Independence limits 2014 tax levy increase to 2 percent

IndependenceCityHallThe Independence City Council, Tuesday, Dec. 10, approved a final property tax levy of $1,979,806 to pay for the majority of the city’s general fund operating expenses in 2014 — a 2.12 percent increase over the $1,928,794 general fund levy for 2013.

The council also approved a $197,210 property tax levy to pay for servicing city debt in 2014. When the general fund levy and debt service levy are added together, the total property tax levy for 2014 will be $2,177,016.

The debt service levy will pay for principal and interest on bonds for the West Hennepin Public Safety police facility, Drake Drive road work, equipment certificates and Lindgren Lane sanitary sewer improvements.

The council also approved a $2,270,127 general fund budget of $2,270,127 — a 3.77 percent increase over the $2,187,672 actual budget for 2013.

Major expenses for Independence in 2014 will include $888,564 for police (5.99 percent increase over 2013), $311,840 for fire protection (3.04 percent decrease), $349,717 for city clerk and finance department (4.56 percent increase) and $458,349 for public works (3.99 percent increase). The General Fund also will pay for the 2014 election, legal services, planning and zoning, environmental protection, government building maintenance, building inspections, solid waste, recreation, community services, park maintenance and insurance.

Mayor Marvin Johnson said Independence is expected to get $22,000 worth of relief from the sales tax exemption for cities that the Minnesota State Legislature approved this year. He wondered how this figure was calculated because, up until now, the city was paying sales taxes on some things but not others.

After the meeting, City Administrator Toni Hirsch said that Independence experienced increases this year and last year in the number of homes being built, and this has resulted in the city collecting more money from building permits. Increases in building permit revenues are helping Independence’s budget. She expected 10 new homes to be built in Independence in 2013, the same number as in 2012.

Meanwhile, during the real estate downturn, only one new home was constructed in 2009 in Independence. New home construction picked up after that, but it still has not reached the pace for 2000, when 54 new homes went up in the city. In 2002, another 43 new homes were constructed, and figures went downhill until 2010.

These ups and downs in real estate prompted Hirsch to say that Independence can’t count on building permit revenue.

Prior to the regular council meeting, Independence held a truth-in-taxation hearing to explain the proposed general fund budget and property tax levies for 2014 and also get feedback from taxpayers.

Three property owners came to express concern about increases in their property valuations. Mayor Johnson explained that the meeting that night was about the entire city property tax levy proposed for 2014 and not about individual properties. The Board of Appeals in the spring will give property owners the chance to protest assessed values of specific properties, and these values would be reflected in taxes payable in 2015.

Johnson also noticed that two of the property owners at the meeting were having the same problem: an unexpected jump in the values of their agricultural land. He suggested that they discuss possible solutions with city staff. One might be combining an agricultural lot with a lot on which a home is located, thus making the new larger lot a homesteaded property.

After the meeting, Johnson said that this year owners of agricultural land have seen 25-40 percent increases in their property values without having made changes to their properties. However, not all agricultural land owners are experiencing this problem. Many factors are involved, including Green Acres status and whether or not a property is homesteaded. He wanted to find out what is going on, partly because he himself is a farm owner.

Contact Susan Van Cleaf at susan.vancleaf@ecm-inc.com   

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