2016-02-09 Council Workshop Packet - Fin SummitCITY OF MENDOTA HEIGHTS
mCITY COUNCIL FINANCIAL SUMMIT
WORKSHOP AGENDA
February 9, 2016 — 1:10 p.m.
Mendota Heights City Hall
1. Call to order — Roll Call
2. Financial Management Plan
a. Fund Balance Policies
b. General Fund Balance Policy
c. Water System Sale Impacts
• Water Tower Cell Revenue
• Water Utility Fund Balance
• Water Surcharge Discussion
d. Street Reconstruction Plan Funding
e. Future Fire Station Funding
3. Economic Development
a. TIF/Abatement
b. Bourn Lane/TH 55 Development
4. Fees
a. Building Permit and Other City Fees
b. Conduit Debt Fees and Policies
c. Utility Franchise Fees
5. Other
a. Sanitary Sewer Inflow and Infiltration Separation Funding
b. Fiscal Disparities Update
c. City Council Health Insurance Participation
6. Adjourn
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<<�� EHLERS
� ���.t'' LEAOERS IN PUBLIC fltiAIJCE
. . �------ --- - .---. �^-.�+�_�';:c��.
TIF and Tax Abatement Basics
City of Mendota Heights
��" � February 9, 2015
�
TI F and Abatement Basics
What is TI F?
The ability to �ap�ur� and u�� most of
the increased local proper�ty t�x
r�ve��u�� from n�w development within
a �le��n�d g�og���hi�; ��e�.
�,
�
� EHLERS
��a=�� P�s�� ���a���
2/9/2016
1
Why Use TIF or Abatement?
• Encourage certain types of development or
redevelopment that would not normally occur
without assistance ("but for" test).
✓Create or retain jobs
✓Redevelop blighted areas
✓Remediate polluted sites
✓Construct affordable housing
�
Why use TI F or Abatement?
• Promote Economic Development
✓ Change the market in the community
✓ attract higher paying jobs
✓ higher value buildings
�EHLERS
LEADER.SII:PUBLiClINPtIC[
• Bring development that does not exist today
• Help shape the look and feel of development
,,
, � � EHLERS
IFAUERS iN PUPtIC flnnNCE
2/9/2016
2
Building Blocks of TIF
There is Value in the District when
created (also called "base value")
iax revenues
continue go to all
local governments
� EHLERS
IERYEP51i: PIIBIIClIIIdNCC
Building Blocks of TIF
TIF District "captures" value Abatement can "capture" part or
from new development the entire value from the parcel
� o o � � o - _ =J _� 0
8 �
Development 0 i�
occurs � �
�� �
Original Tax Capacity
� EH,LERS
2/9/2016
3
TIF Example (26 year housing dist.)
■ Uriginai Tax rapacity ca Prcject Tax Capacity j
5180,000
$160,000
$140,000 � - --
$120,000
5100,OOD ---- , � - �
$80,000 '
550,000 - � �-� � p. r E��� �� n e ._,
g4o,000 ' ' -- � _ , . , �,,
5zo,000
So g
m o �r � m ci o e � n ro m$$ g g d�
Year
�
Taxes Not Captu red
EHLERS
�aoERs,,, P�a�,� �,�<„��
• State Property Taxes
✓ Tax paid by commercial users to support education (cabin
owners pay as well)
✓ Not included in local tax capacity rate therefore it is not applied
to captured value for TIF districts or abatement
• Market Value Taxes
✓ School operating referendums and other school taxes
✓ Based upon market value of property rather than tax capacity of
property
✓ Not included in local tax capacity rate therefore it is not applied
to captured value for TIF districts or abatement
� EH,LERS
2/9/2016
►�i
Fiscal Disparities
• Fiscal Disparities Taxes
✓ State Law requires commercial/industrial (C/I)
properties in 7-County metro area to contribute 40% of
new C/I valuation to an area-wide pool for
redistribution to all local taxing jurisdictions
• Policy choice for Council
✓ Fiscal disparities paid outside of TIF district
• Increase available TIF on an annual basis
• Impacts existing tax payers
✓ Fiscal disparities paid inside the TIF district
• No impact to existing tax payers
,
• Less TIF available on an annual basis
� � EHLERS
IfADEPS i': P�EL�C liHINGC
Commercial TIF
��R� -- - - - -
E4�aRd TaRable Tatal Taxable Propnq
�hrtetVaWe MarketYalue Tabl hEarket Tiz Project
A�e�Rlra Ile�lls Per54��PerSq_FtdUnit Sq.Ftlliils Value Clas TaxCapac
Total PropertyTaxes 110,442
less State-wide Taxes (30,277)
less Fiscal Disp. Adj. (32,740)
less Market Value Taxes (3,105)
less Base Value Taxes (442)
Annual GrossTlF 43,878
Developer receives
$.36 on the dollar
2/9/2016
5
Housing TIF
- Insat Rows - - - - -
i E9imaid Fs3.mafied • , Pmpny
6larkrt�+alue 41AarketYalue To01 Svl�rkrt Tu Project
�. /ueaiP6a� Xer U� Sq. FL'{Inia °Sq. Ft+lk�it Sq_ FtAiils yalue Oa� Tax Capaciry
Sr_ Apl L� 9_`� [G�D 130 12,35t7.0�0 Rai� 159.375 _
7QAL 12,350,OD0 159,S7S
� � ' •
Total Property Taxes 257,420
less State-wide Taxes 0
IessFiscal Disp. Adj. 0
less Market Value Taxes (35,901)
IessBase Value Taxes (20,314)
Annual GrossTlF 201,204
�J
�
Developer receives $.70 on the dollar after
deducting 10% admin and OSA Fee
TIF and Abatement Basics
Prolect Area: Where Monev can be Spent
Project Area
;,
�
•TIF districts must be
located in a �roject Ar�a
•Established by various
statutory authorities
•Sets boundary for TIF
expenditures
� EHLERS
�E� s�_��r�n���
2/9/2016
�
,�,,. --,--� �---
TI F and Abatement Basics
TIF District: Where Monev is Collected
Project Area
TIF Districts
�
TIF District Approval
•Defines Parcels for
capture of value
•Some increment can be
spent �u��i��� the TIF
District, but in the Project
Area ("Pooling")
•Project area can contain
multiple TIF districts
� EHLERS
¢aneas n; rucuc n�uncc
• Can be established by City, County, HRA or
EDA
• TIF Plan and Project Area Plan
• Set forth policy objectives
• Provide maximum budget authority for TIF revenues
and expenditures
• Must have approval of elected officials
following public hearing
EHLERS
� ltxpEnSin'PUELiCl�NRNtE
2/9/2016
7
Types of Districts
• Redo substandard / obsolete buildings
✓ Redevelopment TIF District – 26 years
✓ Renovation and Renewal TIF District – 16 years
• Affordable housing
✓ Housing TIF District – 26 years
• Job and tax base creation
✓ Economic Development TIF District – 9 years
,5 �
How Can Increment be Spent?
• Must Be Costs Associated with New
Development
✓ Land Acquisition
✓ Demolition and Relocation
✓ Site improvements
✓ Utilities, Streets, Sidewalks
✓ Environmental Clean-up
� EHLERS
¢noen; ix eueuc miaua
✓ Parking
✓ Buildings (only for housing districts)
� — � EHLERS
,6 � ����
f£ADEPSiAP116Li GNCE
2/9/2016
•
-�--� --- —
TIF Financing Options
� Pay-as-you-go TI F Note
✓ Developer funds TIF-eligible expenses
✓ Authority repays developer with interest, over time, from available
tax increment
✓ No risk to TIF authority if term expires before note is retired
• Inter-fund loan
✓ City may use cash to pay for redevelopment expenses and repay
itself from future TIF
✓ Common for city-driven redevelopment initiatives like Rogers
downtown
� EHLERS
,� �.
�enoeas ir vueuc nnancc
TI F Financing Options
• General Obligation TIF Bonds
✓ Authority issues bonds to fund TIF-eligible expenses
✓ Pays debt service with available tax increment
✓ IF TIF < debt service, authority is required to cover the gap
✓ Can mitigate (but not eliminate) risk with developer guarantees
� TIF Revenue Bonds
✓ Bonds secured solely with TIF
✓ Inv stor takes full risk of non-payment, wants higher interest rate in
exc�(iange
1B �
� EoEHLERS
2/9/2016
�
"But For" Test
• The development is only possible
the use of tax increment
• Elected body has to make this finding
� EHLERS
L[NOEtI51ii GUPLiC fIIIPNCC
Gap Analysis
assistance is needed?
• Pro forma Analysis
• Cost comparison of raw land vs. developed land
� EHLERS
�ER=��P�a�����.xR
2/9/2016
10
Tax Abatement
What is Abatement?
Each local jurisdiction may decide to use
its portion of the existing or new pro�erty
t��( r�venu�� from any developrr��nt
within a defin�d �eographic area.
