1. Work Session Follow UP
Aug. 23, 2018

2. Budget Workshop Objectives
Review long-term financial plan.
Review draft financial policies.
Follow up from Aug. 16 work session.
● Fiscal disparities.
● Other questions.
● Preliminary levy and budget approval on Sept. 4.

3. Long Term Plan

4. Assumptions Rates % Interest Earnings 1%
Governmental Fund Revenue Growth 3%
Governmental Fund Expenditure Growth
Enterprise Fund Revenue Growth 5%
Enterprise Fund Expense Growth
General Fund Levy Growth
EDA Fund Levy Growth 2%
Population Growth
.49%
Median Home Value Growth
Tax Capacity Growth Rate (including fiscal disparities)
Governmental Fund Debt Interest Rate
Governmental Fund Debt Term
15 years
• One showing current service levels – And the cost of maintaining service levels is increasing due to general inflation.
• One showing one-time accounting changes • Increased service levels address community or workload needs include two new positions in police, one in finance and enhanced IT services.

5. Assumptions with Future Action
Park Improvement Fund includes a $3 million project for Becker Park.
Fleet Fund requires an operations and replacement cost analysis in 2019 to establish the future charge out rate for Fleet Fund.
IT Fund established as an internal service fund to provide for ongoing operations - needs capital preplacement cost analysis.
Storm Water Fund includes several grant assumptions for major infrastructure projects.
City engaged with AEM Financial Solutions for the analyses of utility rates for water and sewer.
• One showing current service levels – And the cost of maintaining service levels is increasing due to general inflation.
• One showing one-time accounting changes • Increased service levels address community or workload needs include two new positions in police, one in finance and enhanced IT services.

6. Key Highlights
General Fund had a 51.7% operating reserve on Dec. 31, 2017.
Tax levy projected to increase from 11.3 million (2019 proposed) to $13.4 million over duration of plan based on projected increases for the general fund capital needs. ● Tax capacity is assumed to grow at 5% during duration of plan.
● Future captured tax increment capacity has not been analyzed. The annual tax amount for a median home is projected to increase from $850 (2019 proposed) to $1,046 during the plan.
Total outstanding debt could decrease from $18.6 million (2017 actual) to $9.5 million over duration of plan.
Total cash position of the city is projected to decrease from $44.6 million (2017 actual) to 33.9 million over duration of plan.

7. Dashboard

8. City Tax Capacity Rates
2017 – 2018 (actual) and 2019 – 2023 (estimated)

9. Tax Capacity Tax Rate Comparison
2013 – 2018 (actual)

10. as Percent of Expenditures
General Fund Balance
as Percent of Expenditures
2017 (actual) and 2018 – 2023 (estimated)

11. Cash Balance by Planned Use
2017 (actual) and 2018 – 2023 (estimated)

12. Property Taxes: General Levy, EDA, Debt Service and Capital
2017 – 2018 (actual) and 2019 – 2023 (estimated)

13. Projected City Tax Impact
2017 – 2023 (estimated) for an average valued house ($196,000 in 2019)

14. Projected Debt Balances
Based on current amortizations 2017 (actual) and 2018 – 2023 (estimated)

15. Debt Per Capita – Comparison
2012 – 2017 (actual) and 2018 – 2022 (estimated)

16. Capital Improvement Plan Discussion
● Streets
● Police
● Parks
● Building
● Fleet
● Information Technology
● Water
● Sewer
● Storm Water
● Street Lights

17. Projected Property Tax Levies and Tax Rates
Property Taxes for General Purposes
2017 Actual
2018 Actual
2019 Estimated
2020 Estimated
2021 Estimated
2022 Estimated
2023 Estimated
General
$8,657,000
$9,436,779
$ 9,641,249
$9,716,249
$10,266,584
$10,891,819
$11,218,574
EDA/HRA
277,200
282,744
288,399
294,167
300,050
306,051
Street Capital
163,600
110,144
116,950
121,628
126,493
131,553
PERF Fund
137,400
151,900
154,938
158,037
161,197
164,421
167,710
PIR Fund
266,220
301,210 -
Building Fund
574,400
585,888
597,606
609,558
621,749
634,184
Park Improvements
248,3100
358,914
476,359
593,804
713,804
Fleet
85,680
86,537
87,402
88,276
89,159
Information Tech.
159,179
159,902
161,501
163,116
164,747
SUBTOTAL
$10,075,820
$10,905,089
$11,268,132
$12,032,929
$12,486,394
$12,949,729
$13,425,782

18. Projected Property Tax Levies and Tax Rates
Property Taxes for Debt Service
2017 Actual
2018 Actual
2019 Estimated
2020 Estimated
2021 Estimated
2022 Estimated
2023 Estimated
2005 Pool Bonds
$212,000 -
SUBTOTAL
212,000
Taxes Levied
$10,075,820
$10,905,089
$11,268,132
$12,032,929
$12,486,394
$12,949,729
$13,425,782
Less: Value of Market Value Levies
489,200
277,200
282,744
288,399
294,167
300,050
306,051
Less: Distribution from fiscal disparities
$2,267,618
20,186,657
$2,295,990
$2,410,789
$2,531,329
$2,657,895
$2,790,790
City Net Levy
$7,531,002
$8,441,232
$8,689,398
$9,333,740
$9,660,899
$9,991,784
$10,328,941

