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HomeMy WebLinkAbout1996-05-13 TranscriptionMay 13, 1996 Council Work Session 6:30 PM Council: Nov, Baker, Kubby, Lehman, Norton, Thornberry, Vanderhoef. Staff: Atkins, Helling, Woito, Karr, Yucuis. Tapes: 96-60, all; 96-61, Side 1. Sales Tax Discussion 96-60 S1 Nov/ We are going to start with a discussion with estimated revenues and distribution of revenues and Don Yucuis is going to get us going ..... Which handout are you following here so we all take out the right one. Yucuis/ Sales Tax Estimate of Revenue. Based on the FY95 information we received from the state and the reports shows the community taxable sales, the percentage of those sales, to the total within the county. The population 1990 Census is the second set of columns and the third column is what the 1% would bring in by community and that is based on the state formula which is 75% is distributed by population and 25% is distributed by taxes levied in FYs 83, 84, and 85 and just going over the first column, taxable sales ..... Iowa City... approximately 75% of the taxable sales within Johnson County. Kubby/ It is an incredible number. The amount of money circulating... Norton/ Why do they go back this far, Don? ..... Yucuis/ It is the state law ..... Baker/ If we do a new census and our population figure changes, is it reflected in this? Yucuis/ Yes, it would be ..... total will be higher and our number will be higher. Baker/ But the other communities, if they don't do a census, they will actually lose. Norton/ What do you make out of that table? .... Yucuis/ Let's take the Iowa City portion, 75% of the tax revenues and 62% of our population to the total and based on the distribution formula, we would receive back about 57% of the 1%. Norton/ Thisrepresents only areasonebly accurate ~nscrlp~on ofthelowa City council meeting of May 13,1996. WS051396 May 13, 1996 Council Work session Page 2 Yucuis/ .... That includes University Hts. and Shueyville .... Majority of that is Johnson County and the 25% of sales tax revenue of 1% going to the county. the main reason is because of the taxes that distribution of 25% based on the amount of taxes that are levied. They levy quite a bit of the taxes... within these figures .... Norton/ Can you make anything... on whether in fact... that you would somehow be getting a significant contribution from people who participate in town but live outside? ¥ucuis/ Not from these figures. We don'% do it by where the person comes from. You could do it by zip code if you did it .... I have only been a couple of stores where they ask for your zip code .... Best guess is you get a lot of people coming from the outside .... college students... sporting events... Hancher events .... from outside .... Norton/ Some of us had an e-mail from somebody who said .... tax would be collected largely in Iowa City and Coralville from all county and out of county residents... then distributed to all city and county .... Nov/ The people who live in the county who shop in Iowa City do benefit from this .... they do get a large chunk of this for the unincorporated areas of Johnson County. Norton/ Kubby/ .... Is it true that they might not charge it but they will receive it back? Yucuis/ The vote for it .... But if they don't vote it in they don't get any of the taxes ..... ~ubby/ So it mstter$ how the vote comes out ..... Nov/ The schedule is based on the fact that all of Johnson County voted yes. Yucuis/ I did do one calculation having everyone vote it in and let's say Coralville opted out ..... Back out the Coralville nu~mbers and you redistribute everything and the $4.488 million goes down to approximately $4 million for Iowa City. Baker/ This represents only a reasonably accurate t~anscrlptlon of the iowa City coundl meeting of May 13, 1996. WS051396 May 13, 1996 Council Work Session Page 3 ¥ucuis/ Kubby/ What does it change to? Yucuis/ $4°488 million goes down to $4 million. Thornberry/ Based on the last three years figures° Does it include what is going to be happening in Coralville the next 2-3 years? ¥ucuis/ The taxable sales are based on F¥95. Nov/ The cities who pass on the ballot have the option to retract it within any year after a whole year has passed and the retraction does not take a ballot issue. They can just pass a resolution. Vanderhoef/ Then it has to come back as a referendum? Nov/ No. Vanderhoef/ If they want to do it again? Nov/ If they want to put it back, it would require a referendum. The tax is basically a county tax. It is sent into the State Department of Revenue. They send it back to the county. They tell the county how to distribute it .... Anyone who is not collecting it is not getting part of the distribution. Baker/ If they opt out after a year, how do anyone of these entities trigger another referendum? Nov/ .... Baker/ ...within their own city limits. Thornberry/ Is there a waiting time on the referendum? Atkins/ In between times, Dean? I don't recall anything in the legislation that says that. Vanderhoef/ And does it have to be done within the one year time limit? Karr/ They have to have it in place for one year ..... Nov/ Then they can take it off anytime .... and put it back in any Thlsrepmsen~ only a reasonably accurate ~anscHptlon of ~elowa City council moogrig of May 13,1996. WS051396 May 13, 1996 Council Work Session Page 4 time but it would require a referendum to put it back in. This article is a good general description of this state law and one cent sales tax... tonight .... Don, do you have any additional comments on sales tax? Yucuis/ Not off hand. Baker/ .... Assumes everything comes together and it is put on the ballot in November and passes and starts collecting January 17 Nov/ First quarter, yeah. Baker/ And it is distributed back to the cities, how often? Yucuis/ Quarterly. Nov/And you must start your collection at a beginning of a quarter also. We first of all have to say do we want a sales tax? If the answer is yes, we will assume that we will place it on the ballot. If we are planning to place it on the ballot, we have to say what we are going to do with it. The ballot has to say we are going to use it for property tax relief or not. But the rest of it is entirely optional ..... We can do a very generic kind of thing such as community betterment... then the individual council can decide what the community betterment means in t~ years budget or next .... We need to involve other cities. We need to involve the county. We need to get everybody together at some point and have a discussion. So, I think because Iowa City is the majority of the population of the county and we can trigger the discussion and we can trigger the requirement to put it on the ballot. We had better know that we really want it and we need it .... Are we ready to put something on the ballot? Baker/ Two key words, want or need. I don't think anyone wants the tax. The question is whether you need it and how you justify it. Nov/ And how you decide what you need? Baker/ ..... Steve.