:,
�
Restrictions for Abatement
�EHLERS
icmeas in eueue niuxcc
• In any one year, the a political
subdivision may abate may not exceed the
greater of:
• Ten percent of its net tax capacity
� $200,000
;a
�
�i EHLERS
�,�Ea=,�P�E .��
2/9/2016
11
==--�-�=- -
Requisite Findings
• Benefits to the political subdivision at least equal the costs of
the proposed agreement; AND
• Abatement is in the public interest
• Increase or preserve tax base
• Provide employment opportunities
• Provide or help acquire or construct public facilities
• Redevelop or renew blighted areas
• Provide access to services for residents
• Provide public infrastructure
• Phase in a property tax increase, in specific circumstances
� Stabilize the tax base with respect to certain utility prope es
� EHLERS
�A��a���P����,�����
�
Abatement and Tax Levies
• Abatements are special tax levies outside of levy
limits
• Amount of abatement must be added to total levy
for the current year
�
� EHLERS
1£ADEAS iti PI1Etf G l�xF�uC[
2/9/2016
12
--- ---= y�
Abatement — Up to 20 Years
• If all 3 entities approve (City, County, School)
— 15 year term
• If 1 or 2 entities approve
— 20 year term
• If term not stated in resolution
— Maximum 8 years
�
TI F vs. Abatement
■ TIF Districts vary in length
from 9 to 26 years, depending
upon the type of district
■ TIF does not require arproval
from County and School
■ TIF can only be captured on
new value of development
■ Various findings/tests required
to create and restrictions on
end uses
� No maximum on the annual
increment generated or
number of TIF districts
`I
�
� EHLERS
ranEN51M1� P118L�ClIXPIICE
■ Abatement is a maximum of 8 to 20
years, depending upon use and
number of entities participating
■ Abatement requires approval from
each taxing entity
a Current taxes can be abated
■ Only public interest findings
required and no restrictions on end
use
• Maximum cannot exceed the
greater of $200,000 or 10°'0 of the
net iax capacity
� EHLERS
��=��:�E���,����
2/9/2016
13
Business Subsidy Policy
;,
�
Business Subsidy Policy
� EHLERS
LETOLns lu P�PLI� fIlIPI1C[
• Outlines the conditions under which the city will
consider providing assistance
• Provides direction and parameters for staff when
fielding requests for assistance
• Clearly communicates the City's position to
existing and prospective businesses
• Ensures compliance with the State business
subsidy statute
�
� EHLERS
fIA0Cft5 iA' PU6LICl11101iCC
2/9/2016
14
page 2
i101 G��ctor;a Curve Nler��i�ta F,e�c�ht;, b1fJ 5�11(i
65a.452]S50 phone I 651452.8940 fax
` www,mendota-heighis,com �
� � �
� CITY OF
IV1ENCiOTA HEfGHTS
DATE: February 9, 2016
TO: Mayor, City Council, and City Administrator
FROM: John R Mazzitello, PE, PMP, MBA — Public Warks Directar/City Engineer
SUBJECT: Water Fund Balance and Revenue Disposition
BACKGROUND
Water Fund Balance
The City of Mendota Heights has been building a balance in the Water Fund (Water Tower and
Water Utility Fund combined), even since the water tower was rehabilitated in 2010. There is
currently �$1.2 million in that fund balance. With the transfer of ownership of the Mendota
Heights water system to the Saint Paul Regional Water Service (SPRWS), the City no longer
needs these funds to pay for capital improvement projects and water tower rehabilitation.
Several suggestions have been made as to the final disposition of these funds. These include:
1. Retain the funds for a potential "buy-back" of the water system from SPRWS
2. Utilize the funds to establish an equipment replacement fund and/or a facilities fund
3. Expend the funds on other projects within the City's infrastructure system
Upon consultation with the City Attorney during the negotiation of the new agreement with
SPRWS, he advised that since the money in the Water Fund was collected from bill payers for
improvements to the City's infrastructure, that it should be expended on infrastructure related
expenses. Vehicles for administration, Public Works, and Engineering, capital equipment related
to infrastructure improvement and maintenance, and City facility maintenance, repair, and
improvements would qualify as infrastructure expenses.
Water Bill Surchar�e Revenue
The City of Mendota Heights collects �$220,000 per year from a 10% surcharge to all water bills
paid from properties within the City. This amount varies from year to year as it is based on
actual water consumption. This revenue has been going into the Water Fund and has been
utilized for capital improvements to the water system. With the transfer of ownership of the
Mendota Heights water system to SPRWS, the City is no longer responsible far capital
improvements to the water system, or the renovation of the water tower.
Several suggestions have been made as to how best utilize the surcharge revenue. These include:
1. Utilize funds to start an equipment replacement fund and/or a facilities fund
2. Utilize funds to contribute to the Special Park fund
3. Utilize funds to build a general infrastructure fund for use city-wide
4. Reduce and or eliminate the surcharge altogether.
A relatively minor amount would be needed to cover expenses associated with change�aa�ed�or
improvements to the system as a result of City activity not programmed as an SPRWS capital
project (i.e. hydrant relocations associated with a City street project). These expenses should not
exceed �$10,000 per year, and would not occur every year.
Cell Tower Leasin� Revenue
The City of Mendota Heights collects �$110,000.00 per year from leases allowing cellular
communication companies to place cellular antennae on the City Water Tower. This money had
been designated for use in the Water Utility Fund where it would go towards capital
improvements to the water system (water main replacement, water tower rehabilitation, etc.).
With the transfer of ownership of the Mendota Heights water system to SPRWS, the City is no
longer responsible for capital improvement to the water system. The City would be obligated for
changes/improvements to the system as a result of City activity not programmed as an SPRWS
capital project (i.e. hydrant relocations associated with a City street project). These expenses
should not exceed �$10,000 per year, and would not occur every year.
As part of the agreement with SPRWS, the City of Mendota Heights will receive 100% of the
cell tower revenue through the year 2021. After that, the City will retain 50% (�$55,000) of the
revenues per year. Since the City is no longer responsible for capital improvements to the water
system, this becomes a revenue stream that could be applied elsewhere.
BUDGET IMPACT
Impacts to future budgets depend on the decision made as to how to utilize the Water Fund
balance and future revenue.
RECOMMENDATOIN
Staff recommends Council discuss what they would ]ike to do with the existing Water Fund
balance, as well as surcharge and cell tower lease revenues in future years.
page 4
i101 G��ctor;a Curve Nler��i�ta F,e�c�ht;, b1fJ 5�11(�i
65a.452]S50 phone I 651452.8940 fax
` www,mendota-heighis,com �
� � �
� CITY OF
IV1ENCiOTA HEfGHTS
DATE: February 9, 2016
TO: Mayor, City Council, and City Administrator
FROM: John R Mazzitello, PE, PMP, MBA — Public Warks Directar/City Engineer
SUBJECT: Street Plan Policy and Funding
BACKGROUND
In 1992, the City Council adopted the Street Rehabilitation and Reconstruction Policy. The first
project constructed under this policy was in 1993 (Mendota Heights Road — I-35E to Dodd
Road). The first full subdivision constructed under this policy was in 1995 (Friendly Hills).
The policy outlines the construction standards that are to be applied to City streets, as well as the
project funding structure. The current policy states that up to 50% of the assessable project costs
may be assessed to the benefitting property owners along the project, with the remaining project
costs being paid by the City. Assessment values for projects have been historically set using this
parameter while taking into account past years' assessments for similar types of work and
average values of benefitting properties along the project. The policy further states that
maintenance work, including preventative maintenance, will be completed by the City at the City
100% expense.
Since 1993, almost all of the City streets have been reconstructed under this policy. There are
four reconstruction projects remaining in the full street plan before the City can enter a sustained
period of rehabilitation and preventative maintenance (Mendota Road — 2016, Center Point
Curve/Commerce Drive — 2019, Victaria Curve — 2022, Carmen Lane-Dakota Drive-Waters
Drive — 2024). There are major rehabilitation projects planned in the years between the
reconstructions. To complete the reconstruction program in time to abide by the 50 year life
cycle for a municipal street (rehabilitation 25 years after construction, reconstruction 50 years
after initial construction), the reconstruction program should be completed in 2018. We are
currently planning to complete the reconstruction in 2024 in conjunction with the first
rehabilitation project from the original construction schedule. We are �5 years behind schedule.
In 2012, the City Council set a funding limit for municipal bond sales at the cost of new debt not
to exceed 1% of General Property Tax Levy (�$900,000 in bond sales per year). In 2014, City
Council reduced that limit to 0.6% (�$540,000 in bond sales per year). The 1% limit was
restored in 2015 for the 2016 budget year.
The City of Mendota Heights has 72 centerline miles of streets under its jurisdiction. If the City
is going to meet the requirements of the established 50 year life cycle, the City should be
rehabilitating 2.88 miles of streets per year. A ballpark estimate of the cost to rehabilitate a City
street is $750,000 per mile. This equates to an annual investment in street rehabilitation of
�$2.16 million per year in total project cost. In 2016, the City plans on assessing 27% of the
assessable project costs for the rehabilitation portion of the project for Warriar Drive, -�i��i 5
Ridge Circle, and Sibley Court. This will keep the assessment amount consistent with
rehabilitation projects form the past few years. If the full investment is made for future
rehabilitation projects based on this percentage, the total City investment will need to be in the
range of $1.6 million per year. City investment does not need to come solely from municipal
bond sales, but the investment level is necessary for the City to keep pace with required
infrastructure maintenance for the street system. These estimates discount the cost of the four
remaining reconstruction projects (�$1.2 million per mile).
Without additional revenue and investment is the street maintenance, rehabilitation, and
reconstruction program, Mendota Heights will fall further behind and will be unable to address
street needs as they arise. These additional revenues can come from any number of sources
including: municipal bond sales, increase general levy, utility franchise fees, utility surcharges,
other fees and surcharges, etc.
BUDGETIMPACT
Impacts to future budgets depend how the City Council decides to fund the street maintenance,
rehabilitation, and reconstruction program, and where those funds for those investments relate to
revenues. As an example, the City of Richfield has campleted their reconstruction program and
has decided to fund the rehabilitation program completely through utility franchise fees.
Richfield no longer issues bonds, nor do they assess property owners for street rehabilitation
projects; however, their Utility Franchise Fee adds �6.5% to utility bills.
RECOMMENDATOIN
The Council should discuss funding of the street maintenance, rehabilitation, and reconstruction
program, as well as revenue sources for those investments. Council should provide guidance on
how they would like to see the street program progress.
� a �
m
DATE:
TO:
FROM:
SUBJECT:
BACKGROUND
CITY OF
MEN�OTA HEIGHTS
February 9, 2016
Mayor and City Counci]
Mark McNeill – City Administrator
Nolan Wall, AICP – Planner
Bourn Lane Siie Development Scenarios
page 6
11�1 Victo�;a Curve . Mendo[a He�ghts. I�iN 55118
&51.452.1850 phone I 651.452.8940 f�x
� www.mendota-heights.com ,
At the January goal setting workshop, the Council discussed the potential of rezoning the city-owned Bourn
Lane properties from B-1 A Business Park, to residential use. The intended benefit of this would be that the
City would be able to keep all of its normal property tax revenues, rather than losing a portion to Fiscal
Disparities.
