Self-Supported Municipal Improvement districts

Transcription

1 Self-Supported Municipal Improvement districts Combined Annual Report Downtown Highland Park Ingersoll Sherman Hill June 30, 2012

2 FAQ s What is a self-supported municipal improvement district or SSMID? A self-supported municipal improvement district or SSMID is an area that is subject to an additional tax initiated by property owners to fund improvement or to provide additional services and maintenance for the area. A SSMID must be comprised only of property that is zoned for commercial or industrial uses or properties within a designated historic district. They are generally made up of properties that have similar present or future use, physical location or condition that would benefit from additional taxation. The levy and uses of SSMID taxes are governed by Chapter 386 of the Iowa Code. There are currently four SSMID s within the boundaries of the City of Des Moines. They are listed below in order of establishment. Date of Name Establishment Sherman Hill Historic Street Lighting June 1997 Downtown Des Moines February 1998 Highland Park October 2003 Ingersoll Avenue February 2007 How is a SSMID created? City Council initiates proceedings to establish a district upon a filing of a petition with the following: Signatures of at least 25 percent of property owners representing 25 percent or more of the property values within the proposed district. A description of the physical boundaries of the proposed district. The name of the proposed district. A maximum rate of tax that may be imposed. The purpose of the proposed district. A statement that taxes levied for the SSMID operation fund shall be used for maintenance expenses of improvements for a specified length of time, along with any option to renew, if the taxes are to be used for this maintenance purpose. Upon receipt the petition, the City Plan and Zoning Commission prepares a report to evaluate the merit and feasibility of the district. Council will then hold a public hearing to consider the district. Citizens are invited to attend that hearing and will be allowed to express their views on the proposed district. Council may adopt an ordinance establishing the district no sooner than thirty days after the public hearing.

3 How does a SSMID work? An additional tax levy is imposed on the designated properties within the SSMID boundaries. The tax is collected by the County Treasurer s Office. The revenue collected is then used for the purpose as outlined in the petition and ordinance that established the district. How does the SSMID tax levy affect other taxpayers and Levy Authorities? Only the property owners within the SSMID would pay the additional tax levy. There is no impact to other Levy Authorities County, School, etc. Would residential properties have a SSMID levy included in their tax bill? Residential assessed properties would not have a SSMID levy included in their tax bill unless they are a part of a historic district. This includes residential units within buildings organized as condominiums or cooperatives. What happens when a SSMID District overlaps a Tax Increment Finance (TIF) area? A Tax Increment Finance (TIF) urban renewal area is created by the City as a tool to alleviate slum and blight and encourage economic development. The TIF allows the City to collect property tax revenue associated with increased assessed values as a result of new investments within the urban renewal area. The revenue attributable to the increased assessed values accrues to the TIF district rather than the traditional taxed units and can be used for infrastructure or other improvements within the urban renewal area. The SSMID levy is treated similarly to the other regular tax levies in the TIF district, which means the TIF collects the SSMID tax revenues associated with the incremental valuation. The City returns those funds to the SSMID in the form of a grant which allows the SSMID to retain all revenues attributable to the SSMID tax.

4 SSMIDS AND THE CITY BUDGET Budget Process Each year the City Council holds a series of workshop meetings to develop the City s annual Operating and Capital Improvement Programs. During that time departments are preparing budget proposals. Some are reviewed and approved by boards or commissions. The City Manager then presents a recommended budget to Council in January. Review continues until Council adopts the budget, typically in late February or early March. The public is welcome to attend and comment at those meetings. The preparation and approval of SSMID budgets are within this same timeline. Fund Accounting The city uses six different fund types which allows for a segregation of resources to be used for specific actions. The different funds utilized are: general fund, enterprises, special revenue funds, debt service fund, and internal service funds. A special revenue fund is one for specific targeted purposes or to segregate income or transfers for reporting requirements. Each SSMID district is its own special revenue fund. Special revenue funds account for 19 percent of the total city budget. The SSMIDs represent only 1.2 percent of all special revenue funds or 0.23 percent of the overall city budget. FY2013 City of Des Moines Budget $558,706,475 General $145,096,908 26% Enterprise $107,965,950 19% Special Revenue $105,999,864 19% Capital $90,732,637 16% Debt $67,383,926 12% Internal Service $41,412,377 7% Other $114,813 < 1% Police Parking Road Use Tax Bridges Health Fire Parks Library Administration Central Services Sanitary Solid Waste Storm Housing Self-Supported Municipal Improvement Districts (SSMID) Police Grants Community Development Grants Streets Buildings Sewers Sidewalks Parks Traffic Control Fleet Forestry Telephone Radio Maintenance, Repair, Replacement Print Shop/Courier Stores

