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HomeMy WebLinkAbout03-20-12 Council Handouts CITY OF OAK PARK HEIGHT Y `r. M emo p ,- To: Council Member Abrahamson City Administrator Eric Johnson From: Betty Caruso, Finance Director Date: March 6, 2012 Re: Fiscal Disparities Your request for information regarding fiscal disparities and the possible tax impact if the city could capture the contribution value is not a clear method of obtaining additional funds for possible increases in expenditures. In theory I believe you would want to capture the taxes generated by the fiscal disparity contribution value. This would have to work in a similar method as tax increment. The present system of fiscal disparity tax that is levied against a property is dependent upon the State calculations of fiscal disparity rates and ratios. The fiscal disparity tax that is charged against a property is collected by the county and redistributed metro wide. For instance the 2011 Fiscal Disparity Tax for Lowes is $69,936. This is calculated on the fiscal disparity ratio of 29.3124% of the tax capacity multiplied by the fiscal disparity rate of 129.327 %. If the city applied the tax rate of 45.028% against the $54,077 of the fiscal disparity tax capacity, the amount of taxes would be $24,349. Just not a clear cut method of non participating in the fiscal disparity metro -wide calculations. However the chart below reflects the tax generation if the theory was possible: THEORY OF CAPTURING FISCAL DISPARITY TAXES - (LIKE TAX INCREMENT) FISCAL CURRENT PAYABLE DISPARITIES TAX TAXES YEAR CONTRIBUTION RATE GENERATED 2010 $ 2,492,111 43.845 $ 1,092,666 2011 $ 2,117,456 45.028 $ 953,448 2012 $ 2,336,411 51.711 $ 1,208,181 ACTUAL FISCAL DISPARITY TAXES The Fiscal Disparity Contribution for Payable 2011 is $2,117,456. This value times the fiscal disparity rate of 129.327% actually generates $2,738A42 in tax revenue that is distributed to the city as well as other communities. The total amount of fiscal disparity tax that the city received in 2011 is $222,950. $2,515,492 is distributed to other taxing districts. This is generalizing some of the calculations, but close to being accurate. BLOOMINGTON — MALL OF AMERICA Interest on Hwy Bonds. $50,000,000 CONTACTS JOANNE HELM — WASHINGTON COUNTY TAXATION 651 -430 -6195 JOAN FLAVIN — ANOKA COUNTY PROPERTY TAX ACCOUNTING SUPERVISOR FISCAL DISPARITIES 763- 323 -5435 ARLIN WAELTI — ASSISTANT STATE AUDITOR /TIF DIRECTOR • JOEL MICHAEL, LEAD ATTORNEY FOR HOUSE, HOUSE TAX COMMITTEE (WAS INVOLVED IN BLOOMINGTON BILL) 651 -296 -5057 ARLIN THOUGHT THE IDEA HAD MERIT. SHOULD PURSUE THROUGH LOCAL REP WHO SHOULD CONTACT JOEL MICHAEL. JOAN FLAVIN WAS VERY NEGATIVE ABOUT TRYING TO DO ANYTHING WITH FISCAL DISPARITIES. SAID WILL NOT GET THE BACKING NEEDED. Springsted Incorporated Springsted 380 Jackson Street, Suite 300 Saint Paul, MN 55101 -2887 Tel: 651 - 223 -3000 Fax: 651 - 223 -3002 www.springsted.com City of Oak Park Heights, Minnesota Financial Feasibility of Infrastructure Costs Related to the St. Croix River Bridge Work Plan March 2012 Objective The purpose of this study is to analyze the financial feasibility of the possible impacts to the City of Oak Park Heights resulting from utility infrastructure improvements related to the construction of the St. Croix River Bridge. The City of Oak Park Heights is facing infrastructure financing costs varying from $6.9 million to $18.1 million, with the $18.1 million option being the preferred option of the City. This study will review the option of financing portion of the proposed $18.1 million in improvement costs as well as an additional $1.5 million in right -of -way acquisition costs, for an approximate total cost of $19.6 million by withholding the approximate $2.1 million in fiscal disparities contribution. Proposed Completion Date: April 6, 2012 Springsted recognizes that there are other possible financing alternatives and has a history of innovative solutions. However, due to the short time frame of this study, those alternatives will be explored upon completion of this study, should the City wish to explore them following this end of this year's legislative session. Task I - Review Background Information • Internal review of background information: o Review the current cost estimates for the utility infrastructure improvements Task II - Develop Preliminary Financial Feasibility Impacts • Project potential annual debt service impact if bonds were issued to finance the improvement costs • Evaluate the option of withholding the City's current $2.1 million fiscal disparities contribution: o Approximate how many dollars this will raise on an annual basis for the City at its current tax rate o What portion of the annual debt service costs for the improvements would these dollars cover o Identify the impact to an average residential homeowner of each entity that participates in the fiscal disparities pool • Develop recommendations for approaching the legislature with the identified impacts; outline them in our memorandum of findings • Develop a memorandum of findings and recommendations • Meet with City staff in a workshop session to review the memorandum of findings and recommendations • Based on our review with City staff, Springsted will make modifications and incorporate the City's comments into the final memorandum of findings, as appropriate Task III - Present Final Feasibility Memorandum of Findings • Springsted will present the final memorandum of findings to an audience selected by the City Expectations In order to conduct this study, the City will need to designate a staff member to serve as a project manager. This person will be responsible for assisting Springsted in gathering accurate and timely data needed to complete the project, and in arranging for required meetings. At a minimum, the following information will be needed to complete the study: • Copy of the City's most recent Comprehensive Annual Financial Report; • A copy of "Estimated Cost Impacts to the City of Oak Park Heights ", dated November 10, 2011 has been provided and will be used for cost estimates, unless we are told otherwise. • Copies of any current City policies related to fund balances and /or cash balances; • Information related to the