°. what sort of his view of the financial future for the next 5-10 years .... Atkins/ And Don jump ino Our financial condition compared to other cities in Iowa is probably superior to most cities that This represents only o reasonably accurate t~onscript/on of the Iowa City council meeting of May 13, 1995, WS051396 May 13, 1996 Council Work Session Page 5 deliver the size and package of services that we provide. We have AAA rating credit. There is only 38 cities in the United States that have that credit rating. Assuming the decision on the peninsula comes together in FY99, we will maintain our cash reserves, estimated at 20% ..... In very general terms our financial condition is very soun4. Looking at that financial condition, it says to me we can pretty much do what we are doing right now for the foreseeable future... employees which is the largest share of our budget ...... We have plenty of debt margin... to finance the capital. My concern would be if you start adding large number of employees. It seems to me that the sales tax offers the opportunity to deal with... the property tax ..... Our property taxes... we are not at the top, we are not at the bottom .... We don't levy a local option tax as most of the cities do here in Iowa .... biggest major concern from a policy standpoint is that we had made commitments to operate certain programs on behalf of the federal government ..... Assisted Housing is in five year contracts .... Some of the other federal programs, I suspect, are going to continue to get reduced .... Do we feel the void with local resources .... It is going to be more difficult and still do the other kinds of things that we do .... Next five years we are comfortable .... The state legislature has the propensity to change things on a whim .... Kubby/ Even four things that we are doing now that are fully or partially funded by the federal government is still doing the same things that we are doing ..... Atkins/ If the community steps forward and says there is a need for .... a major new initiative... it is going to be more difficult. Some new initiatives which include borrowing, we have enough tax capacity .... $8.10 limits the amount of money that you have coming into the General Fund. Our Employee Benefit Levy is not limited ..... As far as our debt service is concerned we are in the neighborhood of 25-50%. We have loads of margin in there if you are wiling to raise taxes to incur additional debt .... Nov/ Steve, what do we want to do that we are not doing? ..... Atkins/ ...Housing initiatives .... question that you all have got to answer for me. Are there initiatives that we have not taken .... Library Board .... we need a new expanded library. You have to deal with that. You also know that there is an initiative coming down from P/R Commission where we want to add gym space ..... There are certain initiatives that only you Thisrepresents only araesonably accurate ~an$=lptlon ofthelowa City council meeting of May 13,1996. WS051396 May 13, 1996 Council Work Session Page 6 can make those decisions on. Norton/ I would like to run over a few of those .... Library... centerSpace .... Near Southside Improvements ..... some commitments in the Central business district ..... We have got some commitment to the airport, presumably. Atkins/ At least $1 million. Norton/ .... cemetery matter ..... Atkins/ It is a serious policy question because if you expand it into Hickory Hill Park .... Norton/ P/R gymnasium Atkins/ What we have in our capital plan preceding council .... We set aside a lump sum of money each year for parkland development, acquisition .... accumulative... $50,000 a year .... Those are substantially General Fund expenses... those could be financed by debt .... Norton/ We have some commitment on the peninsula development? Atkins/ That issue is yet to come back to you .... We will come back... out General Fund Reserve would be replenished by that. We are okay for the next couple of years. Norton/ Civic Center expansion. Arkins/ Civic Center expansion .... seriously thinking about .... is that we do have space above the Police Department .... that second floor is empty .... Third floor... discussed because of other rental commitments... a wash .... Norton/ TFnat about Transit? .... SEATS... Atkins/ Well, if we got into the business of running SEATS, the way I have understood it, is that the capital moneys, purchase authority, etc., that the county has through ECCOG for the purchase of their rolling stock would simply transfer to us .... We would become a new agent .... Kubby/ Atkins/ You may choose to just provide an urban service and let the county provide their rural service .... moneys carved up. This represents only a reasonably sccura~e transcription of the Iowa City council meeting of May 13, 1996. WS051396 May 13, 1996 Council Work Session Page 7 Norton/ But it is a pretty fair list of things that require capital investment one way or another .... Arkins/ I am trying to think of things that are hanging out there that you want to do. It is the General Fund... that is the one that is most vulnerable .... comfortable reserves... landfill is healthy .... airport has some exposure .... $1 million of capital investment .... Transit is always going to be difficult to deal with .... Norton/ Arkins/ I would consider daycare a fairly major and new initiative if you were thinking about doing that .... Neighborhood Centers concept ..... we used federal moneys.,.fundraising .... Given a city of our size having two of those is pretty good... Kubby/ Even childcare for our employees .... Atkins/ That is something that would be a bargainable issue if we would choose to do that .... Norton/ What about industrial...land expansion? Atkins/ Industrial expansion... has been .... problem of finding land... that would allow us to inventory it .... 100 acres or more. That has been very very difficult for us .... I think I can put together some internal funding if the price is reasonable .... industrial land... you need the staying power .... Kubby/ Two things that are not on your list are a need to have a operational commitment to more parkland .... park staff to maintain... And to develop. And the other thing is the moving of our Public Works building .... Arkins/ The Public Works building ... last rain..