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ITEM 1 Budget Meeting #5I Ot�e TYOF 0 HINNO50TA TO: Mayor and City Council FROM: Adam Flaherty, City Administrator & Finance Director DATE: August 10, 2020 SUBJECT: Budget Meeting #5 On Monday, Council and staff will resume the review of the draft 2020 General Fund budget. This meeting is the second of three special meetings scheduled for budget and tax levy review. Please note that staff is seeking Council input during these budget review meetings in order to effectively and efficiently move the budgeting process forward. These review meetings lead into September, where the Council will need to adopt the preliminary property tax levy, which is the maximum amount the City can levy for taxes payable 2021. This action will take place at a regular Council meeting, either on the 14' or the 28t' of September, depending upon Council direction. I have developed an outline of discussion topics below. Property Tag Levy Attached with the packet for this meeting, is an updated summary. Staff will review and explain any changes that have occurred since the last budget meeting. Staff would be seeking Council consensus at each meeting regarding the direction of the preliminary property tax levy amount. Budget Review Council and staff will be reviewing General Fund department budgets as outlined in the attached review schedule. Next Meetings August 24 — At this meeting, staff and Council will be reviewing the detailed line -item budgets for General fund revenues and department expenditures. Materials Attached for Discussion 1) Property Tax Levy Summary 2) Department Expenditure Review Schedule City of Otsego 113400 901h Street NE, Otsego, MN 55330 1 Tel. (763) 441-4414 Fax (763) 441-9163 July 27 Department Page Completed Revenues City Council Administration Elections City Administrator Assessing Finance Information Technology Human Resources City Hall & Public Works Building 2 Yes 5 Yes 9 Yes 11 Yes 7 Yes 12 Yes 13 Yes 15 Yes 18 Yes 21 Yes August 10 Department Page Completed Streets Street Lights Fleet Management Old Township Site Police Services Public Safety Commission Fire Protection Building Safety Emergency Management Animal Control m� m� m� X:\Budget\2021\2021 Budget Calendar City of Otsego Property Tax Levy Calculations Payable 2021 Revised: August 5, 2020 Preliminary Tax Levy (8-10) Preliminary Tax Levy (7-27) Levy Description 2016 2017 2018 2019 2020 2021 Change Change 2021 Change Change Comment General Revenues 3,529,352 3,766,000 3,986,000 4,210,000 4,518,000 4,688,000 170,000 3.76% 4,688,000 170,000 3.76% Tax Abatements 88,814 81,385 65,546 60,816 56,491 45,874 (10,617)-18.79% 45,874 (10,617) Debt Service Series 2010D & Series 2011A 225,000 225,000 215,000 205,000 195,000 195,000 - 195,000 - Evaluating Refunding Issue - Might Change Series 2010B 415,OOD 430,000 440,000 450,000 460,000 460,000 - 460,000 - Series 2018A - - - 79,293 91,758 94,551 2,793 94,551 2,793 Sub -total 640,000 6o 55,OO 655,000 734,293 746,758 749,551 2,793 0.37% 749,551 2,793 0.37% Capital Reserves Pavement Management 339,200 475,960 600,000 800,000 950,000 1,050,000 100,000 1,050,000 100,000 Trails Management 25,250 26,000 30,000 32,000 33,000 34,000 1,000 34,000 1,000 Parks Equipment 54,590 55,000 56,000 58,000 60,000 62,000 2,000 62,000 2,000 Capital Equipment Revolving 168,000 235,200 242,256 260,000 280,000 300,000 20,000 300,000 20,000 Fire Reserve 150,000 150,000 160,000 170,000 180,000 190,000 10,000 190,000 10,000 Storm Water 25,000 25,000 26,000 30,000 32,000 34,000 2,000 34,000 2,000 Capital Improvements - 160,200 282,500 355,000 318,000 441,900 123,900 441,900 123,900 City Buildings & Property - - - - 20,000 25,000 5,000 25,000 5,000 Sub -total 762,040 1,127,360 1,396,756 1,705,000 1,873,000 2,136,900 263,900 14.09%1 2,136,900 263,9001 14.09% Grand Total 5,020,206 5,629,745 6,103,302 6,710,109 7,194,249 7,620,325 426,076 5.92% 7,620,325 426,076 i 5.92% Tax Capacity Growth (%) Net Tax Capacity Growth(%) Tax Rate Population Tax Levy Per Capita 13,238,424 14,873,116 16,783,003 18,695,511 20,742,285 22,048,692 16.55% 12.35% 12.84% 11.40% 10.95% 6.30% 13,238,424 14,872,821 16,696,008 18,608,540 20,497,278 21,717,962 16.55% 12.35% 12.26% 11.46% 10.15% 5.96% 37.921 37.852 36.556 36.060 35.099 35.088 14,968 15,472 16,019 16,605 17,323 18,130 335 364 381 404 415 420 22,048,692 6.30% 21,717,962 5.96% 35.088 18,130 420 Taxing 2016 2017 2018 2019 2020 2021 2021 Authority Final Tax Rate Final Tax Rate Final Tax Rate Final Tax Rate Final Tax Rate Estimate Change Estimate