There are a number of considerations if this is to be done. For discussion, staff analyzed the amount of
development which might be able to be located there, and compared the resulting property taxes generated
by residential, commercial, and industrial developments.
Bourn Lane Site Information
Size: 14.9 acres
Zoned: B-lA Business Park
Guided: B-Business
Residential Development Scenarios
Twin Homes
The attached sketch plan portrays a 16-lot (32-unit) twin home residential development based on the
20,000-square foot minimum lot size requirement in the R-2 zone. The tax impacts were reviewed based
on three different valuations for a single unit within the following existing attached housing developments:
Note that there are three different types of residential multi-family homes. Given the Bourn location—one
which is more impacted by airport noise, a lack of lake frontage, and a more immediate adjacency to
neighboring industrial properties and TH 55, it is less likely that property values comparable to those of
Augusta Shores could be replicated there. A most realistic valuation scenario might be somewhere between
those of Kensington and Kingsley--$300,000 is shown in the above table.
Apartments page 7
Due to recent interest in market rate apartment developments in the City, the following scenarios should
also be considered:
1 � 1 i
Kingston Green 30 units/acre $20,474,500.00 $308,434.32 $] 18,450.50
(Apple Valley) (168/8)
Example N/A $15,000,000.00 $208,680.75 $66,000.00
Lexington Heights 13.56 units/acre $5,950,300.00 $8],511.52 $26,005.88
(North Building) (75/5.53)
The total estimated share generated is shown only for one building. The density of such a future
development is a policy decision for the City Council to consider. It may also be possible to only develop
a portion of the site as residential, in which case the land abutting the frontage road and visible from TH 55
could remain for future commercial development to support the residential use and Business Park.
Industrial Development Scenario
The Scannell Properties industrial development at 1475 Commerce Drive was constructed in 2014 and
contains a 72,030-square foot multi-tenant bulk warehouse building on 4.37 acres.
Based on a similar development scenario on the Bourn Lane site, two lots could be developed as shown on
the attached sketch plan. While the 5-acre lots shown on the attached map are larger than the 3-acre
minimum lot size in the Industrial District, the Scannell example was used due to its recent construction,
available tax information, and desirabiliry in the current real estate marketplace. It is possible that an
additional lot could be created, which would most likely reduce the size of the buildings.
Business Park Development Scenario
In order to analyze potential development scenarios under the existing zoning and land use designation, the
following properties were included far analysis:
The properties on Northland Drive are office buildings that were developed as planned unit developments
with the Industrial Zone. The property at 1100 Mendota Heights Road is the RJ Ryan Construction offices
and is zoned B-1 A, which is the same zone as the Bourn Lane site.
DISCUSSION
page 8
Assuming a moderate range of property value for the development of 32 residential twin homes or
apartment building(s) on the Bourn property, the amount of property taxes to be generated from residential
development is likely to exceed a Scannell-type of industrial developinent revenues, after factoring in the
Fiscal Disparities "penalty". On the other hand, if the property is developed as a business park or higher
density apartments, it is probable that those property taxes would be more than a lower density residential
developinent.
Other things to consider:
• Both commercial and twin home residential will likely not generate a demand for additional
services (schools, parks, police, and fire) than what is able to be provided with existing resources.
Market rate apartments likely will likely need higher levels of services.
• It is probable that a residential development could talce place more quickly than finding the right
commercial user. The sooner the development, the sooner that property taxes start to flow.
• Does the ability to create jobs locally with eiiher a commercial or industrial use outweigh the need
for housing?
• The sales price for the Bourn property should also be part of the consideration. A developer of a
lower density residential use may not be able to justify paying the City as much for the property
than a commercial or industrial user.
ACTION REQUIRED
For discussion and direction.
Bourn Lane Properly page 9
Redevelopment - c�ty of
Twin Home Residential Layout o N 200 ������� Mendota
Heights
January 29, 2016 SCALE IN FEET
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Bourr� Lane Properly page 10
Redevelopment - c�ty of
72k sf Industrial Building Layout o N 200 ������� Mendota
Heights
January 29, 2016 SCALE IN FEET
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page 11
11C1 Vict�ria Curve , Menobta he �nts, �iN 55118
651.452.1&50 phone I 651.452.8940 fax
� www.mendota-heights.com _
� T �
� CITY OF
MENf7�TA HEf�HT�
DATE: February 9, 2016
TO: Mayor, City Council, and City Administrator
FROM: Nolan Wall, AICP
Planner
SUBJECT: Proposed Fee Schedule Amendments
BACKGROUND
The city annually reviews the Fee Schedule to determine any necessary amendments to permit fees. Earlier
this year, the City Council approved raising the park dedication fee to $4,000. Additional amendments
have been identified, but were withheld for discussion as part of the financial summit workshop.
DISCUSS�ON
Attached is a comparison of planning-related fees from other Dalcota County municipalities. Staff is
proposing the following amendments for further discussion:
�. � ..� •� ' ��� •� �
Appeal to the Board of Zoning Appeals $250 $500 escrow
Conditional Use Permit $350 $350 Residential
$500 Comm./Ind.
Rezoning $350 $500 fee
Variance $200 Residential $300 Residential
$250 Comm./Ind. $500 Comm./Ind.
Lot Split/Lot Line Adjustment $350 $500 fee
$500 escrow
Mining Permit $350 $500 escrow
Zoning Ordinance Amendment $250 $500 escrow
Zoning Letter No fee $50
TIF/Abatement A lication Fee No fee $1,000
Demolition Permit 1% of value/ No fee change — add permit to the schedule
$75 minimum (currently using the b'uilding permit form)
BUDGETIMPACT
The City collected $16,000 in planning fees in 2015, including escrow deposits. Any increase in planning
fees would help to off-set the cost of services being provided.
RECOMMENDATION
Staff recommends the Council review and discuss the proposed amendments.
ACTION REOUIRED
None — for review and discussion. Staff anticipates bringing forward any proposed amendments for
consideration and action at the February 16 City Council meeting.
page 12
Metro Cities Planning/Zoning Fees Comparison
.- .
Eagan 64206 500 + escrow 500 resid 1,000 C/I 350 350 + escrow 500 resid 1,000 C/I 350 2,000-9,000 250 + 3.00/lot + 50-300 N/A 300 resid 500 non- 200-300 1,000 + 10,000 escrow
escrow resid
Burnsville 60306 $750 + $5,000 Escrow $5,000 $750 $�50 + $5,000 g5,000 $750 $5,000 ��50 + $5,000 $750 $�50+ $5,000 $1,000 $750 $5000
Escrow Escrow Escrow
$300.00/ single $300.00/single-
Lakeville 55954 $500.00 $500.00 family $500.00 $1,000.00 $500.00 $2,000.00 $200.00 N/A $300.00 $1000.00 family N/A
$500.00/other $500.00/other
192.00 + 3.00 139.00/Residen
213.00 + 641.00 tial;
Apple Valley 49084 641.00 960.00 320.00 1,708.00 960.00 escrow deposit 609.00 192.00 per acre for each lot escrow deposit 609.00 641.00 2gg.00/Others;
over 10
256.00/Sign
$250=Single Family $1,000 plus plat $350 base fee,
$500 base fee, $50 GIS $1,250 for CUPs other than fees, varied GIS $500 plus $50 $25/lot GIS fee, $100 base fee plus $250 plus $5 per lot
Inver Grove Heights 33880 fee, plus $2,500 escrow Single Family Residential Residential, fee, and $5,000 $500 GIS fee N�A and $2,000 $25/lot GIS fee and $3,000 escrow N/A $200 N/A
$500=0ther
escrow escrow
Hastings 22172 $500.00 N/A $500.00 $500.00 N/A $500.00 N/A $600.00 $500.00 $500.00 + escrow N/A $250.00 N/A
Concept $2,200 +
$20/acre; Master
$3,000; Final Site $1,700+$10/unit
and Building Plan residential; $775 for TIF Parcel;
Rosemount 21874 $4,000 N/A 1,000.00 N/A $1,000 N/A $1,200 $1,440 N/A $200 $1,750 for new TIF
$1,450; Minor $1,700+50/acre for
Amendment $900; commercial District
Major Amendment
$3,000
Farmington 21086 $450 $200 + $46 to $500 + $22/ac. $450 $300 $750 + $10/lot $200 + $46 to
County County
$400/Residential $400/Single $100/Residentia
West St Paul 19540 N/A $800/Commercial �2�5 $325 $800 $325 $600-$1600 N/F N/F $2�5 $500/Multiple I$200/Comm N/A
I/Ind.
