 8,000,000 M f� > f5... �r 7 800,000 i , E y y - . ` 7,600,000 o f 7,400,000 2010 2011 2012 lTax Capacity Value 8,080 763 8,309 - 7,813,846 _....... ... . - ..... ............ . 1111 .....,.._ Surnrnaey of Proposed 'lax Levy — local tax rates Loca "fax Rate The City's Tax Rate for the general levy for 2012 is estimated to be 57.614% per $1,000 of tax capacity value. This represents an increase of 28.0% from 2011 rates. The portion of the local tax rate that is related to the proposal change in shifting the mininlum water and sewer utility hill to the tax roll is 5,843 %. The proposed tax rate for the tax levy excluding the amount for the water and sewer utility shift is 51.771 % ... ..... ...... .... € i Local Tax Rates _ 1111 1111 1111 60 .. .............. ............. 1111. _. ;_ `N 1111.. 40 30 ...... t 20 10 0 201 2012 E 9-11- .......... - - _._.._... _._._...._........ - 111 Rate - Utility Portion 5.843 - -- - 11.11......_. . _. ..........1111.. E .. _--- ......._.... Operations Budget 2 ..... _._........ - ..... .._...... . .... �_...... _ 1111_._ ... ... Change in MVHC 4.289 BaseTax Rate 45,028 45,028 The median market value from 2010 to 2011 for the City is estimated to decrease 2.0 %. Page 12 Utility Funds Revenues and Expenditures The Water Utility Fund revenues are anticipated to increase 1.31 % for the year 2012. The increase in revenue reflects an increase in water rates of 2.8% which is needed to meet projected operation and capital expenses. Expenditures in the Water Utility Fund are anticipated to decrease 3.37% for the year 2012. The decrease is due to reduced costs compared to 2011 which included expenses for the Well Head Protection Study and a reduction in capital costs for 2012. The Sewer Utility Fund revenues are anticipated to increase .7% for the year 2012. The increase in revenue reflects a 2.8% increase in sewer rates needed to meet projected operation and capital expenses. Expenditures in the Sewer Utility Fund are anticipated to decrease 4.9% for the year 2012. This decrease is due to a 9% reduction of the charges from Metropolitan Council Environmental Services. The Storm Sewer Utility Fund revenues are anticipated to increase .45% for the year 2012. There is no proposed change to rates for 2012. Expenditures in the Storm Sewer Utility Fund are anticipated to decrease by 3.84% for the year 2012. This decrease is due to reduced capital costs. Utility Funds Revenues Summary 2011 2012 % Increase Budget Bu.. _ get Decrease) Water Utility Fund $606,435 $672,625 10.9% Sewer Utility Fund $802,705 $808,316 .7% Storm Sewer Utility Fund $ 7_,..7,950 $ 78,300 .5% Totals $1,487,090 $1,559,241 4.9% Utility Fund Expenditures Summary 2011 2012 % Increase Budge Budget Decrease Water Utility Fund $606,435 $600,494 { 1.0%) Sewer Utility Fund $802,705 $763,359 ( 4.9%) Storm Sewer Utility Fund $ 6_.,.6,985 $ 64,413 ( 3.8%) Totals $1,476,125 $1,428,266 (3.2%) Page 13 Debt Service Funds As of December 31, 2011 the City will have outstanding debt, including interest, in the amount of $9,631,732 for the following bond issues: G.O. Capital Improvement Bonds of 2008 $8,849,702 G.O. Capital Improvement Bonds of 2009 $1,140,030 The G.O. Capital Improvement Bonds of 2008 were issued in 2008 to provide financing for the construction of a new City Hall. This bond is scheduled to be repaid by a General Obligation Debt I.,evy. The bonds are scheduled to retire in 2028. The G.O. Capital Improvement Bonds of 2009 were