5 FY2013 Budget The fiscal year 2013 City of Des Moines budget is $558,706,475. The total budget is often seen as two budgets a $468 million operating budget and a $91 million capital budget. Revenues by Category Intrafund Transfers 23% Local Taxes 28% Sale of Bonds/ Notes 6% Charges for Services 17% Budget by Category Other Governmental Revenue 17% Franchise Fees 3% Other Revenue 6% Capital Budget 16% Employee Expenses 33% Debt Service 16% Capital Outlay 1% Supplies & Services 23% Transfers to Other Funds 11%

6 DOWNTOWN Establishment The following City Council actions outline the creation and continuation of the Downtown Self- Supported Municipal Improvement District: February 23, 1998 (Ordinance 13,579) - established the Downtown SSMID January 22, 2001 (Ordinance 13,913) - approved a three-year continuation of the district January 26, 2004 (Ordinance 14,311) - significantly expanded the geographical area of the district to primarily address the maintenance needs of the Principal Riverwalk Project and extended the life of the district to June 30, 2009 February 6, 2006 (Ordinance 14,540) - significantly expanded the geographical area of the district to include areas to the west, south and north of the downtown core including MLK Jr. Parkway, all of western Gateway, Riverpoint and River Hills. February 23, 2009 (Ordinance 14,834) - approved a five-year continuation of the Downtown SSMID. District Boundaries and Operation The Downtown SSMID encompasses most of the downtown Des Moines area bordered by Interstate 235, East 7th Street, the Raccoon River, and 18th/19th Streets. The function of the Downtown SSMID is to provide safe, clean, and beautiful public spaces through enhanced security services; additional trash, graffiti, and weed control; an extensive flower planter, bed and basket program; events support; marketing; and transportation management. All of these combined make Downtown Des Moines an attractive place to work, live and visit. On September 14, 1998 (Roll Call ) City Council approved an Operating Agreement with Downtown Community Alliance, Inc. to manage and undertake specified Downtown SSMID services, improvements, and activities. On February 12, 2001 (Roll Call ) City Council approved the First Amendment to the Operating Agreement to extend the term an additional three years ending June 30, On March 7, 2005 (Roll Call ) City Council approved a new operating agreement with Downtown SSMID, also known as Operation Downtown, which subcontracts with Downtown Community Alliance for the performance of all administrative duties and obligations. The Downtown SSMID subcontracts with Greater Des Moines Partnership for financial and fiduciary duties and obligations. The term of the agreement was from July 1, 2004 through June 30, The operating agreement was renewed on October 12, 2009 (Roll Call ) for an additional five years term from July 1, 2009 through June 30, On September 25, 2006 (Roll Call ) City Council approved a Management and Operations Agreement between the City of Des Moines, Des Moines Riverfront Development Authority (RDA) and Downtown SSMID for funding and maintenance of Gateway West Park, Principal Riverwalk, MLK Jr. Parkway and East Village Streetscape. The Management and Operations Agreement was renewed on April 20, 2009 (Roll Call ) for an additional five years, expiring June 30, 2014.

7 District Map Operation Downtown The corporate entity Downtown SSMID is also known as Operation Downtown (OD). OD is ultimately responsible to carry out the mission and daily operations of the Downtown SSMID. The fiscal year 2014 OD proposed budget is $2.2 million. In addition to the $1.3 million of property taxes budgeted, there are revenues of $889,537 from RDA, City of Des Moines, Mercy, Iowa Health Systems, and corporate contributions. Total budgeted expenditures are $2,292,550. The budget provides for payment of management fees; administrative, facilities, and other expenses; clean, safe, and beautiful program expenses; events support; and other program and project support. Financial Data - Last 5 Years Revenue History Property Taxes 1,017,456 1,053,882 1,114,926 1,166,361 1,154,538 All property tax revenues collected are remitted to Operation Downtown. Valuation, Rate and Levy Information Fiscal Year Fiscal Year Total Valuation Rate Computed Taxes Grant From Valuation through TIF Total Computed Taxes & Grant $1,017,166,240 $1.00 $1,017,166 $0 $1,017, $1,060,736,640 $1.00 $1,060,737 $0 $1,060, $1,116,832,740 $1.00 $1,116,833 $0 $1,116, $1,189,829,440 $1.00 $1,195,445 $0 $1,195, $1,164,052,630 $1.00 $1,169,547 $0 $1,169, $1,139,242,160 $1.00 $542,090 $597,152 $1,139,242 All ordinances established the maximum rate at $2.00. The fiscal year 2013 rate is $1.00.

