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Home My WebLink About8A - MTVA Operational Levy Request AGENDA #: PREPARED BY: SUBJECT: DATE: INTRODUCTION: BACKGROUND: DISCUSSION: 8A RALPH TESCHNER, FINANCE DIRECTOR CONSIDER APPROVAL OF MVTA TAX LEVY REQUEST JUNE 16, 1997 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 1998 on behalf of the transit authority. This agenda item requests that the council act upon this issue. 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 Regional Transit Board. Statutory language was amended to allow opt-out communities to select this option. Previously the MVT A basically received up to 90% 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. A requirement of Minnesota Statutes 473.388 subd. 7 is that the City either notify the Commissioner of Revenue before July 1 if it intends to levy the tax or defer the transit levy authority to the Metropolitan Council. This year the MVT A levy limit has increased from $301,171 payable in 1997 to a payable 1998 levy limit amount of $343,257 or nearly 14% higher. The transit levy limit is calculated based upon market value increase rather than the total of the Implicit Price Deflator and household growth rate increases now contemplated by the legislature for cities. The 'problem becomes one of accountability. The Legislature allowed a separate line item comparison for the transit levy in the 1997 Truth-in-Taxation notices that were mailed to the property tax payers prior to the City's budget hearing last fall. The purpose was so that cities would not be held responsible for the percentage increase as a result of combining the city and transit levy together. However for 1998 property tax notices, the separate breakout is disallowed. Therefore if we were to levy the full amount requested by the MVTA our payable city tax levy would increase by $42,086 16200 Eggt~~~~~~~. S.E., Prior Lake, Minnesota 55372-1714 / Ph. (612) 447-4230 / Fax (612) 447-4245 AN EQUAL OPPORTUNITY EMPLOYER with no explanation to the property taxpayer that this levy portion is for transit services. It appears this measure was intended to punish opt-out cities. Not only does the City become penalized for the 14% levy increase we also lose flexibility to increase our property tax levy because the transit levy is folded into our levy limit base. The result is that a portion of our levy limit increase is shifted to the transit side and takes away potential funding for the City's operating costs and capital expenditures. ISSUES: The time line for action on this issue is not what any of us desire. State law requires that the city determine whether the MVT A levy by made by the city or Metropolitan Council and advise the state accordingly before June 30, 1997. The council's last meeting in June is June 16. Many of the issues associated with this decision are created by the legislature. The issues for the council to consider are: 1. If the city levies the maximum MVT A levy it will reduce the amount available to fund city programs because of levy limits. 2. Continuing the MVTA levy in the city's levy will distort the tax comparisons between Prior Lake and other cities who do not have the transit levy incorporated in their local levy. 3. Removing the transit levy from the city's total levy will lower the city property tax. In reality the taxpayer will be taxed the same amount only by two different taxing jurisdictions (City & Metropolitan Council). AL TERNA TIVES: 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 1998. 2. Approve the property tax levy request by the Minnesota Valley Transit Authority in the maximum amount of $343,257.00. 