local tax capacity rate including the City's current total tax capacity, captured TIF tax capacity, fiscal disparities contribution and distribution, any other tax capacity adjustments, and the total tax capacity rate by local government unit (City, school, county, other). • Other relevant information Compensation We propose to complete this study as described in this proposal for the lump sum fee of $5,500, exclusive of any out -of- pocket expenses such as travel and copying. This fee would include up to two on -site meetings. The estimated time to complete the work is 2.5 weeks from the date we receive the information identified in the Expectations portion of this proposal. Should the City request and authorize additional work outside the scope of services described in this proposal or additional revisions beyond those agreed upon at the discussion of the draft financing plan, we would invoice the City at our standard hourly fees. In addition, we would bill, at cost, for any related out -of- pocket expenses. Attendance at any legislative conferences or hearings would be on an as- needed basis, billed hourly, and in addition to the fee noted above. In addition, we would bill, at cost, for any related out -of- pocket expenses. t Springsted City of Oak Park Heights, Minnesota. Financial Feasibility Study M Title Rate Principal & Senior Officer $220 Officer & Project Manager $190 Senior Associate $155 Associate $145 Support Staff $ 65 Project Team The staff assigned to this project is experienced in fiscal disparities and financial feasibility studies. The team is free to draw upon the expertise of our entire staff. • Nicholas R. "Nick" Dragisich Executive Vice President Mr. Nick Dragisich is team leader for Springsted's Management Consulting Services team. Mr. Dragisich will be the senior officer responsible for overall project management. He will review and approve all the work performed. He has over 2.8 years of management experience, including service as a city administrator and city engineer. Mr. Dragisich has been directly responsible or involved in numerous utility rate studies and cost analysis ': studies and in the development of Excel@ based computer models for local governments in A Al Minnesota, Kansas, Iowa, Maryland, Missouri, North Carolina, North Dakota, Virginia, Wisconsin, and Washington. He holds a master's degree in business administration, a bachelor's degree in civil engineering and is a licensed professional engineer in Minnesota and Washington. Sp ring sted City of Oak Park Heights, Minnesota. Financial Feasibility Study Terri Y. Heaton, CIPFA Senior Vice President and Client Representative Ms. Terri Heaton joined Springsted Incorporated, Independent Financial Advisors, St. Paul, MN, in May 2002 as a Senior Vice President, concentrating her efforts as principal advisor to cities and counties. She serves clients in the Midwest, assisting them in attaining their financial goals through effective public finance, economic development, operational and Zois structural alignment and developing strong human resource teams. Ms. Heaton has over 27 years of experience in local government finance and economic development. She has assisted in developing unique and complex financings using tax increment, abatement, conduit debt, tax credits, Build America Bonds, (BABs), recovery zone facility bonds (RZFBs) and other funding structures for public and private development. Heaton has assisted in the issuance of over 250 bond issues to finance government facilities, roads and streets, utilities, economic development projects, hospitals, theaters, community centers, civic centers, airports, transportation and park and recreation amenities. Prior to Springsted, she served as Chief Financial Officer for the City of Bloomington, Minnesota Ms. Heaton is a Certified Independent Public Finance Advisor (CIPFA), Certified Public Accountant (inactive license), and holds a master's degree in Business Administration from the University of St. Thomas, St. Paul, MN. Anthony L. "Tony" Schertler Senior Vice President and Consultant • Mr. Tony is head of Springsted's Housing and Economic Development Group. Mr. Schertler has over 15 years' experience working in local government, with 10 years focused on downtown development and redevelopment. He has been with Springsted for 5 years assisting our clients around the country. Mr. Schertler comes to us from the City of Saint Paul's Department of Planning and Economic Development, where he was responsible for implementing and administering the City's role in land use planning, housing and economic development, small business lending, home rehab and mortgage foreclosure prevention programs and the sales tax program targeting neighborhood revitalization and promotion of the cultural arts. He has over 15 years of municipal public sector experience, with 10 years focused on Downtown Redevelopment. He is a licensed attorney, with an extensive background in land use, real estate development and urban renewal. He is currently serving on the St. Paul Planning Commission and is Co -Chair of the Ford Site Planning Task Force. Mikaela R. Huot, CIPFA Assistant Vice President and Consultant . Ms. Mikaela Huot has been with Springsted's Housing and Economic Development Team for over ten years. Ms. Huot is a specialist in the comprehensive analysis and use of a variety of economic development, redevelopment and housing programs in the Midwest and Mid - Atlantic regions, including property tax and sales tax increment financing, tax abatement, state grant and loan programs, enterprise zones, community development authorities and p special service /business improvement districts. During her time at Springsted, Ms. Huot has assisted many communities with public policy development, developer review and negotiations, revenue projections and financial feasibility studies, tax increment establishment and compliance, project feasibility and financing. Ms. Huot received a Bachelor of Science in Applied Economics and Business and Industry Education from the University of Minnesota and is certified through the National Development Council as an Economic Development Finance Professional. E: Springsted City of Oak Park Heights, Minnesota. Financial Feasibility Study A