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3.6 Preliminary Tax Levy Request for City Council Action DEPARTMENT INFORMATION ORIGINATING DEPARTMENT REQUESTOR: MEETING DATE: Administration City Administrator/Finance Director Flaherty September 27, 2021 PRESENTER(s) REVIEWED BY: ITEM #: Consent 3.6 – Preliminary Tax Levy STRATEGIC VISION MEETS: THE CITY OF OTSEGO: X Is a strong organization that is committed to leading the community through innovative communication. Has proactively expanded infrastructure to responsibly provide core services. Is committed to delivery of quality emergency service responsive to community needs and expectations in a cost-effective manner. Is a social community with diverse housing, service options, and employment opportunities. Is a distinctive, connected community known for its beauty and natural surroundings. AGENDA ITEM DETAILS RECOMMENDATION: It is recommended by staff that the City Council approve the attached resolutions: 1) Reducing the 2022 Debt Service Property Tax Levy Certified in the Original Bond Resolution 2) Adopting a Preliminary Property Tax Levy for Taxes Payable in 2022 It is also recommended by staff that the City Council set a public meeting at which the 2022 Budget and Property Tax Levy will be discussed and for the public to ask questions and provide input. ARE YOU SEEKING APPROVAL OF A CONTRACT? IS A PUBLIC HEARING REQUIRED? No No BACKGROUND/JUSTIFICATION: The City Council and staff have met in seven work session settings in preparation and review of the preliminary property tax levy and General fund budget. Each item is discussed below: 1) When the City issues debt, a property tax levy certification resolution is sent to Wright County. The levy amounts in that resolution are projections at the time of issuance. Each year, City staff analyzes the debt service funds to determine if a property tax levy is needed and what the levy amount should be. Given the most recent analysis performed, the property tax levies for payable 2022 are different than those originally projected. In order to change the 2022 debt levies from the amounts in the original certification resolution, Wright County requires the City Council to pass a resolution. The form that will be filed with Wright County is attached. 2) Minnesota State statutes require the City to certify a preliminary property tax levy on or before September 30th to the County auditor. The preliminary property tax levy amount will be used to formulate the truth in taxation notices that will be sent out by Wright County later this fall. It is important to note that the City’s final levy can be less, but not more than this preliminary levy amount. The form that will be filed with Wright County is attached. 3) The Minnesota Department of Revenue requires that Cities with a population over 500 to hold a meeting at which the budget and property tax levy will be discussed, and the public allowed to speak. The form that will be filed with Wright County is attached. SUPPORTING DOCUMENTS ATTACHED: • Tax Levy Calculation Summary • Resolution 2021-72: Reducing the 2022 Debt Service Property Tax Levy • Wright County Form – Bond Register / Debt Levy Supplement • Resolution 2021-73: Adopting a Preliminary Property Tax Levy for Taxes Payable in 2022 • Wright County Form: Proposed Levy Certification • Wright County Form: Truth in Taxation Public Hearing Information POSSIBLE MOTION PLEASE WORD MOTION AS YOU WOULD LIKE IT TO APPEAR IN THE MINUTES: 3 Separate Motions Needed -Motion to approve Resolution 2021-72, reducing the 2022 debt service property tax levy certified in the original bond resolution. -Motion to approve Resolution 2021-73, adopting a preliminary property tax levy for taxes payable in 2022. -Motion to set the Truth in Taxation public hearing for taxes payable 2022 for 7:00 p.m., on Monday, December 13th, 2021. The meeting will be held in the Council Chambers at 8899 Nashua Avenue NE, Otsego, MN 55330. BUDGET INFORMATION FUNDING: BUDGETED: N/A City of Otsego Property Tax Levy Calculations Payable 2022 Revised: September 21, 2021 $% $% 2020 2021 2022 Change Change 2022 Change Change Comment General Revenues 4,518,000 4,671,000 5,019,000 348,000 7.45% 4,977,000 306,000 6.55%Reflects Reduction in Budgeted Expenses Tax Abatements 56,491 45,874 40,422 (5,452) ‐11.88% 40,422 (5,452) ‐11.88% Debt Service Series 2010B 460,000 460,000 ‐ (460,000) ‐ (460,000) Series 2018A 91,758 94,551 97,187 2,636 97,187 2,636 Series 2020A 195,000 195,000 450,000 255,000 450,000 255,000 **NEW** ‐ ‐ ‐ ‐ ‐ ‐ Sub‐total 746,758 749,551 547,187 (202,364) ‐27.00% 547,187 (202,364) ‐27.00% Capital Reserves Pavement Management 950,000 1,050,000 1,100,000 50,000 1,100,000 50,000 Trails Management 33,000 40,000 43,000 3,000 43,000 3,000 Parks Equipment 60,000 62,000 64,000 2,000 64,000 2,000 Capital Equipment Revolving 280,000 300,000 320,000 20,000 320,000 20,000 Fire Reserve 180,000 190,000 200,000 10,000 200,000 10,000 Storm Water 32,000 34,000 36,000 2,000 36,000 2,000 Capital Improvements 318,000 661,000 ‐ (661,000) 1,227,396 566,396 City Buildings & Property 20,000 25,000 30,000 5,000 30,000 5,000 Sub‐total 1,873,000 2,362,000 1,793,000 (569,000) ‐24.09% 3,020,396 658,396 27.87% Tax Rate Management (Flexibility) 1,185,396 ‐ Grand Total 7,194,249 7,828,425 8,585,005 756,580 9.66% 8,585,005 756,580 9.66% Growth (%) 7.22% 8.82% Tax Capacity 20,742,285 22,876,221 25,086,375 25,086,375 Per Wright County (9‐9‐2021) Growth (%) 10.95% 10.29% 9.66% 9.66% Net Tax Capacity 20,497,278 22,591,258 24,773,881 24,773,881 98.75% of Tax Capacity (Based on 2021) Growth (%) 10.15% 10.22% 9.66% 9.66% Tax Rate 35.099 34.653 34.653 34.653 Population 17,323 18,130 19,966 19,966 Source = U.S. Census Bureau Tax Levy Per Capita 415 432 430 430 Taxing 2020 2021 2022 2022 Authority Final Tax Rate Final Tax Rate Estimate Change Estimate Change City of Otsego 35.099 34.653 34.653 0.00% 34.653 0.00% Wright County 44.421 43.719 43.719 0.00% 43.719 0.00% School District 34.371 31.717 31.717 0.00% 31.717 0.00% School District ‐ RMV 29.961 30.598 30.598 0.00% 30.598 0.00% Description 2020 2021 2022 Change 2022 Change Median Appraised Value 247,859 258,455 290,081 12.24% 290,081 12.24% Less: MV Exclusion (14,933) (13,979) (11,133) (11,133) Taxable Market Value 232,926 244,476 278,948 14.10% 278,948 14.10% Tax Capacity 2,329 2,445 2,789 2,789 2020 2021 2022 2022 Taxing Estimated Estimated Estimated Estimated Authority Tax Tax Tax Change Tax Change City of Otsego 818 847 967 14.17% 967 14.17% Wright County 1,035 1,069 1,220 14.13% 1,220 14.13% School District 801 775 885 14.19% 885 14.19% School District ‐ RMV 743 791 888 12.26% 888 12.26% Total 3,397 3,482 3,960 13.73% 3,960 13.73% Annual Increase 478 478 Meeting #7 (9‐13‐2021) Preliminary Tax Levy (9‐27‐2021) Levy Description 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 These are best estimates calculated by the Finance Director based upon information available at the time of presentation. These should only be considered as estimates, and should NOT be considered final. X:\Budget\2022\Property Taxes\Tax Levy Calculations 9‐27 1 CITY OF OTSEGO COUNTY OF WRIGHT STATE OF MINNESOTA RESOLUTION NO: 2021-72 REDUCING THE 2022 DEBT SERVICE PROPERTY TAX LEVY CERTIFIED IN THE ORIGINAL BOND RESOLUTION WHEREAS, the Wright County Auditor’s records show the original debt levies pledged by the City Council at the time of sale as follows: GO Improvement Bond, 2018A $97,187 GO Improvement Refunding Bond, 2020A 496,652 TOTAL RECORDED LEVY $593,839 ; and WHEREAS, the City of Otsego has, in its most recent audited financial statement, recorded cash in excess of reserve requirements in the Debt Sinking Funds maintained for these bonds; and WHEREAS, the Otsego City Council has considered restructuring of the Pay 2022 property tax levy such that the above amounts may be reduced by use of a portion of the excess funds available, in turn reducing the property tax levy for Pay 2022; and WHEREAS, the debt levies have been adjusted or cancelled based on revenue collections, cash balances reported and projections. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF OTSEGO, MINNESOTA: 1. That the following amounts are approved adjusted property tax levies to be levied as property taxes payable in 2022 for debt service purposes: GO Improvement Bond, 2018A $97,187 GO Improvement Refunding Bond, 2020A 450,000 TOTAL LEVY FOR DEBT SERVICE $547,187 2. That these debt service property tax levy adjustments are applicable to taxes payable for 2022 only and that any future changes in levy will be adopted at such time as is proper and prudent. 