° ceiling dropped in several spots .... We are thinking about putting together a pole building project .... water is coming in and it is not very nice... can market that site .... Nov/ Can we repair those? Atkins/ They can be repaired... they have towels stuffed in the cracks .... plastic draped over the computers... Kubby/ ...Would have been great to have a goal setting session... Thlerepreeent$ only 8 reasonably 8ccur~o ~an$crlption ofthelow8 City council meeting of May 13,1996. WS051396 May 13, 1996 Council Work Session Page 8 What are our priorities...? ~rnat should we be doing with resources? ..... What are our options for increasing our resources? Atkins/ I would be delighted to have that .... I agree with you. Nov/ It is going to be a while before we get everybody in town. Baker/ ... See if this is a fair paraphrase. For the immediate future out financial comfort is pretty well secure as long as our finances are stable. Atkins/ I think that is correct. Baker/ ..... Two particular areas...housing and transportation, transit. Those two seem to be the most problematic in the future ...... Atkins/ What I suspect is going to happen in housing is the federal government I don't think has the courage to just simply dump the program. ;~at they will do... they will begin reducing the administrative fee .... Secondly°.. the percentage of income to be contributed by the tenant to rent they will increase .... The capital plans... fortunate to get that construction grant for 30 some units .... That is the way I envision that the housing program will change .... Kubby/ Atkins/ Transportation... We have a public transit system that I believe is far superior to most in the state .... We have made a number of decision internally that we are choosing to finance it at this level... Baker/ .... Two kinds of budget questions... What do tYoO%od.O. to maintain the status quo? .... And what do you want i addition to the status quo? ..... You are saying the status quo is fairly safe in the immediate future. Arkins/ I think so... We just had a credit rating for a recent bond sale and we were a AAA .... They review our finances .... three year projections .... We also have the ability .... Governor line itemed out some money.°. that we were suppose to get in the form of municipal aid and we were able to eat that without making a big change in the budget... minor changes .... We can do that but you can only do that for some many years .... Thisrepresents only ereasonsbly eccurotetrons=lptlon ofthelowa CI~ councilmeeting ~ May 13,1996. WS05~396 May 13, 1996 Council Work Session Page 9 Baker/ On that list is initiatives .... Isn't there a point in which those initiatives become necessary to maintain the status quo? Atkins/ I would like to think that initiative is truly an expansion on the public services that we currently provide... current public service and initiative at the same time. Sooner or later we are going to have to make the fourth fire station decision .... Bottom line is that sooner or later we go from 20 square miles to 25 square miles and we go from 60,000 people to 70,000 people. Our exposure goes up. Thornberry/ .... more taxes... Arkins/ Keep in mind, Dean, that the state law takes it away from us. This year you lower the tax rate and lowered taxes... state controls that°.. our tax base went Upo But because of rollbacks and other factors that the state does to you, they simply take away your flexibility .... They took a substantial portion this year... I can say to you .... our revenue base, total dollars coming in, grows at just a ..... less than inflation .... You lose a little ground... project planning becomes a little bit different. Baker/ That revenue base, just to maintain status quo, is based on projected growth. Arkins/ We project that the city will grow in the tax base at about 3-4% a year. We build that in .... Baker/ As far as your financial projections, are you comfortable with that for the next five years? Atkins/ I am comfortable with it for the next three years .... I think the next five look pretty good .... We put together a three year plan that has a diminishing cash position .... Nov/ If we lose employment in Iowa City and surrounding areas... do you still think we will be well off in five years? Atkins/ Generally speaking, the loss of employment usually translate into new construction ..... Our residential construction is a big industry in our town and if that were to decline dramatically then we could have some difficulty. Right now the state law is 100% of commercial and industrial value. M&E is now gone .... 3.75% of your tax base is a big big hunk ..... Thisrepresents only areasonably ac~ratetranscrlptlon of thelowa CIHcouncil meeting ~ May 13,1996. WS051396 May 13, 1996 Council Work Session Page 10 Nov/ And if we have fewer people... growth isn't there .... Arkins/ What you see, may see the growth in values beginning to level off .... Waterloo ..... They have had a decline. I don't see us anywhere close to that .... Baker/ Let me ask this question. We could use sales tax money for anything we specify .... When you rollback property taxes, is there a danger that you lose the ability in the future. Atkins/ 8.10 is a tax rate that is applied to the taxable value° Regardless of what you do on the sales tax, the taxable value is likely to continue to grow. That tax rate, that 8.10, you may to only levy 6 ..... Baker/ .... this provides a cushion... this is not why I would advocate a sales tax .... Atkins/ °..The General Fund is the one that I am most cautious about .... We keep the General Fund very healthy .... Nov/ Do we want to start by saying we are going to put a sales tax on the ballot just for the purposes of discussion .... and then talk about the allocations and the kinds of things that we would use it for .... Do we want to start talking about some of those issues? I could start asking questions, for example, if we are going to talk about water and waste water rates. If we received $4.4 million, what does this as a percentage of total water and waste water expenses? How much difference would it make? Is Don here? .... allocate the entire amount to water and waste water expenses. Is this a high portion of our total expenses? Kubby/ .... I have heard people say sewer is out of the picture. Nov/ As a percentage of water expenses .... What percentage is this of total water expenses? Yucuis/ Handout another schedule .... Nov/ ... How much is this in terms of the total budget? Is our yearly budget for all of our water expenses $20 million? ..... Yucuis/ The