Mendota Heights 11071 750.00 500 350.00 500.00 500 350.00 250-1500 750 350.00 750 500 C/0 Res. 250 N/A
City POpnlatio Liquor On-Sale
Eagan 64206 5,300/6,300/7,300 based on sales
Dog License Spayed
20 (2-year license)
page 13
Tobacco Product Food Trucks Garbage Hauler License Massage Therapist update date
License
200 + 100 investigation 100/first truck 60/each addl 25 + 100 investigation 8/20/2015
$350 Best Practice Member,
Burnsville 60306 $7,500 $20/2-Year License $700 Non-member $50/day
Lakeville 55954 $5,500 -$6,500 $20.00 / 2 year license $300
5,300.00, 6,700.00, or 8,000.00, depending on
Apple Valley 49084 liquor sales 20.00 - 2 years 500.00 - 2 years
Inver Grove Based on Gross Annual Liq Sales; Ranges from
Heights 33880 $3,500 -$10,000 12.00 (2 yr.) N/A
Hastings 22172 $4000.00 $12.00/2 year $150.00/year
Rosemount 21874 3,000 for Class B; 4,500 for class A 6.00 N/A
Farmington 21086 $3500/yr $20/2yr or $50 lifetime $200/yr
West St Paul 19540 $7500.00 $15.00 $490.00
Mendota Heights 11071 10,000.00 & 7,500.00 5.00 200 + 100 investigation
$254 $100
$75.00 $50.00 + 150 investigation
155.00 + 60.00 each additional 105.00/first year,
truck 75.00/renewal
150.00 + $3 per truck 50.00
$175.00/year - Commercial $100.00/year
N/A 90.00
$50
$350.00 + $25 each additional $90.00/personal
sticker $90.00/Business
75.00 +$10 per truck tag 50 + 50 investigation
Average $6,317.65 $8.80 $343.33 $65.50
6/19/2015
7/ 17/2015
8/27/2015
6/18/2015
8/6/2015
6/24/2015
6/22/2015
7/12/2015 �
Eagan
Burnsville
Lakeville
City Population
64206
60306
55954
Apple Valley 49084
Inver Grove Heights 33880
Hastings
Rosemount
Farmington
West St Paul
22172
21874
21086
19540
Mendota Heights 11071
Ball Field Picnic Pavilion False Alarms Finger Printing
87/174 res/non-res 149/186 per day res/non-res 100 each, after 3 free per year N/A
Varies by field-City Recreation Dept has Vaires by size & day of week-City
Detail Recreation Dept has Detail 4th & Successive/$150 per alarm $35/R & NR
$50/day/res, $75/day/non-res, $100- 1st 3 calls per year, NC 4th call $50.00
$150/day local business, $175-$275/day each, 5th call $100.00 each, 6th and $10.00 resident, $25.00 non-
$40.00 -$50.00 per 4 hour block non-local business subsequent calls $150.00 each resident
120.00 - 4th and each subsequent
45.00 - 150.00 per day 40.00 - 60.00 response in any calendar year 10.00 - 2 sets of cards
$100 for third offense &$100 for each
Varies based on location & organization $55 (R), $75 (NR) subsequent offense $20 (R & NR)
Res. $45.00/hr + tx, NonRes. $65.00/hr $15.00 1st card, $5.00 each
+ tx Res. $46.00 plus tx, NonRes. $66.00 + tx N/A additional
$225 + tax/team/season (Leagues); $25 $25 + tax/day (open shelter); $35 +
+ tax/field/day (non-league) tax/day (enclosed shelter) N/A N/A
$12/participant youth groups $45 adult
groups $50 $55/ half day $80/ full day After 3-$100/R, $175/NR N/C - R$20 - NR
$57 half day/$79 full day residential $69 4-5/yr $123.00 more than 7-10/year
$515/weekend, $285/1 day half day/$99 full day non-residential+tax $180.00; over 10/yr $263.00 $17.00 (Residents only)
first 3-NC; 4th-50.00; 5th-75; 6th-100; ea
35.00 25.00 add I-25 10.00 per card; max 30.00
page 14
Towing Impoundment update date
N/A
Contracted Service
$225.00 admin fee,
$5.00/day storage
Case by Case Basis
Handled privately -
Eastside Towing
N/A
6/22/2015
6/25/2015
3/4/2009
7/23/2015
6/13/2013
6/18/2015
3/15/2007
ry�zr�z�sN�
Per contract 6/21/2013
85.00 pass thru fee per
day; 35.00 daily storage 6/25/2015
page 15
,>_:
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�51 452.]85C Fintsr� r ,
':Jk":':JiY'�^I��.pY�r-h,�.;ll'.':, _. ,
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� CITY QF
� fVl�f'�.IIJC�`7'A H�I�a'I-F1T5
MEETING DATE: February 9, 2016
TO: Mayor and City Council
FROM: Mark McNeill, City Administratar
SUBJECT: Conduit Debt Policies
COMMENT:
Introduction
At the February 9t" workshop meeting, the City Councilor will be asked to discuss policies and
fees relating to the issuance of tax-exempt debt for entities other than the City of Mendota
Heights.
Background
Minnesota ]aw allow cities to issue tax exempt financing (also called conduit debt). This is often
in the form of revenue bonds to assist manufacturing /industrial development, health care
facilities, multi-family housing developments, and other projects by SOIc. 3 organizations. The
bonds are not obligations of the City, nor do they impact the credit rating of the City. Cities may
issue up to a total of $10 million of tax exempt bonds annually and retain their taX-eXempt status.
The $10 million limit is either the city's own purposes, or for the types of projects mentioned
above.
In previous years, the City of Mendota Heights has issued tax-exempt bonds for a number of
SOlc.3 non-profit agencies, including the Academy of the Visitation, and St. Thomas Academy.
In addition, housing bonds have been issued for the developers of the Lexington Heights
Apartments; and, more recently, housing bonds were of interest to a potential redeveloper of the
Larson Greenhouse property.
According to the City Attorney, most of the cities with whom he works have either an ordinance
dealing with conduit financing outlining the fee structure and other issues, or have a
resolution/policy outlining those figures and costs. Mendota Heights has neither.
Regarding the entities that qualify, Tom Lehmann says that they have to be a duly incorporated
and validly existing and be in good standing under the laws of the State. They also have to be an
organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended,
exempt from federal income taxation under section 501(a) of the IRS code. and that there is no
threatened or pending change to the status. Finally, the organization borrowing the funds cannot
be a private foundation within the meaning of the IRS Code.
By using the tax exempt issuing authority of the City, the SOlc(3) organizations qualify for
significant savings in interest rates over the life of the bonds. The City of Mendota Heights has
required the issuers to reimburse it for any out of pocket expenses, such as legal and financial
review. However, there are typically ongoing annual reporting costs over the issuari°ceg�ength of
the bonds for which the City has not charged.
In addition, while the chances are small, there is always a possibility that the issuer may be
audited by the IRS. The issuer is typically responsible for all costs related to the audit; however,
if the issuer has become insolvent, the City might be in the position of having to pay a settlement
to the IRS in the event of a finding, or allow the bonds to be declared taxable. Being declared
taxable would not impact the City directly, but it would impact the holders of the bonds.
Fees Charged--Simply put, the $500 flat fee which the City has been charging in significantly
below what other cities charge. I am aware of other cities which issue conduit debt for
organizations which have no relationship to that city, other than that the City is agreeable to issue
that debt—and charges fees for the privilege. These are cities which usually have no need to
issue bonds which will exceed the $10 million limit which is established by the IRS.
As an example, charging .5°/o of the par value of a$5 million bond would generate $25,000. A
full one percent would be twice that amount. A portion of those fees would go into the General
Fund for the reimbursement of future monitoring and reporting costs. The balance could go to
other purposes as determined by the City Council.
Policies--The City's financial advisor, Ehlers, has provided staff with the policies of a number of
other cities that issue conduit debt. A summary of their fees are attached on a spread sheet.
Ehlers recommends charging a single fee up front—either .5% or 1% of the value of the bonds.
The alternative is to charge a lesser annual percentage to cover ongoing reporting costs. The
rationale is that the annual costs are more difficult to manage.
I have also attached the discussion of the City of Roseville as an example of what Mendota
Heights may want to consider as a comprehensive policy for the issuance of tax-exempt revenue
bonds. The policies of Roseville are similar to those of the City of Anoka. Roseville's fees are
as follows:
• Non-refundable application fee of $2500
• Closing fee of the greater of $10,000, ar 1% of par value of bonds.
• No charges for refunding (other than reimbursement of out of pock costs) if current on all
other charges.
• Subsequent modification fee--$1500
Action Required
Discuss and give direction to staff.
Mark McNeill
City Administrator
City
Brooklyn Park
St. Anthony
Cloquet
Roseville
Minnetonka
Application Fee Closing Fees Annual Service Fees
(Non Refundable)
$500 .5% of issuance .10% of outsanding
amount principal amount
Not listed 1% of orginal
principal amt
$5,000 .5% of amount .125% of oustanding
being issued OR principal remaining
$2,500 > of $10,000, or
1% of principal
$3,500
.125% of outstanding
principal amount
Mound's View $500 1% of par value
of bonds
Anoka $2,500 > of $10,000, or
1% of principal
Note: Each City requires reimbursement of all legal and fianncial reviews by outside consultants.
FeesforSubsequentchanges
(Non -refundable
$1,500
$1,500
$2,500
$500
$1,500
page 17
PROCEDURE
FOR
APPLICATION TO
CITY OF ROSEVILLE, MINNESOTA
�'
PRIVATE ACTIVITY REVENUE BOND FINANCING
Effective as of June 29, 2009
Finance Director
City of Roseville
2660 Civic Center Drive
Roseville, MN 55113
page 18
PART I
PART II
PART III
PART IV
PART V
PART VI
PART VII
PROCEDURE FOR APPLICATION
TO THE CITY OF ROSEVILLE FOR
PRIVATE ACTNITY REVENUE BOND FINANCING
Table of Contents
GENERAL.....................................................................
GUIDELINES ................................................................
MISCELLANEOUS MATTERS ..................................
APPLICATION FOR TAX-EXEMPT FINANCING ...
APPLICATION FOR TAX-EXEMPT FINANCING ...
ADDENDUM TO APPLICATIONS ............................
INDEMNIFICATION LETTER OF AGREEMENT....
page 19
Pa�e
.................................... 1
.................................... 2
.................................... 4
.................................... 5
.................................... 8
.................................. 11
.................................. 13
page 20
PARTI
GENERAL
Under the Minnesota Municipal Industrial Development Act, Minnesota Statutes, Sections
469.152 to 469.1651 (the "Industrial Development Act"), the City of Roseville has authority to
issue industrial, commercial, and health care revenue bonds or notes to attract ar promote
economically sound industry and commerce to the City.
Under Minnesota Statutes, Chapter 462C (the "Housing Act") the City is authorized to issue
housing revenue bonds to finance multi-family residential housing projects for low and moderate
income persons and elderly persons. Projects must be consistent with a Housing Program as these
terms are defined in the Housing Act.
The Council is aware that such financing far certain private activities may be of benefit to the City
and will consider requests for tax exempt financing subject to these Guidelines. The Council
considers tax exempt financing to be a privilege, not a right.