3. Approve a transit property tax levy in the same amount of $301,171.00 as the 1997 level if acceptable by the Minnesota Valley Transit Authority which leaves the Metropolitan Council the option oflevying the difference of $42,086.00. RECOMMENDATION: MVTA representatives have met with the Metropolitan Council representatives to discuss the options for transit levy. At his writing, we have not received a written statement of position from the Metropolitan Council. We are also awaiting the results of a special H:\AGENDA \A9706.DOC ACTION REQUIRED: 1~\J! Approved by: H:\AGENDA\A9706.DOC MVTA meeting scheduled for Monday, June 16, 1997. Because the 1998 Truth-in- Taxation law will not provide for the separation of the transit and municipal property tax levies it would not appear to be in our best interest to choose Alternative #3. Depending upon the outcome of their meetings Staffs recommendation will be either Alternative #1 or #2. Pending additional information from the MVT A, the council could either act on this issue on June 16 or decide to conduct a special meeting. I' l /" .MINNESOTA Department of Revenue Property Tax Division Mail Station 3340 Phone (612) 296-3155 St. Paul, MN 55146-3340' Fax (612) 297-2166 May 22, 1997 Frank Boyles City Manager City of Prior Lake 16200 Eagle Creek Ave. Prior Lake, Minnesota 55372-1714 Dear Mr. Boyles: The payable 1998 transit services levy limitation for operating costs and capital expenditures for the city of Prior Lake has been determined. This levy limitation is determined and certified under M.S. 473.388, Subd. 7. The enclosed table shows the determination of this levy limitation. The statute requires that a municipality which intends to exercise the transit services local levy option for the ta'(es payable year 1998 must notify the Department of Revenue and the Metropolitan Council of its intent on or before June 30, 1997. The notification must include the amount of the municipality's proposed transit ta'( for levy year 1997, taxes payable 1998. If your city intends to levy a transit tax under the transit services local levy option for the taxes payable year 1998, please send us a certification of your city's intent along with a certification of your city's proposed payable 1998 transit tax on or before June 30, 1997. If the required certification is not received by the due date, your city may not levy a transit tax for the taxes payable year 1998. If you have any questions concerning this letter or the enclosed table, please contact me. Sincerely, I1~J IJ/U~L- Richard B. Gardner Research Analyst Supervisor Senior Enclosure cc: Richard P. Johnson, Associate Regional Administrator Metropolitan Council Tim Fleetham, Budget Coordinator Metropolitan Council An equal opportunity employer ITY/TDD' (612) 215-0069 1. Payable 1997 Levy Limit $ 301,171 2. Payable 1996 Total Taxable Market Value* $ 538,220,400 ... Payable 1997 Total Taxable Market Value* $ 613,431,600 ". 4. Payable 1997IPayable 1996 City Market Value Ratio (3'/2) 1.139741 5. Payable 1998 Levy Limit (1 x 4) $ 343,257 * Includes ta'( increment values, fiscal disparity values, and powerline credit values. However, the amounts shown are after (l) 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 22, 1997 06/l1/97 WED 13:11 FAX 6128827600 MN VALLEY TRANSIT @OOl ~- F acsimilei.!%~1 ;;~4f~f~ 100 East Highway 13 Burnsville, MN 55337 612-882-7500 612-882-7600 (Fax) TO: Frank Boyles City Manager, Prior Lake From: Audrey Swartz Assistant Administrator Date:June 11, 1997 Pages: 2 (including cover) Attached is the agenda for a special meeting to be held at the MVTA offices Monday June 10 <It 1:30 p.m. Please excuse the late notice but your attendance at this meetin~ would be greatly <lpprecidt- ed. The meeting was called by the MVTA board members primarily to discuss the tax levy options. Please call Robin or Denise at 882-7500 trl inform us whether you are able to attend or not. Thank you. 06/11/97 WED 13:11 FAX 6128827600 MN VALLEY TRANSIT [4J 002 MVT A Special Board Meeting June 16, 1997 1:30 p.m. - 2:45 p.m. MVT A Office Burnsville Transit Station Board Members: Sandra Masin (ChaiT), Cathy Busha, Tom Kedrowski, Ed Mackie, Will Branning, Glenn McKee, Elizabeth Krautz, Art Suel, Ruth Grendahl. MVT A Staff: Beverley Miller (Executive Director), Audrey Swartz, Michael Abegg, Robin Selvig. Agenda 1:30 p.m. 1. Call the meeting to Order 1 :30 p.m. "'II. Approval of Agenda 1 :35 p.m. III. Public Comment 1:40 p.m. "'IV. Discussion of Transit Local Levy Tax Option 2:15 p.m. ..V. Presentation of Building and Site Design for Apple Valley Transit Station 2:35 p.m. VI. Staff Reports/Update 2:45 p.m. ""VII. Adjourn ... indicates board action required.