total projected expenses in the Water Fund for 1997, FY97... just under $6 million .... Based on our projections- Nov/ It is about 2/3s. Thlsrepresen~ only a masonably nccuratetrans=lpfion of ~elowaCl~ council meeting of May 13.1996. WS051396 May 13, 1996 Council Work Session Page 11 Yucuis/ It is going to grow though. Kubby/ Yucuis/ We are looking to grow to about $10 million in year 2000 .... I am looking for total expenses in Water Fund. Atkins/ The water operation for F¥99 is $6 million. $7 million. Yucuis/ That is assuming 20% cash accumulation. Nov/ We could maintain the current water rates with this kind of usage. We would not have to have any increase? .... How long could we maintain the FY96 water rates? Yucuis/ If you wanted to use sales tax just for water? .... If you used all of the $4 1/2 and no sunset on it, you could decrease rates in FY98 and probably not have a rate increase until year 2004-2005. CHANGE TAPE TO REEL 96-60 SIDE 2 Yucuis/ It is assuming we are going to do the new water plant... We are not going to utilize any 20% cash, we are going to sell bond, we are going to use the $4 1/2 million to repay the debt .... Thornberry/ If it had a ten year sunset clause, how would that affect it? Yucuis/ Look on the chart- Norton/ That is water and sewer. Yucuis/ I wanted to show you what the monthly combined bill is .... I like to kind of package them together because you can see what the impact is on both of them .... The last two columns. one is with using $4 1/2 million cash accumulation, you finance all the projects from a bond sale .... At $41 in F¥96, up to maybe $50 in 2006 .... you maintain $41, $42, $44 .... That is without sunset. The next column is a ten year sunset and I also did an assumption using some of that sales tax cash to bring the bond issue size down in FY99 and year 2000. You are using the $4 1/2 to repay any of the debt .... in tenth year... revenues have to increase substantially over time... rates... increase probably every year .... Make sure that tenth year.° gradually increasing rates to cover that sunset. Thisrepresents only areasonably accuratetranscription of ~elowa CI~ councU meeting of May 13,1996. WS051396 May 13, 1996 Council Work Session Page 12 Norton/ But not dramatically. Kubby/ How come you did this with no cash accumulation because that is not our current plan? Why wasn't this looked at with a 20% cash accumulation so we could compare the possibility to reality...? There is an assumption kind of build in here .... Council/ (All talking). Yucuis/ Four page memo°.. look at the last chart, #3... put those side by side with a new chart that I put out. The right hand column is where we were at back in January or February. So you are looking at 20% cash accumulation, selling bonds for the balance and these are the rates that we proposed back in January and what the average would be on a monthly combined. Now one thing... Middle column... after we did that issue, our assumptions were higher than what we originally proposed and we are going to factor that into the next March rate increase. We should be able to decrease the amount we thought we were going to do in waste water. First column is if you sold bonds for everything, no cash accumulation... no sales tax use. So your rates in next five years would be lower... starting to creep up again .... If you look at rates in between there from '97 to 2003, compared to that you are gradually going up .... Norton/ ... I still haven't got it stretched out the way I want it. Nov/ This no cash accumulation pushes some of the expenses onto the future rate payers .... Kubby/ We know we are going to have to increase the capacity of the water plant at some point... those future rate payers .... Norton/ I am aware. Thornberry/ ... plan now for future expansion .... Kubby/ I say when we look at year 2006 and see that rates are one way or another, these don't account for whatever the next big expenditure for quality water is. Nov/ At that point somebody can decide .... We don't have to do it now. Let's go- Do you think if we had $4 million .... and put it into water rates, do we want to use it to pay off the bonds more quickly rather than to keep the rates down? .... What about thinking of other capital expenses if this $4 million were in our general CIP budget. What would it be as a This represents only a reasonably accurme transcription of the Iowa City council meeting of May 13, 1996. W$051396 May 13, 1996 Council Work Session Page 13 percentage to that? .... Yucuis/ You could use the sales tax... it would... go towards property tax .... pay cash for the project .... I look at it as property tax relief .... Next year as issuing as much as $7 million in bonds...looking at next 3-4 years, selling bonds at a pretty high level. Norton/ Yucuis/ We have... a pretty aggressive CIP .... We are looking at it again to see if the Engineering can do all that .... We are probably going to stretch out a few of those projects .... Norton/ $53 million over the 7 year plan... in project costs. Atkins/ That which is subject to property tax, the Debt Service Fund. IN this budget we have in FY97 $6 million; FY98 $7 million; FY99 $4.8. That is general debt .... You will sell more debt. for the purposes of water and sewer but that is measured against another fund and retired by water fees ..... Page 24 of your budget. Baker/ Atkins/ Proposing to sell. Baker/ Our consistent bond budget is still staying within $2-2 1/2 million a year? Atkins/ No, this is new debt. Remember old debt goes off .... These are estimates. In FY96 under our fiscal policy, we were at 13% of our allowed for taxes .... So the numbers are well within- Norton/ But those figures consider nothing about Library and CenterSpace? Atkins/ No, they do not .... If you were to do the library project at about $12 million ..... that tax levy rate would go up probably about another 40% .... Norton/ If put money toward that... reduce the amount that you issue each year .... Nov/ It would show up in your property tax ..... This represents only a reasonably accurate transcription of the Iowa City council meeting of May 13, 1996. WS051396 May 13, 1996 Council Work Session Page 14 ¥ucuis/ Baker/ Nov/ It can be part of the discussions of what do we want the community to do. Do we want the library to expand? .... not raise property tax in order to do it. This is an option ..... 