It is the judgment of the Council that tax exempt financing is to be used on a selective basis to
encourage certain development that offers a benefit to the City as a whole, including significant
employment and housing opportunities. It is the applicant's responsibility to demonstrate the
benefit to the City, both in writing and at the required public hearing. The applicant should
understand that although approval may have been granted by the City for the issuance of financing
for a similar project or a similar debt structure, that is not a basis upon which approval will be
granted. Each application will be judged on the merits of the project as it relates to the public
purposes of the Housing Act or the Industrial Development Act and the benefit to the City at the
time the request for financing is being considered.
page 21
PART II
GUIDELINES
1. The Council will consider tax exempt financing for commercial, industrial and health care
projects under the Industrial Development Act and housing projects under the Housing
Act. An applicant for tax exempt financing pursuant to the Industrial Development Act
must submit to the City the application contained in Part IV of these Guidelines. An
applicant for tax exempt financing, pursuant to the Housing Act, must submit to the City
the application contained in Part V of these Guidelines.
2. Projects must be compatible with the overall development plans and objectives of the City
and comply with the zoning and land use regulations of the City.
3. An application will not be considered by the Council until City Staff has reviewed City
Codes with respect to zoning, building plans, platting, streets, and utility services. The
application must be accompanied by the addendum contained in Part VI of these
Guidelines and must provide information as to the project's need for municipal services
including, but not limited to, street improvements, water and sewer services, and police
and fire protection.
4. The project must be a positive benefit to the City. The project must be of a nature that the
City wishes to attract, or an existing business which the City wishes to retain or have
expand within the City, considering employment opportunities, incentive for further
development, impact on City services, and support for the industrial, commercial or health
care operations currently located in the City. A housing project must provide significant
housing opportunities for low and moderate income persons or the elderly.
5. The applicant must select a qualified financial adviser or underwriter to assist the applicant
in preparing all necessary application documents and materials. The financial adviser will
submit a letter that establishes the financial feasibility of the project. Applications may, in
the alternative, include a signed letter from a financial institution indicating that the proj ect
is economically feasible and viable and stating that bonds can be successfully sold for the
project or that an individual or institution intends to purchase all of the bonds.
The City will appoint bond counsel for the bond issue, which will normally be the City's
regularly retained bond counsel.
6. Pursuant to the Industrial Development Act and the Housing Act, consideration of an
application for tax exempt financing must be done at a public hearing held by the Council.
Modifications to the project after the public hearing and preliminary approval must be
consistent with the scope of the project as proposed at the time of preliminary approval.
The applicant must receive approval from the appropriate state agencies, secure financing
and commence construction, if applicable, within one year of the date of the public hearing
on the project or the housing program.
page 22
7. The City is to be reimbursed and held harmless for and from any out-of-pocket expenses
related to the tax exempt financing including, but not ]imited to, legal fees, financial
analyst fees, bond counsel fees, the City staff s expenses in connection with the
application, and any deposits or application fees required under state law in order to secure
allocation of bonding authority. The applicant must execute a letter to the City undertaking
to pay all such expenses. A form of the required letter is set forth as Part VII of these
Guidelines. A non-refundable application fee in the amount of $2,500 must be included
with the submission of the application.
8. Prior to closing and delivery of the bonds for the project, the applicant must pay an
administrative fee in an amount equal to the greater of $10,000 or 1% of the principal
amount of the bonds actually issued. The administrative fees required by this paragraph
will be adjusted at or paid prior to delivery of the bonds if necessary to ensure compliance
with the Internal Revenue Code and regulations.
9. Applications for financing must be made on the forms attached to these Guidelines. In
addition, the applicant must furnish a description of the project, a site plan, elevation of
proposed buildings, landscape, lighting, and site preparation, if applicable, together with a
brief description of applicant and the proposed financing in such form as required at the
time of application.
10. The Council may, in its sole discretion, impose conditions exceeding those required under
the City building code in respect to exterior building materials, landscaping, signage
lighting, and such other aspects as the Council may consider appropriate on a case-by-case
basis.
11. The Council may, in its sole discretion, withdraw its preliminary approval of a project any
time if in its judgment the purposes of the Act will not be served by going forward with the
project and its financing.
page 23
PART III
MISCELLANEOUS MATTERS
1. Refundin�s. In the case of refundings of bonds for which the administrative fee listed in
paragraph 8 of Part II have been paid in full, no new administrative fees are required; but
the non-refundable application fee must be paid together with all City expenses in excess
of that fee. If the administrative fees for the refunded bonds are not paid in full upon
closing on the refunding bonds, such fees must continue to be paid for the refunding bonds.
In the case of refundings of bonds where no administrative fee has been paid, the
administrative fees listed in paragraph 8 of Part II must be paid. The application form is to
be appropriately modified.
2. Subsequent Proceedings. Where changes to the underlying documents or credit facilities
of outstanding bond issues are to be made and require Council action (including changes
that are a"deemed reissuance" under Internal Revenue Service regulations), no
administrative fee is charged but a non-refundable fee of $1,500 must be deposited with
the City to cover administrative costs. No formal application form is required.
3. Issue by Another Politica] Subdivision. The City will consider requests for taX exempt
iinancing of projects in the City by other political subdivisions. In these cases the non-
refundable application fee must be paid and all procedures through the approval of the
preliminary resolution followed. No administrative fee is charged.
4. City Contact. Initial contacts about taX-eXempt financing are made by contacting:
Finance Director
City of Roseville
2660 Civic Center Drive
Roseville, MN 55113
5. Request for additional information or requirements. The City of Roseville has the right to
request additional information that may be deemed necessary to consider requests for tax
exempt financing of any project in the City of Roseville.
6. Upon issuance of the Bonds. The City of Roseville will want to be copied in on all annual
certifications of documents that are sent to the Treasury Department, the Internal Revenue
Service, the State of Minnesota, Minnesota Housing Finance Agency and/ar other
governmental body for compliance purposes, as provided in the documents relating to the
bonds.
1
2
3
C!
page 24
PART IV
APPLICATION FOR TAX-EXEMPT FINANCING
(Commercial, Industrial ar Health Care)
APPLICANT
a. Business Name:
b. Business Address:
c. Business Form (corporation, partnership, sole proprietorship, etc.):
d. Authorized Representative:
e. Principal contact person and telephone number:
PURPOSE OF REQUESTED FINANCING:
a. New Facility (describe):
b. Expansion (describe):
c. Refunding (describe):
GIVE BRIEF DESCRIPTION OF NATURE OF BUSINESS, PRINCIPAL PRODUCTS,
ETC.:
ESTIMATED PROJECT COSTS: (Not required for refunding)
Land $
Building
Equipment
Architectural, Engineering
Costs of Issuance
Capitalized Interest,
including discount
Other
Total Financing Requested $
5. AMOUNT OF FINANCING REQUESTED: $ (_% ofproject costs)
page 25
6. TYPE OF FINANCING PROPOSED:
Bonds Tax Exempt Mortgage Note
Expected Term of Financing Years
Security:
Mortgage
Letter of Credit
Guaranty (third party)
Guaranty (personal)
Unsecured
Other (specify)
7. BUSINESS PROFILE: (Not required for refunding)
a. Is the business located in the City of Roseville now?
b. Number of employees in City:
1) Before this project:
2) After this project:
c. Approximate annual sales:
d. Length of time in business:
Length of time in business in City:
e. Do you have facilities in other locations? If so, where?
8. NAMES OF:
a. Underwriter or Lender (name and contact person):
b. Corporate Counsel:
c. Underwriter's or Lender's Counsel:
page 26
9. WHAT IS YOUR TARGET DATE FOR: (Not required for refunding)
a. Construction start:
b. Construction completion:
10. Attachments:
a. Project description:
b. Initial application fee
Indemnification Letter of Agreement
I certify that the information provided above contains no misrepresentations, omissions or
concealments of material facts and that the information given is true and complete to the best of
my knowledge. I have been furnished a copy of the Procedure for Application to the City of
Roseville for Private Activity Revenue Bond Financing and is aware of its content and agree to be
bound by its terms and the terms of the indemnification letter.
Signature
Title
Date
1
2
3
4
5
6
PART V
APPLICATION FOR TAX-EXEMPT FINANCING
(Multi-Family Housing)
APPLICANT
a. Business Name:
b. Business Address:
c. Business Form (corporation, partnership, sole proprietorship, etc.):
d. Authorized Representative:
e. Principal contact person and telephone number:
NAMES OF:
a. Underwriter or Lender (name and contact person):
b. Corporate Counsel:
c. Underwriter's or Lender's Counsel:
d. Property Management:
PURPOSE OF REQUESTED FINANCING:
a. New Facility (describe):
b. Redevelopment (describe):
c. Refunding (describe):
PROJECT NAME:
PROJECT LOCATION:
PROJECT 1NFORMATION
UNIT CURRENT RENTS RENTSAFTER
Efficiency
One Bedroom
Two Bedroom
Three Bedroom
page 27
AMI%*
Parking (included in rent/
not included in rent) _
Laundry
Utilities included in monthly rent:
$
$
page 28
*Please provide detail information regarding how many units are currently income/rent
restricted and what the new number will be once the development is completed.
OPERATING EXPENSES (Not required for 501(c)(3) financings)
% of Gross (Annual)
TOTAL PROJECT COST
DEBT SERVICE:
LAND VALUE
$
$
$
DEVELOPER EQUITY
*HARD COSTS
SOFT COSTS:
$
$
$
*(Hard Costs are all project costs the IRS has determined to be eligible items for
depreciation.)
ANTICIPATED INTEREST RATES: AMORTIZATION SCHEDULE:
o�a
-Year Amortization Schedule
If the project were conventionally financed, what interest rate would you expect to pay?
%
SALES ASSUMPTION:
(Not required for 501(c)(3) financings)
How many years do you plan to
hold the property before you
sell?
a. At what percent do you
feel the value of the project
will appreciate?
