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MINUTES OF THE ORONO TRUTH-IN-TAXATION MEETING Monday, December 12, 2011 6:00 o’clock p.m. _____________________________________________________________________________________ Page 3 of 4 Debt Service Funds are used to collect funds for the annual principal and interest payment on the City’s outstanding bonds. The tax levy for the debt service funds is formally adopted by the Council as part of the budget process. The 2012 levy required for the debt service funds is the same as 2011 but will increase slightly in 2013. If no new bonds are purchased, the debt service in 2015 will drop to $623,000 and to $573,000 in 2016. Printup asked what the other category includes. Olson stated it primarily includes the Hennepin County Regional Rail Authority, Hennepin Parks, and HRA, which is 5.14 percent. Also included would be the Metropolitan Council at approximately 2 percent, the Watershed District, and the park museum. Every property in Hennepin County pays a very small percentage for the park museum. Rahn asked how much more of a decrease in the budget the City would have needed to keep the same tax rate. Olson indicated it would be several hundred thousand and would be approximately 1 percent times 28 million. Rahn commented that other cities have been using a tax rate rather than the levy rate. Olson stated there were years when the City’s tax capacity was going up 10 percent per year but that the City’s tax rate was actually decreasing from a high of 20 percent to a low of 12 percent. Olson stated he would not recommend using the tax rate rather than the levy percentage. McMillan asked if the property valuations are still dropping in the City. Olson indicated the amount of decrease has lessened somewhat but that there will still likely be a small decrease over the next year. Olson noted the valuations for apartment buildings have increased. McMillan opened the meeting for public comment at 6:30 p.m. Kevin Landgraver, 2570 Thoroughbred Lane, asked of the City's $29 million tax capacity, how much is residential versus commercial. Olson stated the majority of it would be residential but that he does not have the exact percentage. Landgraver asked if commercial/industrial has also declined by a comparable percent rate. Olson noted some of the commercial buildings were empty this past year so their valuations were less, but that once they secure tenants, their valuation would increase. Olson indicated he would be able to provide that information to the Planning Commission. Landgraver asked how the 7.5 FTE’s would impact the budget. Olson indicated those positions are not included in this year’s budget and that he does not anticipate those positions being filled in the coming year. Item #02 - CC Agenda - 01/09/2012 Approval of Truth-in-Taxation Meeting Minutes 12/12/2011 [Page 3 of 4]