1~hether or not a tax such as this ..... should we then say we want to spend it on something that has a benefit to the region .... Baker/ But certain services, users outside the city have to pay additional for it anyway. Norton/ Nov/ .... rural residence .... library... palatable use for the voters. Lehman/ .... I think it would take an extraordinary use of sales tax dollars to get the public to be interested at all in voting for it .... reduction in water rates might be that extraordinary use. Don brought this little chart which shows the average disposable income subject to sales taxes and it goes up to an income of $43,500 and the maximum increase in cost to those folks is approximately $52 .... The difference between that and the increase in water rates is certainly substantially more .... apply it to water rates... make a case... financial gain .... I really think if we earmark things for transit, public housing .... we are not going to get anywhere with it. Kubby/ ...Lots of housing initiatives that communities can do. Lehman/ I think the public will buy it .... Norton/ How do you respond to ..... a lot of people are outsiders and they are not paying water bills .... users are suppose to pay. Why should county people help pay our water bills? Lehman/ If we have increased water rates, it all filters down .... Norton/ ..... Kubby/ People of higher income tend to use services that aren't taxable ..... All these things are maybe an argument for not using 100% of that .... Thlsrepr~ents only area$onsbly 8ccuratetrsnscriptfonofthelowa CIW coundl m~ofing of May13,1956. WS051396 May 13, 1996 Council Work Session Page 15 Baker/ There is some merit to the argument that water rates .... users can pay... You have to have compelling arguments to get this thing to pass ..... some water rate relief, some substantial portion ..... Option .... 50% for water rate relief and do 50% for general improvements .... Nov/ Property tax relief. Baker/ No, I wouldn't do that. Nov/ Anytime you defer property tax incurring expense into sales tax, you have used it for property tax relief ..... Thornberry/ ...We could lower, with this referendum...we could lower property taxes. Without a referendum, we could increase that property tax back up to where it is now. Atkins/ Thornberry/ We are at the highest rate. We can reduce that rate by using part of this money as property tax relief .... without a referendum we could go back and raise the property taxes back up to the $8.10. That is sneaky and I would not go for that. Baker/ .... Thornberry/ Property tax relief quite possibly to sell the sales tax and then end probably not this council... another council... raise it right back up to $8.10 ..... Nov/ ... you don't raise the budget casually .... Baker/ Designate X percent for property tax relief ... that would be potentially misleading ..... That is implicit in whatever you do ..... Kubby/ If we don't want to do property tax relief, we have to put zero for property tax relief on the ballot .... Nov/ You can also say you are going to do something in addition to property tax which you would not have done ..... Baker/ But that requires us to be very specific... you have to have a general justification .... This is one of the things that we could do with it... I don't see us putting on the ballot 10% for CenterSpace or 10% for library° This mpresents only a re~onably accur~e Uanscription ~ ~elowa Ci~ coun~l meeting of May 13,1996. W8051396 May 13, 1996 Council Work Session Page 16 Vanderhoef/... contingency for capital projects only. Norton/ I just think you can't go the 100% .... We need to look for a mutual interest... variety of reasons .... some other project .... some capital expenses .... identify some of them that we think we ought to get moving Oho Thornberry/ I am surprised, Dee, you didn't mention trails ..... Council/ (All talking). Kubby/ In all of those things you are talking about ..... maybe an argument for having one of them being either a generalize category of community betterment or capital. Nov/ Capital improvements would certainly work .... Norton/ We have a bunch of them on our plate. Nov/ ...aid in economic development ..... the kind of infrastructure improvements that would be needed if we were going to have industrial uses on airport property .... Baker/ Nov/ If you want to use it for something like that it is available .... within capital improvements .... Baker/ .... Vanderhoef/ ...water plant is capital improvement... move it into the water plant that year. Nov/ Thornberry/ Are you telling me the only way I can get money for the airport is to go capital improvements? .... Norton/ We have got to keep some flexibility in here. Baker/ Let me ask about... downtown development .... why wouldn't that be an attractive proposition for the public? Thornberry/ What would you do with the money for d.t. improvement? Norton/ We have got some streetscape improvements to make. This represents only a reasonably accurate tra~s~lpt~on of the Iowa City council meeting of May 13, 1996. WS051396 May 13, 1996 Council Work Session Page 17 Nov/ It fits into the CIP and I would go for as flexible a ballot designation as possible and then let a future city council look at a future budget .... Baker/ Looking at the future... are committed to some investments in the d.t. area ..... 10% or $400,000 per year. Kubby/ Would you include the southside as part? Norton/ Yeah. Nov/ I would not put something like that into the ballot because at some point... you have done all of those $400,000 a year projects and you have $400,000 sitting that you may not spend on another area of the city. Baker/ Are we still assuming that we are going to have a ten year sunset clause? Nov/ Yes but at the end of 10 years you will have spent $10 million within this one area of the city. Is this something that you really want to specify? Baker/ ...includes the Senior Center, library, arts and culture, plaza redevelopment, Near South Side. Norton/ .... exactly where they stack up at any given point in time is going to be hard to say .... Nov/ I want to keep as much flexibility as possibility .... I think there are pros and cons to sales tax .... If it is on the ballot, it should be as flexible as it can be. Kubby/ The only way the sales tax is going to win if people on this body sell it to the public really hard ..... We have to believe on what we are putting on the ballot .... ownership and enthusiasn .... We should believe in it if we are going to say we are going to put it on the ballot. Nov/ Exactly. Baker/ ..... budget component that we understand .... individual capital improvement goals .... You really do have to develop constituencies outside the council .... Norton/ How much finer does it need to be sliced? This represants only e reasonably accurate transcription of the Iowa City council meeting of May 13, ~996, WS051396 May 13, 1996 Council Work Session Page 18 Baker/ You can't do seven different things .... Nov/ ...Ames.. When they put this on the ballot, they put 60% for property tax relief... General Fund .... 