EQUIPMENT:
DEPRECIATION METHOD:
(Not required for 501(c)(3) financings)
Years:
Type:
Amount of Total Basis: $
$ ofproject cost is for equipment (e.g., washers/dryers)
page 29
ANTICIPATED INCREASES: ANTICIPATED VACANCY RATE:
(Not required for 501(c)(3) financings) (Not required for 501(c)(3) financings)
Revenue: % per year First Year: %
Expenses: % per year After First Year: %
CONSTRUCTION SCHEDULE: (Not required for refunding)
Anticipated construction commencement date:
Anticipated construction completion date:
7. RELOCATION PLAN (Not required for 501(c)(3) financings)
A relocation plan will be required if any of the residents are dislocated due to the
renovations or financing that is being utilized.
8. ADDITIONAL 1NFORMATION:
I certify that the information provided above contains no misrepresentations, omissions or
concealments of material facts and that the information given is true and complete to the best of
my knowledge. I have been furnished a copy of the Procedure for Application to the City of
Roseville for Private Activity Revenue Bond Financing and is aware of its content and agree to be
bound by its terms and the terms of the indemnification letter.
Signature Date
Title
page 30
PART VI
ADDENDUM TO APPLICATIONS
The following items must be attached to each application:
APPENDIX A
A brief description of the organizational structure of Applicant, including parent subsidiary and
affiliate organizations (if applicant is other than an individual).
APPENDIX B
Statement of Applicant's business history (for applications under Part V, including any other
multi-family rental projects of the Applicant).
APPENDIX C
The name, address, and telephone number of:
L The Applicant's legal counsel
2. The Applicant's accountant
3. The architect of the proposed Project (Not required for refunding)
4. The engineer of the proposed Project (Not required for refunding)
5. The general contractor of the proposed Project (Not required for refunding)
APPENDIX D
6. Present ownership of the proposed Project site and Applicant's interest therein.
7. Present zoning of the Project site and a description of what city land use approvals are
needed for this project.
8. The projected number of new employees to be added to the Applicant's permanent work
force because of the Proj ect (for Commercial, Industrial or Health Care only).
9. Other financing attempted or available to the Proj ect including any interim financing.
10. Statement regarding whether or not this project has all required city approvals. If the
project does not have all of the required approvals, list the approvals still needed and a
tentative time schedule.
page 31
APPENDIX E
Indemnification Letter of Agreement.
APPENDIX F(Not required for 501(c)(3) financings)
Proforma Analysis of the Project
page 32
PART VII
1NDEMNIFICATION LETTER OF AGREEMENT
The Mayor of the City of Roseville
and Members of the City Council
City of Roseville
2660 Civic Center Drive
Roseville, MN 55113
RE: Application of for Tax Exempt Revenue Bond Financing by the City
of Roseville
Dear Mayor and Members of the City Council:
This letter of agreement is given by , a under the
laws of Minnesota ("Applicant") as required by the City of Roseville, Minnesota in connection
with its consideration of an application for tax exempt revenue bond financing for the project
described in the application.
Applicant agrees as follows:
L Applicant agrees to pay or reimburse the City for any and all costs and expenses which the
City may incur in connection with its consideration of the project and the granting of tax
exempt revenue bond financing therefor, whether or not the project is preliminarily
approved by the City, whether or not the project is approved by the State of Minnesota,
whether or not revenue bond financing is finally approved by the City, whether or not the
bonds are issued and sold, and whether or not the project is carried to completion.
2. Applicant agrees to indemnify and hold the City, its officers, employees and agents
harmless against any and all losses, claims, damages, expenses or liabilities, including
attorneys fees incurred in their defense, to which the City, its officers, employees and
agents may become subject in connection with the City's consideration, issuance or sale of
the bonds for Applicant's project and the carrying out of the transactions contemplated by
this agreement and any resolutions adopted, or agreements executed by the City in
connection with the issuance of its bonds for this project.
3. Applicant hereby releases the City, its officers, agents and employees from any claims,
causes of action, losses, damages, or liabilities which it may have against the City, its
officers, agents, and employees or which it may incur in connection with: the City's
consideration of the application for industrial development revenue bond financing for
Applicant's project; the failure of the City, in its discretion, to issue tax-exempt revenue
bonds for Applicant's project; the issuance and sale of the bonds; the construction of the
project; or any other matter or thing of any type or nature whatsoever which may arise in
connection with the foregoing.
page 33
4. Applicant is aware of the City's application and administrative fee structure for tax exempt
financing and agrees and covenants that al] such fees will be paid in the amount and at the
times required.
Dated: (Applicant)
I�
Its
� ::. _��:., �.�:,:
page 34
�51 452.]85C F�nt}rc ; r ,
':Jk":':JiY'�^I��.pY�r-h,�.;ll'.':, _. ,
� } �
� CITY QF
� fVl�f'�.IIJC�`7'A H�I�a'I-F1T5
Request for City Council Action
MEETING DATE: February 9, 2016
TO: Mayor and City Council
FROM: Mark McNeill, City Administrator
SUBJECT: Franchise Fee Discussion
COMMENT:
Introduction
The Council is asked to give staff direction on whether it wants to pursue implementation of a
franchise fee on gas and electric utility fee.
Background
In 2014, the Council has had several discussions of the possible addition of a utility franchise fee
which could be used as a funding source to augment or replace the City's property tax levy.
Information regarding this program, and what it would have raised in Mendota Heights--2013
financial impact projections are attached.
In the end, the City of Mendota Heights did not agree to a Franchise Agreement; however, the
Council indicate a desire to publicize its consideration of pursuing the Franchise Fee.
The Council is asked to discuss this again, and consider whether it wants updated information
about a Franchise Fee. Note that it would be probably FY 2018 before it could realistically be
collected, as adequate notice will need to be given the affected parties.
Action Required
The Council is asked to give direction to staff as to whether it is interested in exploring a
Franchise Fee.
Mark McNeill
City Adminsitrator
�:..� �r�ergy°:
��:
_. .. .
R E S P 0 N S I B I. E B Y N A T U R E�
3000 Maxwell
Newport, MN 55055
City o� Mendota IHeights, �lIN'
Franchise �ee Esfiimates
page 35
The follawing information is being provided to assist your community in discussions regarding
franchise fees. Given markef sensitivity to e(ectric and gas rates, we strongly encourage the
city to reach out to residents and businesses.
� Information based on year ending December 31, 2013
� Franchise fee is applied as the same percentage to all customer classes and rounded to
the nearest $0.25.
• The tables below show the fee fhat would be reflected on a customer bill, and the
revenue the community would collect annually.
� 1% and 2% fees are applied for illustrative purposes, 5% is the maximum applicable
franchise fee.
� Franchise fees must be a�plied equally to all public utilities.
� Xcel Energy retains no porkion of a franchise fee.
Franchise Fee: Electric
Class Monthly Fee, 1% Equiv. Monthly Fee, 2% Equiv.
Residential $1.Op $2.�5
Small C&I Non Demand $1,00 �2.25
Small C&I Demand, l.arge C&I $27.00 $54.00
Public Streetlights $2.00 $4.0p
Municipal Pumping $2.25 $4.25
Total (Annual) Revenue $149,781 $314,565
Franchise Fee: Gas
Class Monthly Fee, �% Equiv. Monthly Fee, 2% Equiv.
_ ...............
Residential $p.75 $� .5p
Commercial Nan Demand � � $1.75 $3,75
Commercial Firm Demand $129.50 $259.Q0 �
Small Interruptible $22.50 $45.25
_.........___. .._.._
Medium and Large Interruptible $68.75 $137.75
Commercial — Large $10.25 $20.50
Total (Annual) Revenue $63,240 $127,437
Jake Sedlacek
Manager, Community Relations and Economic Development
jake.sedlacek@xcelenergy.com
651.458.1228
page 36
Diversi Revenues wiTH Franchise Fees
BY NICK ANHUTAND 1ESSICA COOK
ave you ever wondered why cities
across the nation have more revenue
options than we do in Mirinesota?
New York City has an income tax; Colo-
rado cities collect most of their budgets
from local sales taxes.
Minnesota cities rely on a compli-
cated property ta�c system as their main
source of revenue.
The property tax is
predictable com-
pared to income '
and sales tax, but
many consumers of
city services do not
pay property t�es.
Franchise fees are
an often overlooked
alternative for
Minnesota cities
to diversify their
revenue streams.
Many cities have
been collecting a
cable franchise fee for years. Under Min-
nesota Statutes, section 216B.36, a city
may also impose a fee on a gas or electric
utility in exchange for the use of public
rights-of-way.
The utility companies collect the fee
from their customers and remit it to the
city every billing ryc1e. Cities can deter-
mine the amount, structure, and use of
franchise fees. There is no cap on the fran-
chise fee rate on gas and electric utilities.
we had two-thirds of the property owners
paying for 100 percent of the streets:'
The City of Edina recently adopted
franchise fees in lieu of raising tases to
fund sidewallcs, trails, bike paths, and other
pedestrian-related improvements. The
fees will provide a stable funding source
to undertake projects on a pay-as-you-go
Pros & Cons of Franchise Fees
: FEATURE
per account or as a percentage of the
customer's bill. Forest Lake charges its
electric utility customers $4 per month
for a residential account. The council
selected a flat fee because it assigns the
cost of road maintenance to properties at
a fixed amount, and it provides a steady
revenue stream for the city.
Alternatively,
franchise fees can
be structured to
correlate wifih the
customer's energy
:
use. Coon Rapids
charges all users
4 percent of their
utility bill. Other
cities choose a fixed
charge per therm or
kilowatt hour. With
these structures,
revenue will e�and
and shrink with the
business rycle and
seasons but, over time, will keep pace
with inflation.
Use of the fees
Franchise fees can be used for anypublic
purpose. Recenfly, many cities have
directed franchise fees to specific capital
unprovements such as pavement man-
agement programs. One reason is that
proving benefit for special assessments
has become more difficult in a time of
declining residential property values.
The City of Morris has collected fran-
chise fees for about 10 years and dedi-
cates them entirely to road maintenance.
"Over 30 percent of our city is comprised
of tax-exempt property;' says City Man-
ager Blaine Hill. "Before franchise fees,
basis. While there is no specific statutory
authority to issue bonds based on franchise
fee revenues, cities can use the revenues to
write down annual debt levies.
