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Home My WebLink About8E - MVTA Levy 2001 MEETING DATE: AGENDA #: PREPARED BY: AGENDA ITEM: DISCUSSION: JUNE 19, 2000 BE FRANK BOYLES, CITY MANAGER RALPH TESCHNER, FINANCE DIRECTOR CONSIDER APPROVAL OF MVTA 2001 TAX LEVY REQUEST The City Council, at their June 5, 2000 regular meeting, deferred action on this item directing that the staff supply information the Council needs to clarify how this action might impact upon the City's future transit plans. By June 30, 2000, the State Department of Revenue asks opt-out communities to report the amount of the transit levy for calendar year 2001 and whether the City or. Metropolitan Council will make the levy. The City can levy the same amount as last year ($379,950), or up to the maximum calculated by the State ($463,739). This levy is for transit operating costs only. 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 MVTA 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 MVT A in 1999 and 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 to support the regional system. 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: I\COUNCILIAGNRPTS\2000\0619 _ SE. DOC 16200 Eagle Creek Ave. S.E.. Prior Lake. Minnesota 55372-1714 / Ph. (612) 447-4230 / Fax (612) 447-4245 AN EQUAL OPPORTUNITY ErvlPLOYER "r...".... r Payable 1997 1998 1999 2000 Levy $301,171.00 $301,171.00 $379,950.00 $379,950.00 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 Member City Levy Certified vs. Max. Levy Allowed Levy Percentage of Maximum Apple Valley Burnsville Eagan Prior Lake Rosemount Sava~e $1,216,857/$1,330,905 $2,248,362/$2,318,534 $2,498,362/$2,656,407 $379,950/$424,949 $-0-/$434,359 $414,068/$414,068 91% 97% 94% 89% Levy deferred to Met Council 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 full 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 maximum allowable transit levy plus an operational portion above the city transit levy limitation. Listed below is a table indicating the levy level associated whh transit funding that the Metropolitan Council levied in each of the MVT A cities for payable 2000: MVT A Member City Apple Valley Burnsville Eagan Prior Lake Rosemount Savage MET Council Levy V5. Max. Levy Allowed $66,203/$180,251 $226,073/$296,245 $199,055/$356,933 $127,566/$172,565 no local levy $237,467/$237,467 Levy % of Max. 37% 76% 56% 74% n/a 100% ISSUES: To determine who should levy and in what amount, the City Council needs answers to some key questions: 1) What does the MVTA propose that Prior Lake do with respect to the transit levy? IICOUNCIL'AGNRPTSI2000106 I 9_ 8E. DOC The MVTA proposed that the City of Prior Lake, not the Metropolitan Council, levy the maximum levy for 2001. Such action is good for the MVT A in two ways. If the City levies, the MVT A is guaranteed to receive the entire levy without administrative procedures. If Prior Lake levies the maximum, the MVT A will receive an infusion of $84,000 in new transit operating dollars to devote to 2001 services. It is not clear what additional or improved service the City will receive as a result of such an additional levy. 2) Does the Metropolitan Council have a position on the transit levy question? While the Metropolitan Council takes no position on this matter. It appears that transit levies made by opt-out communities could understate the actual costs of regional transit and therefore, metropolitan government. 3) How will the transit levy affect the City's ability to operate its own transit system should it desire? Paragraph 9 of the MVTA joint powers agreement provides that "...withdrawal by any patty shall be effected by servicing written notice upon the other parties. no later than January 10th of the year at the end of which such withdrawal is to be effective." If Prior Lake wishes to withdraw from the MVTA to develop its own transit system, we must give all other MVT A members written notice by January 10, 2001. The City could then withdraw effective December 31, 2001 and provide its own transit program for 2002. Since the transit levy the Council is acting upon tonight is for calendar year 2001, there is no impact upon the City's ability to withdraw from the MVT A for calendar year 2002. 4) What should Prior Lake do between now and January 2002 when it may wish to begin its own service? The MVTA does not have actual ridership or cost data for Prior Lake. Instead, they estimate ridership and allocate costs based upon a formula. Prior Lake receives three services including two daily peak hour commuter trips Downtown and back, van pools to Northwest Airlines and Scott County Courthouse, and a summer only Dial-a-Ride service. 1999 estimates suggest that commuter service serves 10,000 persons annually or 40 rides per day. The van pools serve 12,461 persons annually or 50 rides per day. Dial-a-Ride serves 722 persons or 11 rides per day. Costs for these services in total, based upon the MVTA cost allocation plan, is about $354,000 dollars exclusive of administrative costs. If the City wished to contract for such services it is estimated that identical service would cost the City about $325,000 annually. This does not include marketing, administration, oversight or revenues. In light of these facts, I believe the Council may want to consider the following actions between now and January 2002. l: ICOUNCIL IAGNRPTSl200010619 _ 8 E. DOC I II ALTERNATIVES: RECOMMENDED MOTION: L\COUNCILIAGNRPTSI200010619 _ 8E DOC . During calendar year 2000 and 2001 we should work with the MVTA to improve services and ridership to Prior Lake residents. . By January 10, 2001, we should provide written notice of our intent to withdraw from the MVTA effective January 1,2002. . No later than June 30, 2001, the City should certify a transit levy for 2002, which is based upon an analysis of our transit service needs and costs as proposed by potential vendors through a RFP or bidding process administered before that deadline. 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 Staff's perspective Alternative #3 is the best course of action. 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 * S 424,949 2. Payable 1999 Total Taxable Market Value ** S 759,424,400 .... Payable 2000 Total Taxable Market Value ** S 828,746,300 ;). 4. Payable 2000IPayable 1999 City Market Value Ratio (3/2) 1.091282 5. Payable 2001 Levy Limit (l x 4) * S 463,739 * Before HACA 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 hr.."