40% was listed as community betterment .... when they got to the point of allocating it, half of that 40% went for pay as you go capital projects instead of selling bonds .... All capitals .... I don't know that it was new projects .... I know that it was not operations, it was capital expenses, capital projects .... .leary of continuing operating expenses ..... can't draw Baker~h~%' line too fine ..... The other half of their community betterment was not used for capital. It was used for human services and arts .... 20% of total was capital projects only... 20% was human services .... Baker/ How was that articulated on the ballot? Nov/ On the ballot it said property tax relief 60%, community betterment 40%. Baker/ When did the 20/20 split occur? Nov/ The split of the 40% happened at the decision level of the city council budget. Baker/ Was that a long term commitment of 20/20? Nov/ I think it was a pretty long commitment.. all of these various things... are flexible .... 20% of their total can be used for any of these small capital projects. None of then. are listed on the ballot ..... Baker/ .... At some point of the ballot issue you have got to be a little more specific than just general public improvement .... Nov/ If you really want to sell it .... public improvement... Then you say for example it can be used for these following five things or ten things or whatever .... Norton/ Nov/ Council/ (All talking). Baker/ Let me throw out a hypothetical ballot issue: 50% water rate Thlsrepmsents only are~onabiyaccurate ~anscr]ptlon ~ theIowa Ci~ coun~l meeting of May 13,1996. WS051396 May 13, 1996 Council Work Session Page 19 relief .... 30% for general improvement .... 10% d.t. development, 10% for housing and human services ...... Nov/ I don't believe people are going to buy housing. Baker/ You think that this city will look at 10% of this budget and say we are not going to support 10% of this budget for housing ..... Kubby/ I think it will draw a lot of people in who would normally come out and vote against .... Nov/ I think you need to designate somehow human services and assume that it is going to cover many things beyond Baker/ Call it housing and human services housing .... Kubby/ Nov/ Could be you will use it for the jazz festival. Thornberry/ 0.. I think they will look at this referendum and try to find something that they can disagree with or dislike to give them a reason for voting no. Baker/ There is going to be knees jerking all over town right and left. Norton/ .°.depends a little bit on how we approach this thing .... What is the City Steps document all about .... substantial city wide commitment to the housing area, isn't' it? Kubby/ ...Having something for housing in here ..... its what do we need to be doing at local government... housing .... If we want to start creating incentives for the private sector for buying land... it is going to cost money .... If we want to make some difference, it is going to have to be the public and private sector working together .... Nov/ You can put the same argument into economic development as well as housing. Kubby/ But we are already doing a lot of things on a local initiative with tax abatements to move economic development. Baker/ I personally have no problem with a category called economic development .... not highest thing on my list .... advantage of Thisrepresents only areasonably eccurme ~anscdptlon of ~elowa CI~ council meeting of May13,1996, WS051396 May 13, 1996 Council Work Session Page 20 articulating some commitment to housing and human services is first of all, you do have all the commitments you have already established through policies and goals°.. It is our money so we set the rules .... We determine how it is spent locally .... spent in this local community.. provides a service .... Lehman/ Basically the voters are going to set the rules .... Baker/ Lehman/ Baker/ They are accepting our goals and values. Norton/ We have got to set the tone of this thing in a very positive way .... Iowa 2000 statement .... go back .... look at them .... pretty wide spread segments of society .... set fourth some sensible goals... may give us some guidance .... I think they are going to look at it as an opportunity but it depends a lot on how we talk abou it. Baker/ Also .... sales tax campaign of '87... One major group that opposed was d.t. merchants ..... What you have to say... look, we are going to take this money and use it for the very purposes that you want us to do but we cannot fund right now .... a very liberal group and a very conservative group defeated that sales tax .... Kubby/ You have to remember that this sales tax is going to be on a presidential ballot where people are going to be coming out .... You have a different group of people ... broader segment .... increased population of people who are going to be voting in this town. Baker/ Thornberry/ I don't want to be in a situation of trying to sell space heaters to pygmies or refrigerators to Eskimos .... Kubby/ Nov/ The main argument that I heard in 1987 and I am continuing to hear today is that we will send out retail business outside of Iowa city. Did you call Cedar Rapids? What did they have to say? Atkins/ I didn't hear ...... Thisrepresents only are~onably accurate ~ans~lpfion of ~olowe CAy council meeting of May 13,1996. WS051396 May 13, 1996 Council Work Session Page 21 Norton/ I thought they were pretty well committed to going for it. Nov/ I don't know. They are not as committed as they may have been at one time .... Having it on the ballot in Linn County and Johnson County at the same time is a distinct advantage to the argument from the retailers ..... Baker/ ... I understand the argument... If we believe that argument then this is a bad idea .... Kubby/ Let's throw out another idea... better in a capital improvement or community betterment line. To have three categories: water, capital improvement or community betterment. I think capital improvement is more specific... And one for housing and human services and maybe think about those categories and then we can start with negotiating what the percentages are .... Nov/ .