If your city is interested in nnplement-
ing franchise fees, there are three primary
steps you should take.
STEP 1: Establish the need
To avoid getting mired in a fee vs. tax dis-
cussion, take the time to clearly articulate
and develop consensus around the need
for a new revenue source. In Champlin,
the City Council had established the goal
of a 0 percent t� rate increase. As capital
needs grew and property values stalled,
new revenue sources were needed.
Staff identified various funding
options, including additional prop-
erty tax levy, a stormwater utility, and
franchise fees. The council chose to add
franchise fees because they give the city a
more balanced approach to budgeting.
STEP 3: Adopt an ordinance
The only authorizing action required to
establish a franchise fee is the adoption
of an ordinance. The ordinance estab-
lishes the terms of the fee: the structure,
collection schedule, and the effective
dates. Once adopted, utility providers
may need to undergo a 90-day filing
period through the Minnesota Public
Utilities Commission before the fee can
be imposed.
Wlule there is no statutory public
hearing or notice requirement, some cities
opt to provide opporhuuties for public
comment and education. Forese Lalce
informed its residents of fihe proposed fees
by creating a handout and providing news
updates. Hastings leaders added a svnset
provision so that new action must be
taken after five years to extend the fee. �
STEP 2: . NickAnhutandlessica Cook are finanaal specialists
Structure the fee to suit city needs with Ehlers (www.ehiers•inc.com). Ehlers is a
There are two broad options for struc- memberofthe League's Business Leadership Council
(www.lmc,orglsponsors).
turing the franchise fee: as a fixed charge
MINNESOTACITlES I JUL/AUG 2014 � 19
page 37
1101 Vict�or�a Curve , Mendvta He���hts, �1N 5�i18
651.452.1&50 phone J 651.452.8940 fax
� www.mendota-heights.com _
� T �
� CITY OF
M�N�O�A H�fGH��
DATE: February 9, 2016
TO: Mayor, City Council, and City Administrator
FROM: John R. Mazzitello, PE, PMP, MBA - Public Works Director/City Engineer
SUBJECT: Sump Pump Discharge to the Sanitary Sewer System
INTRODUCTION
The Council is asked to discuss am implementation program to separate illegal sump-pump
discharges.
BACKGROUND
Both State Plumbing Code and Mendota Heights Municipal Code prohibit the discharge of sump
pumps to the sanitary sewer system.
Minnesota Plumbin� Code 4715.2700
Storm water shall not be drained into seweNs intended for sanitary sewage only.
Mendota Hei�hts Citv Code 10-3-SB
Surface Waters: It shall be unlawful to discha�ge o� cause to be discharged into the
inunicipal sewer system, either directly or indirectly, any roof, storm, surface or ground
water of any type or kind, or water discharged from any air conditioning unit or system.
(1981 Code 803 � 4)
At the February 3, 2015 Goal Setting Work Session, City Counci] discussed the impacts to the
sanitary sewer system of sump pumps illegally connected to the system. City Council then
directed staff to initiate public communications in the Heights Highlights, and inform building
permit holders of the sump pump requirements throughout 2015, and requested the issue be
revisited in 2016.
City staff subsequently published articles in the Heights Highlights newsletter (once as the cover
story), and has been informing building permit applicants of the code requirements for sump
pumps throughout the year.
The City of Mendota Heights pays Metropolitan Council Environmental Services (MCES) a fee
for sanitary sewer treatment that is bases on the total flow contribution to the MCES system. In
2014, the City's total annual flow increased by �60 million gallons (12.3%)*, resulting in an
increase in annual fee by 9.83%. In addition to the rate increase, MCES also initiall�°�r�po�ed a
surcharge fee of $99,600 per year for the next 4 years for increasing flow over 10°/o in one year.
Staff was able to convince MCES to remove this fee due to our ongoing sanitary sewer cleaning,
televising, and lining program along with our manhole casting sealing program.
It is widely believed that the sudden and dramatic increase in flow was due to the extremely wet
spring experienced from March to July of 2014. A large quantity of snow from the preceding
winter melted followed by several large rain storms. The season culminated with 4.8 inches of
rain that fell between 12:30am and 1:OOpm on June 19, 2014.
Wet weather impacts the sanitary sewer system by means of Inflow and Infiltration (UI). I/I can
come from cracks in sewer pipes, broken pipe joints, tree root penetrations, or manholes; but the
most prevalent possible sources for sudden increases in flow are illegal discharges to the sanitary
sewer system. The most common of these discharges are basement sump pumps. Both MCES
and the American Public Works Association (APWA) have published figures stating 60%-70%
of sudden increases in flow volume are likely due to sump pumps connected to the sanitary
sewer system.
Based on some logical assumptions about sump pump behavior from the past spring, staff has
calculated that �39 million gallons of the �60 million gallons* in increased flow (65%) is likely
due to sump pumps. In order to minimize or eliminate these discharges, a policy would need to
be developed and implemented, including public communications, and inspections.
In 2005, the City of Eagan experienced a similar phenomenon due to an extremely large rain
event. By 2009, they had adopted a policy and Ordinance to address sump pumps. The Eagan
plan was implemented in 2010. A copy of their policy is attached.
CONSULTANT OPTION
If the City of Mendota Heights was to implement a plan similar to that of Eagan and inspect
residential properties for their sump pump connections, it would come at a cost to the City to hire
the labor force to complete the task. Staff suggests hiring a consulting firm to complete the
inspections and develop a database of all properties inspected and corrected.
This offers the City two distinct advantages in completing the program: 1) the consultant would
be hired far this task only, and would not increase the number of city employees, and 2) the
consultant would be limited to looking at sump pumps only when inside residents properties —
This would alleviate some residents' concerns about the City government coming into their
homes and seeing other violations. The City of Eagan offers financial assistance to residents that
needed to disconnect their sump pumps from the sanitary sewer system. Mendota Heights is
under no obligation to offer similar assistance.
Staff has contacted two consulting %rms that would be capable of offering such a service. The
cost of a contract for consultant services is expected to be in the range of $150,000 -$180,000.
This assumes �2000 homes to be inspected with �70°/o of them needing to correct their sump
pump discharges. Funding for this program is discussed below.
Eliminating, or greatly reducing the contribution to the sanitary sewer system from sump pumps
would allow for a more predictable total sewer flow projection and make the budget process for
the sanitary sewer utility fund more stable. It would also greatly reduce the risk of fi�ureesevere
flow increases and avoid future penalty surcharges.
BUDGET IMPACT
UI contributions to the sanitary sewer system have a direct impact on the amount charged to the
City by MCES. Consequently, UI contributions directly impact what the City needs to charge
residents and businesses for sanitary sewer service to keep the utility fund operable and stable.
Eliminating non-sewage contributions to the sanitary sewer system can provide a much more
stable and predictable cost of utility operations.
Funding an inspection and enforcement program could be derived from a number of sources:
- Sanitary Sewer Utility Fund: the fund currently does not have the additional funds to
support the program. Sewer utility rates would need to be raised by �6.3% to cover the
cost of the program.
- Water Fund: The Water Fund has a�$1.2 million balance. A 10% withdrawal form this
fund would cover the costs of the program.
- Additional General Levy Funds: �1.7% of the General Property Tax Levy would be
needed to fund the program.
- Other fees & surcharges.
RECOMMENDATION
Staff recommends Council consider implementing an Inflow and Infiltration (I/I) Program/Policy
similar to that enacted by the City of Eagan in 2009. If Council wishes to implement the staff
recommendation, Council should establish this Program/Policy as a goal for 2016, and direct
staff to begin working on policy documents, ordinance, costs, and public communications.
pa�e 40
CITY OF EAGAN
Inflow and Infiltration (I&I) Miti�ation Pro�ram/Policy
Adopted December 15, 2009
Revised January 19, 2010
Back�round
The Metropolitan Council of Environmental Services (MCES) implemented an Infiltration &
Inflow (I&� Mitigation and Surcharge Program on February 8, 2006. I&I relates to extraneous
clean water entering the sanitary sewer system through either ground water (Infiltration) or direct
flow (Inflow) such as sump pumps. This excess volume of clean water adds considerable cost to
the overall Metropolitan Disposal System (MDS) for both conveyance and treatment.
As a result of a significant 5" rainfall event that occurred on Oct. 5, 2005, the City of Eagan was
determined to have had an excessive rate of flow to the Seneca Waste Water Treatment Plant
exceeding its peak flow allocation. As a result of this exceedance, the MCES determined that the
City of Eagan was required to spend $1,718,500 over 5 years (�$343,700/yr) to either mitigate
its excessive I&I, or pay that amount to the MCES for its equivalent expansion of the MDS.
MCES enforced this financial obligation through an annual surcharge program beginning in 2007
and scheduled to end in 2012. If excessive flows continue to occur after that date, the annual
surcharge will likely become a permanent Demand Charge (in an amount yet to be determined).
The City continuously evaluates the public sanitary sewer system (275 miles of pipe, 7,800
manholes and 18 pumping stations) and performs corrective measures as needed. However, to
adequately address the excessive I&I, there is also a need to inspect and mandate corrective worlc
in the private sanitary sewer system within the community (over 18,800 connections).
Program
The private property inspection program has been commonly referred to as a"Sump Pump and
Service Lateral Inspection Program" (SP&SLIP). Many communities have already implemented
this type of inspection with a related corrective enforcement program which can take up to
multiple years and millions of dollars to complete on a citywide basis. It requires the personal
inspection of a private property's internal sewer plumbing system and service lateral connection
to the City's sewer main (typically in the street or a backyard easement). On September 1, 2009,
the Eagan City Council adopted an amendment to City Code Section 3.40 to add Subdivision 10,
"Clear Water Discharge Prevention and Prohibition" (attached).
