10.59% preliminary tax levy increase ‘largest’ Mayor has seen

The maximum property tax levy increase for 2023 could be more than residents are accustomed to.

The city council was presented the preliminary property tax levy during Tuesday’s meeting. Administrative services director Aurora Yager broke down the need for the increase, along with the preliminary general fund and enterprise fund budgets.

City staff starts the budgeting process during the summer months, preparing for a final budget at the end of the year.

The recommended preliminary property tax levy increase for next year is 10.59-percent. The levy must be approved by the council and certified to Hennepin County by Friday, Sept. 30.

The largest factor in the increase, according to Yager, is to pay for additional staffing. Public safety in particular will see an increased investment with the addition of two more police officers.

The city is working toward having two officers on duty at all times. With the number of officers currently with the police department this is not possible. Yager said it would really take three more officers to achieve that goal.

Currently, the police department is a more than $2.6 million expenditure for the city. The proposed budget increase would add another $46,812 to the department.

“I applaud how well the city has been run financially for as long as I’ve known. This has been a painful year to look at these things,” said councilor Alex Plechash. “It’s my view we do need what we’re asking for. I feel it’s one that’s warranted.”

Plechash said the largest complain he hears from residents is about evening activity on Lake Street.

Following Plechash’s comments, councilor Cathy Iverson asked what the true cost of maintaining Panoway is. Public works director and city engineer Mike Kelly said the city has only just started tracking that data.

The property tax increase, if at the maximum rate proposed, would cost the median homeowner an additional $110.

While the increase took some of the council aback, Yager shared how it compares to neighboring cities. Even with an increase of more than 10-percent, Wayzata would have the second lowest tax levy rate among those cities. The city’s property tax rate makes up about 18-percent of a property owner’s property tax statement.

Councilors Iverson and Molly MacDonald voiced their hesitation to certify the rate increase. MacDonald said she believes it can be lowered. When the time came for roll call, Iverson was the only one to vote against certifying.

Yager said she has heard of possibly larger rate increases from neighboring cities ranging from 5- to 22-percent.

“We’ll see what happens when those other communities release their levies,” she said. “I would not be surprised to see higher.”

With the preliminary property tax levy certified at an increase of 10.95-percent, the council can only increase the tax by that amount or less. It cannot increase by more than the rate it certified to the county.

The 2023 general fund assumes an increase of 5.37-percent in operating expenses. Cities across the country are losing one revenue source with the expiration of American Rescue Plan funds. 

The total revenues for the city in 2022 are estimated at $7.5 million and projected to increase to about $7.9 million in 2023. 

Yager said the proposal for the general fund is for a balanced budget. The council approved the preliminary budget. Iverson voted ‘nay.’

Text Amendment costs debated in fee schedule

When discussing the next agenda item, the adoption of the 2023 fee schedule, Iverson asked about zoning amendment fees. The fee schedule for 2023 has a text amendment fee of $2,195 with an escrow of $3,822. Both are increases of more than $100 over 2022.

“There has been someone that has reached out to the city asking why it’s so much higher than our other cities,” Iverson said. “Plymouth’s is $300 with no escrow. Excelsior is $700 with no escrow. Why such a high cost? It seems extremely elevated.”

CATHY IVERSON

Yager said she would not dispute those numbers, but she said cities such as Minnetonka have fees which are similar to Wayzata’s.

City attorney David Schelzel clarified what escrow is used for. He said it helps the city ensure legal processing fees and professional service fees are covered by the applicant. What is not used is then refunded to the applicant. On larger projects, staff may request a larger escrow.

Schelzel went on to say the escrow fee is important to the city because of the amount of “sophisticated development” that happens in Wayzata.

“Your single-family homeowner who is doing a small project, those fees are not going to be all used like that,” Schelzel said.

“For these big development applications when we have a PUD and we’re talking tens of millions of dollars, I’m not too concerned if they can make $3,800 work,” Mouton said. “I think they can scrape that together.”