°.Let's just do a head count... Does everyone want this on the ballot? Are we talking just about where the money is to be allocated? Kubby/ It matters where it is going for me. Baker/ Depends on how it is put on the ballot. Nov/ Okay, you are saying if you don't' have X% here and X% somewhere else, it is not going on the ballot?... As individuals I don't hear that there are enough people that really want- Baker/ Certain people want things to happen .... Kubby/ ...maybe we can take percentages out of it for just a moment to see if we can move a little further forward. Nov/ I am trying to move us off the discussion of percentages. Lehman/ .... a substantial portion goes for water. I think that is the incentive that may pass it .... Baker/ I think housing and human services can be turned into an incentive .... Kubby/ There are needs out there that we cannot fund .... Thornberry/ Karen, I don't care how much money you put towards Thisrepresents only 8reasonablyaccurete ~anscrlptlonofthelowe City council meeting of May 13.1996. WS051396 May 13, 1996 Council Work Session Page 22 that, it will never be enough. Council/ (All talking). Norton/ Just do what you can to help .... Thornberry/ Why increase sales tax? Nov/ We are all talking at once here .... Norton/ I think.° I want to thinka little more before I say yea to housing and human services... I would need to spell out a little more carefully for my understanding exactly where that money would go... what kinds of particular projects .... We got to be behind it .... I still kind of like the d.t. development .... Kubby/ ...Naomi's argument for me was pretty strong .... Norton/ You have got the park thing lurking around there, too .... Almost leave it 50/50 and leave the second category pretty broad .... We have got to discuss the details of that refinement .... Baker/ .... We have to sell it. You are going to need a very strong consensus and people willing to go ut and sell it from this council. I am looking for something to support .... I don't want to be indifference. Kubby/ ..°Ernie has said ~{ater is bottom line for him. Lehman/ ..selling that hinges on water. Baker/ Absolutely. Vanderhoef/ I agree with that. Norton/ o..I am at 50%. Kubby/ I actually would prefer your 30% .... I could hear 50%. Baker/ Once you go below 50 you have lost the political .... Norton/ I would be happy to go with 50 ..... CHANGE TAPE TO REEL 96-61 SIDE 1 This rspresen~ only areasonably acourate transcdpfion of thelowa City council meeting of May 13,1996. WS05~396 May 13, 1996 Council Work Session Page 23 Norton/ Kubby/ Baker/ .... scheduling and how we need to make a decision. I want us to put this back on the agenda for next Monday night informal. Nov/ .... I think we have to make a decision today that we are definitely going to put it on the ballot because if we have not made that decision, we are going to go around in circles for the rest of the year. Baker/ My deadline for making the decision is next Monday night .... Lehman/ I am willing right now that I would put it on the ballot. Norton/ Let's get it on there. Lehman/ ...The voters are ultimately going to make the decision .... Baker/ .... I want to say yeah, it is a good idea .... I am at that point based on how we allocate it .... Kubby/ It seems like we have focused tonight. That we agreed that if it goes on, that a substantial proportion°.° goes for water rate relief .... zero percent for tax relief .... two other categories... housing and human services and capital improvement .... What those mean to us as a group .... Vanderhoef/ We need to decide... what our bottom lines are for water .... We need to have four people who are going to set a line... whatever we are going to do with water... Baker/ ... A minimum of 50% for water .... Kubby/ Maximum 50% and want to see some of the housing issues in there. Council/ (All talking). Thornberry/ Not putting it on the ballot at all to water ..... Council/ (All talking). Baker/ Dean, you and Karen represent the reason it lost last time .... Thlsrepresents only areasonsbly accurate transcription of ~slowa Ci~ coun~lmeeting of May 13,1996. WS051396 May 13, 1996 Council Work Session Page 24 Norton/ We have to negotiate ..... Council/ (All talking). Baker/ ... work and sell the idea to the public. Nov/ Norton/ Where are we at? 50% on water? Vanderhoef/ I would be real happy to have it a bit higher ..... 60 to 70%. Kubby/ Baker/ This is a one time shot... If it passes you have constricted that source of revenue .... Norton/ You have got to keep some flexibility. Kubby/ This is the only revenue left at this point. Vanderhoef/ ...ought to be at least a 5% contingency. Nov/ If you put in some portion of this to relieve property tax .... allow it to happen ..... without listing a requirement for the contingency. Kubby/ If your purpose is the beef up the reserve... then that is what should be on ballot .... Baker/ Legitimate purpose ..... A reserve fund is a good idea .... Norton/ I thought we had reserves all over the place .... Kubby/ Some of them are federal mandates .... Our General. Fund Reserves has gone down, down, down. Baker/ Kubby/ I would be willing to add that to my list of things. Nov/ .... general public is not going to tax themselves for a reserve fund. Norton/ Thlsrepresents only areesonably accur~stranscrlptlon of thslowa CI~ council meeting of May 13,1996. WS051356 May 13, 1996 Council Work Session Page 25 Baker/ Nov/ You can't say we are going to be $20,000 a year into reserves .... Atkins/ It is likely when you divide up the allocations, you are going to have to write some sort of a policy statement about each one because the public is going to want to know your thinking .... That has to be in the record .... Within that policy... Within each allocation, you could make a reserve statement... a portion of this .... 2% will be set aside... You can say those kinds of things in policy... Your broad categories remain fixed .... Within them you buy yourself a little flexibility. I think putting 5% for reserve doesn't do you much good .... As a matter of policy.°. you all have to have sort of a follow up discussion... what does this mean .... Norton/ .... suggestions about what you mean when you say housing and human services .... Baker/ Simply answer... look at the policies we have in place..° programs we currently fund. Look at what is requested and not funded. Nov/ We have traditionally not funded human service agencies to the extent that they have requested .... Council/ (All talking). Norton/ I want to understand where it is... Nov/ The CDBG has a specific percentage that may not be exceeded for operating .... 