This amendment prohibits any type of clear water connections or faulty services that allow
ground water to enter the system. It also requires all notified property owners to schedule an
inspection with the city, or its designa�ed agent(s). This inspection typically takes up to 2 hours
to perform and requires that an adult resident be present at all times. A copy of the inspection
report identifying any non-compliant issues will be left with the resident upon completion of the
inspection. Corrective Work Orders will be sent to the property owner/occupant informing them
pa e 49
pa�e 41
of the required corrective work that must be completed within 60 days. Upon satisfactory
completion of the Corrective Work, a Certificate of Compliance will be issued by the City.
If either an inspection is not scheduled, or required corrective work is not completed, within the
required time frames, a monthly surcharge will be added to the property owner's utility bill until
such time as an inspection is performed and/or all corrective work is completed. (See attached
Work Flow Process diagrammatic)
Non-compliant Enforcement Surcharges
City Code 3.40 (Rules and Yegulations relating to sewer service), Subdivision 10 (Clear' Water
Discharge Prevention and Prohibition), Paragraph E(Surcharges) provides for monthly
surcharges to be added to the property's utility bill resulting from any cause that results in a lack
of a Compliance Certification being issued. The amount of the I&I Surcharge for non-
compliance will be established by formal Council action and incorporated into the Annual Fee
Schedule. Per the Code, the I&I Surcharge becomes effective for the entire month when the final
notice of Non-Compliance was sent to the property owner/resident and every month thereafter
until such time that a Compliance Certificate has been issued. Nonpayment of delinquent fees
and/or surcharges will be certified to the property's taxes for collection.
City Cost Participation
Other communities' experiences have indicated that the majority of corrective work requirements
relate to a simple disconnection and rerouting of a sump pump discharge. However, there have
been situations where foundation drain disconnections and/or service lateral repairs become
more costly. In respect to the cost savings expected to the City's future sewer billings from the
Metropolitan Council, the City Council deemed it justifiable to offer financial participation for
corrective repairs to low and medium density residential properties (R-1,2 & 3). The City will
assume responsibility for 50% of costs incurred by the homeowner for required corrective work
(Permit Fees not included). If the corrective work is not performed under a City issued contract,
the property owner may perform the work personally. While all material costs will be eligible for
reimbursement, only work performed by a licensed plumber and/or pipe-layer contractor pre-
approved by the City will be eligible for City participation. If the property owner elects to
perform the worlc through a private contractor, the City will issue payment upon receipt of proper
documentation for the City's share, made payable to both the private contractor and property
owner.
Cit,y Financin o� f Propert,y Owner costs
The Property Owner may elect to have all, or any part, of their actual costs incurred levied as a
special assessment against the benefitted property spread over 5 years and financed at 4% simple
interest. This will require the execution of the appropriate Waiver of Hearing and Special
Assessment agreement.
APPROVED BY COUNCIL ACTION: December 15, 2009
REVISED: January 19, 2010
page 42
11/t2/15 REVISOR LCB/IL 16-S122
1.t A bill far an act
t.2 relating to taxation; property; reducing the fiscal dispax-ities contribution
i.3 percentage for cex�tain cities in the metropolitan area; appropriating money;
l.a amending Minnesota Statutes 2014, sections 473F.07, subdivision 1; 473F.08,
1.5 subdivision 2; proposing cod'u�g for new law in Miunesota Stalutes, chapter 473F.
t.� BE IT ENACT�D BY THE LEGISLATURE OF THE STATE O� M1NNE50TA:
�.� Section 1. Minnesota Statutes 2014, section 473F.07, subdivision 1, is aznended to read:
i.s Subdivision 1. Contribution net tax capacity; areawide net tax capacity. �
i.9 Each county auditor shall determine each mui�icipality's contribution net tax capacitv as
t.�o 30 percent of the ainount determined under section 473F.06 for cities with a po�ulation
t.1 i of less than 15,000, or 40 percent of the amount determined under section 473F 06 for
1.12 all other inunicipalitzes. The auditor must certify each anunicipaliry's contribution net tax
t.13 capaciry and the deterininations undcr sections 473F.05 and 473F.06 to the administrative
t.i4 auditor on or before �lugust 1 of each year.
t.1s �The administrative auditor shall deterinine an amount equal to 40 percent of the
1.16 sum of the amounts certified under section 473F.06. The resulting amount shall be known
i.t� as the "areawide net tax capacity for ........(year)."
1.� s (c) The admu�istrativa auditor must detet771ine the state's cont�ibution net ta�t capacit
�.t9 as the ditTerence between the nreawide net tax capacitv and the suin of the contribution net
z.zo tax capaciry amounts for all n�unicipalities determined under paragz�aph (a)
t.2i �FF�CTIVE DATE. This section is effective for taxes pa �able in 2017 and
1.z2 thereafter.
t.2s Sec. 2. Minnesota Statutes 2014, section 473F.Q8, subdivisioa 2, is amended to read:
Sec. 2. �
z. t
2.2
2.3
2.4
z.s
2.6
2.7
z.s
2.9
2.io
2.11
2.12
2.13
2.14
t tii2ns
page 43
REVISOR I.CBIIL 16-5122
Subd. 2. Computatiou of net tax capacity. `The net tax capacity o£a govern�nentat
unit is its net tax capaciry, as determined in accordance witl� other provisions of law
i�icluding section 469.177, subdivision 3, subject to the following adjustments:
(a) There shall be subtracted from its net tax capacity, in each municipality in which
the governmental unit exercises ad valorem taxit�g jurisdiction, an amount which bears the
same proportion to ' i,• "'�Q
. the municipality's contribution net tax capacity as the
total preced'uig year's net tax capacity of commercial-industrial property which is subject
to the ta�ng jurisdiction of the goveinmental unit within the inunicipality, determined
without regard to section 469.177, subdivision 3, Uears to the total preceding year's net tax
capacity of con�mercial-industrial properly within the uiunicipality, determined without
z'egard to section 469.17'7, subdivision 3;
(b) There shall be added to its net tax capacity, in each municipality in which the
governmental unit exercises ad valorem taxing jurisdiction, an amount which bears
2.is the same proportion to the areawide net tax capacity for the year attributable to that
2.i6 muiiicipalit� as the total preced'zng year's net tax capacity of residential property which is
2. t7 subject to the taxing jurisdiction of the governmental unzt within the municipality bears to
2.ts
2.19
2.20
the total preceding year's net tax capacity of residential property of the inunicipality.
EFFECTIVE DATE. This section is effective for taxes payable in 2017 and
thereafter.
2.2i Sec. 3. [473F.14j STATE OF MINNESOTA PAYMENT.
2.22 (a) The admir�istrative auditor must deteru�ine the state's fiscal dispurities payznent
2.23 by multiplyin� the state's contribution net tax capacity determined under section 473F.072
2.za subdivision 1,'by the arcawide tax rate determined under section 473F.08 subdivision 5
2.zs � November 1 of each year, the administrative auditor must notify the commissioner
2.26 of revenue of the state's fiscal disparities pa ment for taxes �ayable in the following
z.2� calendai�ear.
2.zs (b) The commissioner of revenue must submit the payment certified under paragraph
z.2s (a) to the adulinistrative auditor in two equal installments, on June 1 and November 1 each
z.so ear. � sum sufficient to meet the obli ations uuder this section is aniwall a ro riated
2.31 from the enexal fund to the commissioner of revenue.
232
2.33
EFFECTIV� DATE. This section is effective for taxes payable in 2017 and
thereafter.
Sec. 3.
2
page 44
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Request for City Council Action
MEETING DATE: February 9, 2016
TO: Mayor, City Council and City Administrator
FROM: Tamara Schutta
Assistant to the City Administrator/HR Coordinator
SUBJECT: City Council Health Insurance Coverage
INTRODUCTION
Staff has been asked to provide information regarding the possibility of adding Mendota
Heights' elected officials to the City's employee health insurance coverage.
BACKGROUND
While not the norm, there are some Twin Cities municipalities which include their
mayors and city councils in their health insurance coverage. Cities of which we are
aware are St. Paul, Stillwater, Apple Valley, Fridley, and New Brighton
The City of Mendota Heights currently provides insurance benefits to full-time
employees and part-time employees working 20 hours a week. The City contribution for
full-time employment is $1,452 per month. The City contribution is prorated for part-time
employees and is $726 per month.
The City offers two health insurance plans. BCBS Aware Gold and BCBS HSA. The
2016 monthly rates are the following for each plan.
BCBS Aware Gold
Single: $742
Family: $2,050.50
BCBS HSA
Single: $538. Annual deductible is $2,350
page 45
Family: $1,487. Annual deductible is $4,700
The City's current Cafeteria Benefit Plan requires single health insurance coverage for
all employees eligible for the monthly contribution. Employees are permitted to opt out
of health insurance coverage with acceptable proof of health insurance coverage
through another group health plan. Employees are allowed to cash-out up to $653.40 of
the monthly employer insurance contribution. Part-time employees are allowed to cash-
out up to $326.70 of the monthly employer insurance contribution.
If the City Council were to consider providing health insurance coverage to Council
Members there are several items that would need to be addressed. The Cafeteria
Benefit Plan would have to be amended to allow for coverage and if the City Council
would be eligible for the cash-out option.
Another issue to bring to your attention is the Affordable Care Act "Cadillac Tax" that
will impose a 40% penalty on employers that offer high-cost plans beginning January 1,
2020. The thresholds for high-cost plans are currently $10,200 for individual plans and
$27,500 for family coverage. The tax is 40% of the cost of health coverage that
exceeds predetermined threshold amounts. For example:
Single Coverage
$11,000 — $10,200 = $800 x 40% _ $320
Family Coverage
$29,000-$27,500 = 1,500 x 40% _ $600
Based on the example above, the City would have to pay $320 for each single plan and
$600 for each family plan beginning January 1, 2020.
Open enrollment season for benefits is typically held the first week in December.
Enrollment and changes for insurance benefits would be effective January 1, 2017.
BUDGETIMPACT
The potential budget impact of adding five elected officials would be approximately
$17,424 per council member, or $87,120 annually. Future costs will be dependent on
annual premium changes, and Affordable Health Care changes.
The insurance costs would need to be considered for the 2017 Budget.
ACTION REQUIRED
Staff is seeking City Council direction.