8 HIGHLAND PARK Establishment On October 20, 2003 (Ordinance 14279) City Council established the Highland Park Self- Supported Municipal Improvement District. The ordinance establishes the life of the district from July 1, 2004 through June 30, 2019 which can be extended by the City Council for additional five year terms unless a petition of owners of not less than 40% of the valuation of the area is submitted opposing such an extension. District Boundaries and Operation The Highland Park SSMID geographical area is along 6th Avenue from Seneca to Ovid Avenues and along Euclid Avenue about half a block west of 6th Avenue to 2nd Avenue. The function of the Highland Park SSMID is to fund the operation and maintenance costs associated with the Highland Park Streetscape Project that included vintage-style street and pedestrian lighting, new sidewalks and curbs, a new street overlay, street furnishings, plantings, and a decorative arch over 6th Avenue. On October 20, 2003 (Roll Call ) City Council approved an Operating Agreement with the Parks Area Foundation to assist in the operation of the Highland Park Self Supported Municipal District by establishing a Highland Park SSMID Board. The board holds an annual public hearing to recommend the SSMID budget and tax rate for the fiscal year beginning the next July 1. The board forwards its recommendation to the City Council which approves and certifies the tax rate to be applied to the district. On behalf of the SSMID, the City of Des Moines pays utility, repairs, maintenance, and insurance invoices related to the streetscape improvements and landscape and flower plantings. Annual utility expense is approximately $3,100; annual repair and maintenance $5,500; insurance $500, and plant maintenance $2,600. Total annual property tax revenue is just over $12,000. The City contributes an annual replacement credit to the Highland Park SSMID fund equal to the estimated annual utility costs that would have been paid by the city for the operation of the street lights that existed prior to the streetscape improvements. The annual contribution is $1, District Map

9 Financial Data - Last 5 Years Fiscal Year Revenue History Property Taxes 12,785 12,540 11,554 12,080 12,184 Replacement Credit 1,804 1,804 1,804 1,804 1,804 Insurance Proceeds for Damage ,730 14,588 14,344 13,358 13,884 19,717 Expenditure History Utilities 3,252 2,959 3,308 2,650 3,171 Insurance Premiums Fixture Repair & Maintenance 1,849 10,734 3,622 5,681 5,303 Plant Maintenance ,900 2,610 Other ,598 14,184 7,986 12,231 11,576 Ending Fund Balance 32,645 32,804 38,176 39,830 47,971 Future planned use of the fund balance includes upgrades to the accent lighting on the arch to LED. Historically, the Parks Area Foundation, Highland Park SSMID Board and volunteers planted and maintained all the landscaping and flower pots with donated or reduced cost plant material. The past couple of years the SSMID has contracted with a private contractor for plant material and maintenance incurring an annual expense that was previously not incurred. Also, MidAmerican Energy does not service the custom pedestrian and street lighting. As the fixtures age the maintenance expense will likely increase. Valuation, Rate and Levy Information Fiscal Year Valuation Rate Computed Taxes $6,905,308 $1.75 $12, $7,165,698 $1.75 $12, $6,698,028 $1.75 $11, $6,902,748 $1.75 $12, $6,962,310 $1.75 $12, $6,775,950 $1.75 $11,858 The maximum rates are: FY05 FY09 $1.75 FY10 FY14 $2.00 FY15 FY24 $2.25 The fiscal year 2013 rate is $1.75.