15% .... We have not cushion to pick it Baker/ Norton/ I am hoping that the housing details... we can articulate in a way... appealing .... Kubby/ We are at the point of focusing on which ones do we want to package together. So, are we agreeing to Monday night, having some time to talk about this again? Baker/ Let's set aside 30. Council/ (All talking). This represents only s re=sonably accurate transcription of tha Iowa City council maeting of May 13, 1996, WS051396 May 13, 1996 Council Work Session Page 26 Thornberry/ I thought that this was the meeting to do the sales tax. Baker/ So if you are ready, tell us absolutely what you will or will not support. Baker/ I want to talk some more .... next Monday night .... Nov/ We have Larry basically decided that he really would like a sales tax .... We have Dean here saying he doesn't want a sales tax. Thornberry/ No, I don't want a sales tax .... I would put it on a ballot for referendum for water with a sunset clause. But only for water. Kubby/ Nov/ I think I hear a couple of other people, including me, who are not yet convinced that it is something we need to put on the ballot. So if anybody has any strong convincing needs here .... I am convinced we can reduce water rates without sales tax .... Baker/ Water, to me, is more of a political question .... Thornberry/ What I am saying is I would let the people vote on it for water .... Norton/ But that leaves you no flexibility anywhere else. Baker/ Put something on the ballot that you would say... I think you ought to vote for this. Thornberry/ I am not going to be able to do that. Norton/ ...try to help figure out where we ought to be putting resources and urging .... downtown .... Thornberry/ I think we can do it in the budget we got. Norton/ ...some of those we have already committed to .... Thornberry/ ..... That can be done without tax payers money .... Nov/ They can do it with a self taxing district .... Th~srepresents only areasonab]y accurate ~scrlptlon of ~eiowa C]Wcoundl meoting of May 13,1996. WS051395 May 13, 1996 Council Work Session Page 27 Norton/ Thornberry/ Ernie... has picked up around his store .... Norton/ Urban renewal ..... If we hadn't of put some public money in, it wouldn't have happened. Kubby/ So Dee, getting to the water thing, can you go above 50%? Norton/ I can't go above 50%. I don't want to be excessively rigid ...... I would go as high as 50 .... Baker/ ...50% for the future... reasonable .... Thornberry/ Nov/ I am not convinced that we need it. What about if we put it on the ballot, do we want a sunset? Lehman/ Absolutely. Nov/ I thought I had pretty good agreement on that. Are we thinking ten years? Norton/ Yes, that was the number I heard. Nov/ Sounds if we have a majority who want to put it on the ballot and who consider ten years a reasonable sunset clause. We do not have good agreement on exactly what we want to do with in except we want some of it to go for water rate relief. Baker/ At ieast 50%. Kubby/ I can't say I am one of those people who wants it on the ballot until we make a final decision about the appropriations. Nov/ I think we are all thinking along those lines° Council/ (All talking). Kubby/ It concerns me the summary is there is a majority who want to put it on the ballot because I think it is very contingent upon- Nov/ I know. I said it is contingent upon specifics .... There are four people who say that I will put it on the ballot if and I Thtsreprese~s only ereasonsbly accuratetrensmiptlon ofthelowa City coun~l me~ing of May13,1996. WS051396 May 13~ 1996 Council Work Session Page 28 did not hear that the last time we had this discussion. We have moved along a little bit. Thornberry/ Nov/ If it on the ballot we have to be prepared to sell the reasons. Lehman/ Baker/ ...have publio position... if it is going to go on the ballot .... Unless you get some... enthusiasm .... support .... Norton/ Kubby/ So a half hour on Monday? Nov/ 15 minutes. Atkins/ Since you are getting close to wrapping up. You also need to think about it was mentioned about having a public discussion .... Do you put it on the ballot. How do you want to frame this public discussion ..... The public discussion could be the folks in the ballot box. Baker/ Monday night doesn't put it on the ballot. Public discussion process still allows us by August to say- Atkins/ My point is the public discussion intended to be an opportunity for folks to change your minds, propose other ideas, do whatever. It isn't- Nov/ I viewed it as the system of allocation .... It will depend on how it is allocated and I think they will tell us they want this allocation rather than that. Kubby/ It is not to formulate our original idea. Norton/ They would be reacting to our draft of a proposal or something like that. Atkins/ As soon as you can get close to setting the thing .... you need to contact the other cities and counties because they will need some lead time to have their own councils to have their own debates .... Kind of keep those things in mind. Baker/ After Monday I see those as kind of parallel tracks. Thisrepresents only ereasonably ac~mte ~ens~ipfion of ~elowe Ci~ council meeting of May13,1996. WS051396 May 13, 1996 Council Work Session Page 29 Atkins/ ...You have not decided anything officially this evening. Monday is the evening in which you will probably try to bring it as much to a head as you possibly can. Again, your public discussion and your other communities, I just wanted you to be aware that those are still issues hanging out there for you. Baker/ After Monday we need to contact formally those other bodies and tell them this is where we are headed right now .... Atkins/ I think it is important that when the media reports this thing, you have not tonight decidea to put it on the ballot. Nov/ No, we have definitely not made a decision. We will not make that decision next Monday either at the work session. Someday we will have a resolution that we will vote on that says it will go on the ballot. Baker/ Next Monday..° at least start setting some p.h.s. Nov/ We can start doing that. I will also start some contacts with other people, other governments, Coralville, for example. Baker/ .... I think we need to have you and other contacts... want to see the idea to other bodies as well .... Council/ Nov/ I want you to also remember that we are going to meet with Coralville on June 6 ..... Atkins/ I would like .... is it safe to say that if the ballot proposal is shaped the way it sounds, water rate relief is a substantial use of those moneys .... I don't know the percentage but water rate relief is built into this .... I want to be able to say here is what you are thinking. Nov/ That is what I am hearing. Norton/ It is in there. Nov/ The amount is what in is question. Arkins/... I am going to get calls. Nov/ Okay. Adjourned: 8:35 PM Thlsrepresents only areasonably accurate ~anscriptlon ofthelowa CIH coun~l mee~ng of May 13,1996. WS061396