issued in 2009 to provide additional financing for the construction of a new City Hall. This bond is scheduled to be repaid by a General Obligation Debt Levy. The bonds are scheduled to retire in 2019, Page 14 Budgeted Projects Fund The Budgeted Projects Fund was established to fund capital purchases for public works, police, administration, etc. The revenues received in this fund are transfers in from the General Fund and the Utility Funds. Revenue received for tree replacement and occasionally revenue received as donations are also deposited in this fund. For the year 2012 the City has budgeted transfers from the General Fund Budget in the amount of $314,225 and transfers in from the Utility Fund in the amount of $108,689. The anticipated expenditures for 2012 are for sealcoat /crack seal, park and trail improvements and maintenance, tree planting, police vehicle, civil defense siren, copier, computers and software. Page 15 Oak Park Heights - Request for Council Action Meeting Date November 29` ", 2011 Time Required: 1 minute Agenda Item Title: — NLC — Annual Conference — Planning Meeting — Tan 5 -6 2012 Agenda Placement Consent Agenda Originating DepartmenURequestor Councifine McComber Requester's Signature Action Requested Approve up to $750.00 for expenses related to Councilmember McCombe airline /ticket costs to Washington DC for NLC .Annual Conference _- Plannin M eeting --Tan Background/.Justification (Please indicate if any previous action has been taken or if other public bodies have advised): I have been appointed to serve on the 2012 National League of Cites — Officer / Board of Directors Planning Meeting. Accordingly, 2012 NLC officers, board members, and committee, council, panel, and constituency group chairs are invited to an important meeting to review, discuss, and frame the NLC priorities for the coming year. Requested Action: The NLC will sponsor the costs of my hotel /tax as well as group meals, but I must find funding for my flight. Would the City Council consider sponsoring the costs of the flight from MSP to Washington DC? I have enclosed some additional information. Funding to be from the Council Contingency fund and /or Council: Travel, Conferences and Schools. cn C > 0 �6 p N QY 0 , r- 3: E 0 U w C7 0 Z Ln C L r- :3 aj +1 F w 0 U cu - 1 E bn 0 m co 0 -- km u 0 MO -0 a w c r 4 4- - S� C U m Cl) >- 4-1 CD V � > r- E co 0 vi �E is c :3 w >- 0 :3 Q) +, r E 4d fu T) (U 0 4� 0 N 4- C: > bD Q) 0 OJ NO a) LA E u m A tw fu IV +- E w V) CL o -0 w 0 en m M Ln M 41 -C L- a) CL 41 E 40 CO OJ us E t . E 4- ru O1 D E E a) Cl. C — - - �U �: C: X: - Ln CL Ul M 1� >, 0 - 0 L�j m = C: Ln > -Mi , ► 4� ra txp M E ro ai U. o o C: Ln U Ln ' o Ln t 0- - a..) Qj > U Ln Ln __j NO 0 73 Z V, co M tw vi 4-A 0 E 413 — 0 , � = , 2 4= _":: -14 > r- L- 0 a "Ln m m 0 0 ra E 0 m u w 0) u 0- 0 u :3 b)) 0 M E >- >1 4- (D u — j - E m Ln 5 — E co - r 0 +1 � 41 W , 0 o C: i V) LXO 0 41 -T GJ r- q , to E 17— si N 0 r O! r . 2 co u m m Qj E m w *= I a, co 0 u m C 'U w 0 0 0 -W E +- - CL 0 :3 r 41 c 0 4� u Ln Q) u 0 V) S-' �n CO 4- m L:,3 u c kz� CL - m CLO 0 :3 (1) o c " 0 vi > bLo m Uj CL Q) m u E ao (U C E txo 41 m w m rq • as 0 > 'n 0 0 4� to a m M " m -2 E 0 > 0 Z\( m 0 0 4- 0 x U CL 41 ro 40 4J 01 sta x a) W m V) E 2 m o t, i "TMW TV JAN UA R Y 2012 NATIONAL LEAGUE n OfficeVBoard of Directors Planning Meeting Reception Thursday, January 5, 2012 5:30 p.m. Meeting ends Friday, January 6, 2011 3:30 p.m. ®� NATIONAL LEAGUE of CMES