10 INGERSOLL Establishment On February 12, 2007 (Ordinance 14,628) City Council established the Ingersoll Avenue Self- Supported Municipal Improvement District. The ordinance establishes the life of the district from July 1, 2007 through June 30, 2022 which can be extended by the City Council for additional five year terms unless a petition of owners of not less than 40 percent of the valuation of the area is submitted opposing such an extension. On November 5, 2012 (Roll Call ) City Council received and filed a petition to establish the Ingersoll Grand Self-Supported Municipal Improvement District. If approved, the Ingersoll Grand SSMID would be an expansion of the current boundaries and absorb the current Ingersoll Avenue SSMID. The report and recommendation from the City Plan and Zoning Commission was received and filed by City Council at the November 19, 2012 council meeting (Roll Call ). The Commission voted in support of a motion to recommend approval of the evaluative report and establishment of the proposed SSMID. A public hearing will be held at the December 17, 2012 City Council meeting for citizens to voice their views of the proposal. District Boundaries and Operation The Ingersoll SSMID runs along Ingersoll Avenue from 28th to 31st Streets. The purpose is to fund the maintenance of improved sidewalks, curbs, crosswalks, landscaping, planters, decorative lighting, utility relocation, traffic signals and related pedestrian improvements. The proposed Ingersoll Grand SSMID expands the boundaries to include Ingersoll Avenue between Martin Luther King Jr. Parkway and 40th Street and Grand Avenue between Martin Luther King Jr. Parkway and 28th Street. Additional services provided under the SSMID would be enhanced maintenance and cleaning of public spaces; a Goodwill Ambassador program; and a marketing, business retention and attraction strategy. District Map

11 Financial Data - Last 5 Years Fiscal Year Revenue History Property Taxes 19,372 21,156 21,141 20,864 20,983 20,325 Insurance Proceeds for Damage ,372 21,156 21,141 20,864 21,905 20,325 Expenditure History Utilities ,856 1,635 1,273 1,223 Fixture Repair & Maintenance , Plant Maintenance - 25,634 31,857 18,663 19,246 18,596-26,012 35,657 20,864 21,905 20,325 Ending Fund Balance 19,372 14, Additional City Expenses ,913 36,947 52,758 54,790 Annual property tax revenues have been approximately $21,000. Services includes a four season rotation of plant material and maintenance; litter control; spring and fall clean-up; repair of railings, planters and drainage grates; and expense for 43 pedestrian lights. The fiscal year 2013 estimated expense is $75,115. As the boundaries of the SSMID expand the expenses will increase. Valuation, Rate and Levy Information Fiscal Year Valuation Rate Computed Taxes $11,469,900 $1.75 $20, $12,089,080 $1.75 $21, $12,080,600 $1.75 $21, $11,922,250 $1.75 $20, $11,990,000 $1.75 $20, $11,614,200 $1.75 $20,325 The maximum rates are: FY08 FY12 $1.75 FY13 FY17 $2.25 FY18 and thereafter $3.00 The fiscal year 2013 rate is $1.75. On November 5, 2012 (Roll Call ), City Council approved an intent to voluntarily limit the levy for the Ingersoll Grand SSMID upon annual review of the budget submitted by the SSMID Board.

12 SHERMAN HILL Establishment On June 2, 1997 (Ordinance 13488) City Council established the Sherman Hill Historic Street Lighting Self-Supported Municipal Improvement District. This district is known as Sherman Hill Historic Street Lighting SSMID District #1. On October 6, 1997 (Ordinance 13531) City Council established the Sherman Hill Historic Street Lighting Self-Supported Municipal Improvement District #2. Both ordinances established the life of the districts from July 1, 1998 through June 30, 2018 which can be extended by the City Council for additional five year terms unless a petition of owners of not less than 40 percent of the valuation of the area is submitted opposing such extension. District Boundaries and Operation The Sherman Hill Historic Street Light SSMID includes most of area bordered by Crocker Street, 15th Street, Woodland Avenue and Martin Luther King Jr. Parkway. The SSMID is divided into two districts. District #1 is the corridor along Woodland Avenue from 15th to 20th Streets and along 15th Street from Woodland Avenue to Center Street. District #2 is all the remaining properties within the SSMID boundaries. The purpose of the entire SSMID district is for the maintenance of the decorative pedestrian oriented lighting system. This includes annual utility usage, inspection and cleaning, lamp repairs, light bulb replacements, and locate expenses. Notes to Revenues and Expenses Sale of Property In February 2002, Council approved the sale of land at 673 and th Street to the Sherman Hill Association, Inc., with the provision for the proceeds to be applied to the maintenance of the historic street lighting in the two SSMID districts. Each district received $9,725 in June of 2003 total of $19,450. PILOT In March of 1997, the City entered into an agreement with Iowa Methodist Medical Center, Sherman Hills Association, and Hoyt Sherman Place Foundation, for a payment in lieu of taxes (PILOT) on their tax exempt properties. The amount of the payment is equal to the taxes that would have been generated by the levy of the Sherman Hill SSMID Operation Tax on the assessed value of the property. Iowa Methodist Medical Center and Sherman Hill Association, Inc. sold their tax-exempt properties and are no longer responsible for payment. Hoyt Sherman Place Foundation property is located at 1501 Woodland. Revenue is deposited in Sherman Hill Historic Street Lighting SSMID District #1. Replacement Credit Language in the 1998 agreement approved by Council provides for a replacement credit to be paid by the City to the SSMID. The agreement states that if the illumination of the historic lighting is at a level to allow the City to remove all or a portion of existing street lights, the annual savings to the City (net the costs of removal) shall be paid to the SSMID to reduce the amount of the operation tax that must be levied against the properties within the district to support the operation and