2 ADOPTED by the Otsego City Council this 27th day of September, 2021. MOTION BY: SECONDED BY: IN FAVOR: OPPOSED: CITY OF OTSEGO __________________________________ Jessica L. Stockamp, Mayor ATTEST: __________________________________ Audra Etzel, City Clerk CITY OF OTSEGORE: Bond Register/Debt Levy Supplement(A) (B)(C)A-B=CBOND ORIGINALDATE DEBT LEVY PER ADDITIONS ORCERTIFIED ISSUED PRINCIPALISSUED BOND RESOLUTION REDUCTIONS TO DEBT LEVYFOR PAY 2022 LEVIED AMOUNT2022G.O. IMPROVEMENT REFUNDING BOND, SERIES 2020A496,652 (46,652) 450,000G.O. SEWER REVENUE NOTE OF 2020G.O. WATER & SEWER REVENUE REFUNDING BONDS, SERIES 2019AG.O. IMPROVEMENT BONDS, SERIES 2018A$97,187 97,187G.O. WATER & SEWER REVENUE REFUNDING BONDS, SERIES 2010CTOTAL593,839 ‐46,652 547,187I hereby certify that the above schedule of bond levies to be spread on payable 2022 tax rolls agrees withyour records and is true and correct. Copies of any resolutions which increase or reduce these leviesare attached.Please sign and date, then return to the Wright County Taxpayer Services Office with your Levy Certification.SignatureDateSincerely,Tammi J VaithTammi J VaithAssistant Finance Director ‐ Property Tax OperationsAugust 3, 2021 1 CITY OF OTSEGO COUNTY OF WRIGHT STATE OF MINNESOTA RESOLUTION NO: 2021-73 ADOPTING A PRELIMINARY PROPERTY TAX LEVY FOR TAXES PAYABLE IN 2022 WHEREAS, the Otsego City Council is required by State Statute to establish a preliminary tax levy for taxes payable in 2022 by September 30, 2021 and certify the preliminary tax levy to the Wright County Auditor; and WHEREAS, the Otsego City Council has reviewed the City’s anticipated expenditures for funds using property tax proceeds in 2022; and WHEREAS, the Otsego City Council has considered projected revenues for funds using property tax proceeds in 2022; and WHEREAS, revenues from sources other than property taxes are not sufficient to meet the anticipated expenditures of said funds; and WHEREAS, the debt levies have been adjusted or cancelled based on revenue collections and projections. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF OTSEGO, MINNESOTA: 1. That the following amounts are the maximum to be levied as property taxes payable in 2022 for the following purposes: General Revenue $7,997,396 Tax Abatement 40,422 GO Improvement Bond, 2018A 97,187 GO Improvement Refunding Bond, 2020A 450,000 Total Tax Levy $8,585,005 2 ADOPTED by the Otsego City Council this 27th day of September, 2021. MOTION BY: SECONDED BY: IN FAVOR: OPPOSED: CITY OF OTSEGO __________________________________ Jessica L. Stockamp, Mayor ATTEST: __________________________________ Audra Etzel, City Clerk Proposed Levy CertificationSTATE of MINNESOTAReturn by: September 30, 2021COUNTY of WRIGHTCity Taxes VotedCITY of OTSEGOTo the Finance Director of Wright County: I hereby certify that the Council for the City of Otsego, County of Wright, Minnesota, did at a meeting onSeptember 27, 2021 levy the following amount to be raised by taxation for the City of Otsego for the payable year 2022.2021 Final 2022 ProposedABCDABCD(A-B-C=D)(A-B-C=D)2021 2021 2021 2021 2022 2022 2022 2022Budget Other Tax Budget Other CertifiedRequirement LGA Resources Levy # Fund Requirement LGA Resources Levy6,611,457 1,940,457 4,671,000 5 Revenue 7,330,345 2,353,345 4,977,000190,000 190,000 7 Fire Protection 200,000 200,00062,000 62,000 11 Parks 64,000 64,0001,525,031 775,480 749,551 19 Debt Service 805,931 258,744 547,1871,302,679 252,679 1,050,000 20 Blacktopping 1,340,293 240,293 1,100,00025,000 25,000 25 Building Improvemen30,000 30,000661,000 661,000 26 Capital Imp 1,227,396 1,227,39645,874 45,874 37 Tax Abatement 40,422 40,42234,000 34,000 41 Water 36,000 36,000300,000 300,000 73 Public Facilities 320,000 320,00040,000 40,000 76 Park Projects 43,000 43,00010,797,041 2,968,616 7,828,425 Total 11,437,387 2,852,382 8,585,005* Do not include any Disparity Reduction Aid or Fiscal Disparity taxes.Dated this 28th day of September, 2021.Adam Flaherty, Finance DirectorFor Office UseTax SystemExcel City Name: Otsego Contact Person: Adam Flaherty Phone: (763) 441‐4414 Date: December 13, 2021 Time: 7:00PM Listed below is prior year data for (1) the location of the public meeting, (2) the phone number to be published, and (3) the mailing address for written responses. Please review these and check the appropriate box for each item. Fill in any new information as needed. 1. Location: Otsego Prairie Center 8899 Nashua Ave NE Otsego, MN 55330 2. Phone Number: (763) 441‐4414 3. Mailing Address: City of Otsego 13400 90th St NE Otsego, MN 55330 Please return this completed form no later than September 30, 2021. email:propertytax@co.wright.mn.us fax:(763) 682‐7873 Attn: Christa Pearson mail: Wright County Taxpayer Services Attn: Christa Pearson 10 2nd St NW Room 230 Buffalo, MN 55313 Truth in Taxation Public Meeting Dates Public Meeting Information is correct New Information Information is correct New Information Information is correct New Information