19. Projected Property Tax Levies and Tax Rates
Tax Capacity
2017 Actual
2018 Actual
2019 Estimated
2020 Estimated
2021 Estimated
2022 Estimated
2023 Estimated
Personal & Real Estate
$16,716,393
$18,459,975
$19,383,974
$20,352,122
$21,369,729
$22,438,215
$23,560,126
Other assumed net growth factors -
Less: contribution to fiscal disparities
1,082,015
1,179,088
1,133,042
1,189,695
1,249,179
1,311,638
1,377,220
Less: Tax Increment
248,944
212,599
Adjusted Net Tax Capacity
$15,385,434
$17,168,288
$18,037,332
$18,949,829
$19,907,950
$20,913,978
$21,970,307

20. Projected Property Tax Levies and Tax Rates
2017 Actual
2018 Actual
2019 Est.
2020 Est.
2021 Est.
2022 Est.
2023 Est.
General
42.33%
43.66%
42.28%
43.06%
42.09%
41.14%
40.20%
Capital Levies
5.58%
5.51%
5.20%
5.53%
5.80%
6.02%
6.22%
Schedule Debt Levies
1.04%
0.0%
Total City Levy Tax Rate
48.949%
49.168%
48.175%
49.255%
48.528%
47.776%
47.013%
Total EDA Tax Rate
1.385%
1.274%
1.250%
1.225%
1.201%
1.177%
1.152%
Population
22,855
22,967
23,080
23,193
23,307
23,421
Taxes Per Capita
450
475
488
519
536
556
573
Median Home Value (Jan. 2)
166,000
182,000
196,000
205,800
216,090
226,895
238,239
Median Home Taxes (from city)
703
792
850
922
962
1,004
1,046
% Change from Prior year $
N/A
13% 7% 8% 4% 9%

21. Projected Property Tax Levies and Tax Rates
Tax Levy $
2017 Actual
2018 Actual
2019 Est.
2020 Est.
2021 Est.
2022 Est.
2023 Est.
General
$8,657,000
$9,436,779
$9,641,249
$10,266,584
$10,574,582
$10,891,819
$11,328,941
Capital
1,141,620
1,191,110
1,184,960
1,318,044
1,456,145
1,594,744
1,736,410
EDA
277,200
282,744
288,399
294,167
300,050
306,051
Debt Service
212,000 -
Tax Levy %
2017 Actual
2018 Actual
2019 Est.
2020 Est.
2021 Est.
2022 Est.
2023 Est.
General
84%
87%
86%
85%
Capital
11%
12%
13%
EDA 3% 2%
Debt Service 0%

22. Outstanding Debt Schedule

23. Financial Management Plan
● Auditor
● Budget & financial control
● Business assistance
● Capital
● Conduit debt
● Contacts
● Debt management
● Fund Balance
● Interfund loans
● Investments
● Post issuance compliance
● Revenue
● Risk Management
● Tax abatement
● Tax increment financing

24. Follow up to 2019 – 2020 Budget ● Fiscal disparities distribution –
updating schedule of tax rate calculation.
● Other questions/comments.

25. Tax Rate Calculation Net Tax Capacity Local Levy Total Tax Rate
Payable 2015
Payable 2016
Payable 2017
Payable 2018
Payable 2019
Payable 2020
Tax Capacity
$14,758,503
$15,250,280
$16,716,693
$18,459,975
*$19,577,862
***$20,556,755
TIF Captured Value
(297,589)
(325,706)
(248,944)
(212,599)
**(212,599)
Area-wide Contribution
(1,088,083)
(1,088,334)
(1,082,015)
(1,079,088)
(1,216,174)
Area-wide Distribution
4,197,619
3,999,304
4,375,023
4,467,214
Net Tax Capacity
$17,570,450
$17,835,544
$19,760,757
$21,635,502
$22,616,303
$23,732,282
Certified Levy
9,074,153
9,099,500
9,798,620
10,627,889
11,060,388
11,744,529
EDA Levy
239,000
246,200
277,200
282,744
288,399
Local Levy
$9,313,153
$9,345,700
$10,075,820
$10,905,089
$11,343,132
$12,032,928
2015
2016
2017
2018
Payable 2019
City Tax Rate
50.50%
51.83%
50.36%
50.42%
49.91%
51.00%
County Tax Rate
46.40
45.36
44.09
42.81
School Tax Rate
33.23
33.83
31.61
31.96
Other Tax Rate
10.56
10.43
10.21
9.05
Total Tax Rate
140.68%
141.45%
136.27%
134.23%
133.73%
134.82%
* Proposed Values and Tax Capacity – Hennepin County Assessor’s Department. Amounts are estimated for county,
school and other tax rates for 2019.
** Estimates for the 2019 Captured Tax Capacity from Tax Increment Finance Districts will not be available until Aug. 15,
2019. The prior year, TIF Captured Value was used to calculate the estimated 2019 tax rate. *** Estimated at 5% increase over 2019.

26. Impact on Residential Homes
Based upon proposed increase in the city tax levy.
2018 Market Value of a Home
Taxable Market Value
2018 Actual
2019 Estimated
$ Increase
% Increase
$158,760
$135,800
$685
$705
$20 3%
$176,400
$155,000
$781
$804
$23
$196,000
$889
$915
$26
$235,200
$219,100
$1,105
$1,137
$32
$282,240
$270,400
$1,363
$1,403
$40

27. Questions?