Change City of Otsego 37.921 37.852 36.556 36.060 35.099 35.088 -0.03% 35.088 -0.03% Wright County 39.970 39.599 39.946 44.273 44.421 44.421 0.00% 44.421 0.00% School District 39.266 36.659 36.137 32.865 34.371 34.371 0.00% 34.371 0.00% School District - RMV 19.441 19.373 19.422 19.430 29.961 29.961 0.00% 29.961 0.00% Description 2017 2018 2019 2020 2021 Change 2021 Change Median Appraised Value 198,300 217,206 220,572 247,859 258,455 4.28% 258,455 4.28% Less: MV Exclusion (19,393) (17,691) (17,389) (14,933) (13,979) (13,979) Taxable Market Value 178,907 199,515 203,183 232,926 244,476 4.96% 244,476 4.96% Tax Capacity 1,789 1,995 2,032 2,329 2,445 2,445 2017 2018 2019 2020 2021 2021 Taxing Estimated Estimated Estimated Estimated Estimated Estimated Authority Tax Tax Tax Tax Tax Change Tax Change City of Otsego 677 729 733 818 858 4.89% 858 4.89% Wright County 708 797 900 1,035 1,086 4.93% 1,086 4.93% School District 656 721 668 801 840 4.87% 840 4.87% School District -RMV 384 422 429 743 774 4.17% 774 4.17% Total 2,425 2,669 2,730 3,397 3,558 4.74% 3,558 4.74% Annual Increase 161 161 Estimated at 1% of County Provided Value Estimated at 98.500A of Tax Capacity Source = MN State Demographer The City rate is calculated by the Finance Director. County and School District tax rates were obtained from Wright County, and represent the tax rate from their respective preliminary levies and are NOT FINAL. Source = Wright County Assessor are best estimates calculated by the :e Director based upon information ale at the time of presentation. These I only be considered as estimates, and I NOT be considered final. X:\Budget\2021\Property Taxes\Tax Levy Calculations 8-10 City of Otsego Property Tax Levy Calculations Future Tax Levies Revised: August 5, 2020 Levy Description 2020 General Revenues 4,518,000 Tax Abatements Gateway North 56,491 Parkview Retail - Preliminary Projections 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 4,688,000 4,922,400 5,168,520 5,426,946 5,698,293 5,983,208 6,282,368 6,596,497 6,926,311 7,272,627 Comments Annual Increase of 5% 45,874 - - - - - - - Current Abatements (Gateway North) - 34,196 57,770 57,770 57,770 57,770 57,770 57,770 57,770 57,770 Projected Abatements(Parkview Retail) Debt Service Series 2010D & Series 2011A 195,000 195,000 450,000 425,000 400,000 300,000 300,000 280,000 - 280,000 - - - _ - Debt Expires = 202 Debt Expires = 2021 Series 2010E 460,000 91,758 460,000 94,551 - 97,187 - 94,415 - 102,144 - 104,308 - 106,313 113,412 114,946 9,232 12,592 Debt Expires = 2034 Series 2018A - 299,777 299,777 299,777 299,777 299,777 299,777 299,777 299,777 299,777 $4.OM Bond -15 Years at 1,50% Interest (2022) NEW - PW Expansion - - 488,847 488,847 488,947 488,847 489,847 $SM Bond -15 Years at 4.50% Interest(2026) NEW - Fire Station Sub -total - 746,758 - 749,551 - 846,964 819,192 801,921 704,085 1,194,937 1,182,036 1,183,570 797,856 801,216 Capital Reserves 950,000 1,050,000 1,150,000 1,250,000 1,325,000 1,400,000 1,475,000 1,550,000 1,625,000 1,700,000 1,775,000 See Cash Flow Spreadsheets Pavement Management 33,000 34,000 35,000 36,000 37,000 38,000 39,000 40,000 41,000 42,000 43,000 Increase $1,000 Annually Trails Management 60,000 62,000 64,000 66,000 68,000 70,000 72,000 74,000 76,000 78,000 80,000 Increase $2,000 Annually Parks Equipment Revolving 280,000 300,000 320,000 340,000 360,000 380,000 400,000 420,000 440,000 460,000 480,000 Increase $20,000 Annually Capital Equipment Fire Reserve 180,000 190,000 200,000 210,000 220,000 230,000 42,000 - 44,000 - 46,000 - 48,000 - 50,000 - 52,000 Increase $10,000 Annually Until Debt Issued Increase$2,000 Annually Storm Water 32,000 34,000 36,000 38,000 40,000 - - - - Evaluate Annually Capital Improvements 318,000 441,900 - - 35,000 - 40,000 45,000 50,000 55,000 60,000 65,000 70,000 Increase $5,000 Annually City Buildings & Property 20,000 25,000 2,136,900 30,000 1,835,000 1,975,000 2,090,000 2,205,000 2,080,000 2,185,000 2,290,000 2,395,000 2,500,000 Sub -total 1,873,000 Grand Total 7,638,560 8,020,482 8,376,637 8,665,148 9,315,915 9 10,631,613 20,497,278 24429753 25406943 26423221 27,480,150 28,579,356 29,722,530 30,911,431 Annual Capacity Increase of4% NetTax Capacity Growth (%) 10.15% 5.96% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% Tax Rate 35.099 35.088 33.819 34.144 34.289 34.105 35.257 35.324 35.438 34.240 34.394 Increase/(Decrease) to Maintain Tax Rate 2,366 506,264 450,135 432,805 496,672 212,377 2OZ250 177,974 541,096 515,141 FUTURE LEVIES X:\Budget\2021\Property Taxes\Tax Levy Calculations