13 maintenance of the improvements. The annual contribution is $6, Revenue is deposited in Sherman Hill Historic Street Lighting SSMID District #2. Combined Revenues and Expenses Combined annual revenues have been about $47,000 with property tax accounting for $40,000 of the total. Starting in late fiscal year 2008, the Sherman Hill Association elected to handle payments and scheduling of all service and maintenance and submit to the city for a reimbursement from the Sherman Hill SSMID funds. For doing so, the Association collects a five percent administration fee on each reimbursable invoice. With the Association now handling all payments directly the annual expenditures will appear to vary over the years depending on the dates of reimbursement requests. Historically, annual utility usage has been approximately $8,000; annual inspection and cleaning has been $6,700; and lamp repairs, light bulb replacements and locate expenses have varied. District Map

14 SHERMAN HILL DISTRICT 1 Financial Data - Last 5 Years Fiscal Year Revenue History Property Taxes 5,446 5,850 5,996 6,088 6,453 PILOT Payment 1, ,496 6,550 6,696 6,788 7,153 Expenditure History Utilities 1,520 1,123 1,933 1, Repair & Maintenance 578 2,128 3,365 2, Insurance Premiums Administration Fee ,217 3,509 5,517 3, Ending Fund Balance 28,414 31,456 32,635 35,625 42,038 The annual expenditures appear to vary since the Sherman Hill Association assumed responsibility for payment of all expenses. Variation is due to timing of when reimbursement for expense is submitted to the City. Valuation, Rate and Levy Information Fiscal Year Valuation Rate Computed Taxes $3,630,958 $1.50 $5, $3,900,028 $1.50 $5, $4,000,448 $1.50 $6, $4,260,978 $1.50 $6, $4,078,778 $1.50 $6, $3,335,078 $1.50 $5,003

15 DISTRICT 2 Financial Data - Last 5 Years Fiscal Year Revenue History Property Taxes 30,941 33,195 33,327 34,046 33,214 Replacement Credit 6,526 6,526 6,526 6,526 6,526 37,467 39,721 39,852 40,572 39,740 Expenditure History Utilities 6,094 5,292 9,025 7,125 1,610 Repair & Maintenance 13,302 10,494 18,916 9,220 1,394 Insurance Premiums Administration Fee , ,961 17,020 29,384 17,162 3,154 Ending Fund Balance 72,043 94, , , ,209 The annual expenditures appear to vary since the Sherman Hill Association assumed responsibility for payment of all expenses. Variation is due to timing of when reimbursement for expense is submitted to the City. Valuation, Rate and Levy Information Fiscal Year Valuation Rate Computed Taxes $20,579,994 $1.50 $30, $22,163,422 $1.50 $33, $22,371,220 $1.50 $33, $22,903,622 $1.50 $34, $22,241,552 $1.50 $33, $21,777,102 $1.50 $32,666 The maximum rates are: FY99 FY03 $1.50 FY04 FY08 $2.00 FY09 FY13 $2.50 FY14 FY18 $3.00 FY19 and thereafter $3.50 The fiscal year 2013 rate is $1.50 for both districts.

16 Prepared by the Research & Budget Office For an electronic version of this document please visit Finance/Pages/FinancialReporting.aspx and click on SSMID tab.