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Home My WebLink About9B - Deferred II. "\.~ 'FIIVNESO MEETING DATE: AGENDA #: PREPARED BY: AGENDA ITEM: DISCUSSION: JUNE 5, 2000 9B RALPH TESCHNER, FINANCE DIRECTOR CONSIDER APPROVAL OF MVT A 200 I TAX LEVY REQUEST The Minnesota Valley Transit Authority is once again requesting that the City of Prior Lake certify the maximum allowable transit property tax levy for payable 2001 on behalf of the transit authority. This agenda item requests that the council act upon this issue. The City received the Department of Revenue information on May 22, 2000. Council must take action on this item, because the City needs to notify the State by 6/30/00 of our intentions regarding the transit levy. History On June 17, 1996 the City Council approved Resolution 96-66 which authorized the City of Prior Lake to levy the transit tax levy in lieu of the Metropolitan Council. Statutory language was amended to allow opt-out communities to select this option. Previously the MVT A basically received up to 88% of the maximum levy allowed from the Metropolitan Council. The problem became that the Metropolitan Council treated this levy as a sort of discretionary financial assistance whereby the MVT A had to continually submit requests to receive these dollars. The financial advantages were basically that if the opt-out cities would levy directly, the MVT A would be assured of these dollars in their full amount and would receive them on a regularly scheduled basis. Current Circumstances A requirement of Minnesota Statutes 473.388 subd. 7 is that the City either notify the Commissioner of Revenue by June 30th if it intends to levy the tax or defer the transit levy authority to the Metropolitan Council. This year the transit services levy limitation for Prior Lake has increased to an amount of $463,739 which is 22% or nearly $84,000 higher than the $379,950 amount that the City has levied on behalf of the MVTA in 2000. The council should be aware that this amount ($463,739) is only a portion of the total levy. The Metropolitan Council may levy up to an additional maximum amount of $172,565. Outlined below is a history of the transit levies which the City of Prior Lake has levied on behalf of the MVT A transit authority over the past four years: 16200 Eagle Creek Ave. S.L. Prior Lake. Minnesota 55372-1714 / Ph. (612) 447-4230 / Fax (612) 447-4245 ',11'"" '-n H"AGENDA\A0003.DOC AN EQL'AL OPPORTUNITY ElvlPLOYER Payable Year 1997 1998 1999 2000 Levy Amount $301,171.00 $301,171.00 $379,950.00 $379,950.00 ISSUES: Of the 6 cities within the Minnesota Valley Transit Authority, only Savage levied the maximum allowed for 2000 while Rosemount decided to let the Metropolitan Council levy. The remaining cities levied less than the maximum amount. Listed below is a table indicating the levy level each of the MVT A cities were at for payable 2000: MVTA Levy Certified vs. Levy Percentage Member City Max. Levy Allowed of Maximum Apple Valley $1,216,857/$1,330,905 91% Bumsville $2,248,362/$2,318,534 97% Eagan $2,498,362/$2,656,407 94% Prior Lake $379,950/$424,949 89% Rosemount $-0-/$434,359 Levy deferred to Met Council Savage $414,068/$414,068 100% In discussion with Rich Gardner of the State of Minnesota Revenue Department. it was clarified that the citizens in any of the opt out communities could be taxed the fiLlI amount of the maximum levy allowed because the Metropolitan Council has the option to levy the difference if a city chooses to levy less than the maX1l11Um allowable transit levy plus an operational portion above the cIty transit levy limitation. Listed below is a table indicating the levy level associated with transit funding that the Metropolitan Council levied in each of the MVT A cities for payable 2000: MVTA MET Council Levy vs. Levy Percentage Member City Max. Levy Allowed of Maximum Apple Valley $66,203/$180,251 37% Bumsville $226,073/$296,245 76% Eagan $199,055/$356,933 56(1;) Prior Lake $127,566/$172,565 74% Rosemount no local levy n/a Savage $237,467/$237,467 100% The preference of the MVTA is for the City to levy the full amount of the transit levy. The downside to continuing the MVT A levy in the city's levy is that it will distort the tax comparisons between Prior Lake and other cities who do not have the transit levy incorporated in their local levy. By removing the transit levy from the city's total levy it will lower the city portion of the property tax HIAGENDA'A0003.DOC AL TERN A TIVES: RECOMMENDED MOTION: REVIEWED BY: Attachments: HIAGENDAIA0003.DOC -r-,,-' 'n with an offsetting increase to the Met Council's portion of the property tax. Also if the city levies the maximum MVT A levy it will reduce the amount available to fund city programs under the city's general overall levy limitation. Because of these reasons it appears that the City could defer the levy to the Metropolitan Council. It should not be automatically assumed that the Metropolitan Council will levy the maximum as they actually levied less than allowable in five of the six cities in 2000. However, if the City Council does intend to levy the transit tax, Staff would recommend that we continue funding the Minnesota Valley Transit Authority at the current level of $379,950 which would be $83,789 less than the $463,739 maximum and not increase the transit levy amount for the third year in a row. The following alternatives are available to the City Council: 1. Defer the transit levy authority to the Metropolitan Council by not exercising the transit services local levy option for the taxes payable year 2001. 2. Approve the property tax levy request by the Minnesota Valley Transit Authority in the maximum amount of $463,739.00 to be included in the City of Prior Lake's local levy for the taxes payable year 2001. 3. Approve a transit property tax levy In the same amount of $379,950.00 as in 2000. 4. Approve a transit property tax levy somewhere between this year's levy of $379,950 and the maximum allowable levy of $463,739. From Staffs perspective Alternative #3 should be the course of action. The only disadvantage of this option is that the MVT A will have to request any additional appropriation funding through the Metropolitan Cou il. e 2001 Transit Services Levy Limitation Notice City of Prior Lake Payable 2001 Transit Services Levy Limitation for Operating Costs and Capital Expenditures (M. S. 473.388, Subd. 7) 1. Payable 2000 Levy Limit * $ 424,949 2. Payable 1999 Total Taxable Market Value ** $ 759,424,400 3. Payable 2000 Total Taxable Market Value ** $ 828,746,300 4. Payable 2000/Payable 1999 City Market Value Ratio (3/2) 1.091282 5. Payable 2001 Levy Limit (1 x 4) * $ 463,739 * Before HAC A reduction. ** Includes tax increment values, fiscal disparity values, and powerline credit values. However, the amounts shown are after (1) limited market value adjustments and (2) market value exclusions for improvements made to qualifying homestead property ("This Old House" exclusions). Prepared by: Minnesota Department of Revenue Property Tax Division May 18, 2000 I II _._...._...,..~.__.._,~---_._-_..--,._--_.~"-'-_._---_..,.."._..._---~ ~-~--~-----------_.__..._-~.__.<._-~,.-