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Public Hearing Presentation Proposed 2011 Budget for the City of Rochester December 6, 2010 CITY OF ROCHESTER 2011 PROPOSED BUDGET SUMMARY December 6, 2010, 7:00 p.m., City Council Chambers Initial Public Hearing on 2011 Proposed Budget

SLIDE 1

Public Hearing Presentation Proposed 2011 Budget for the City of Rochester December 6, 2010

SLIDE 2

CITY OF ROCHESTER 2011 PROPOSED BUDGET SUMMARY

December 6, 2010, 7:00 p.m., City Council Chambers

Initial Public Hearing on 2011 Proposed Budget

December 6, 2010, 2:00 p.m., Room 104, City Hall

Mayor/Council Review of Individual Department Budget Requests

December 7, 2010, 2:00 p.m., Room 104, City Hall

Mayor/Council Continued Review of Individual Department Budget

Requests December 8, 2010, 2:00 p.m., Room 104, City Hall

Mayor/Council Continued Review of Individual Department Budget

Requests ( if needed) December 20, 2010, 7:00 p.m., City Council Chambers

Adoption Public Hearing for 2011 Budget

SLIDE 3

CITY OF ROCHESTER

Physical Trend Data

10 20 30 40 50 60 70 80

Ten Year Trend 2000 Actual compared to 2009 Actual

-------------------------Miles---------------------

Streets Sanitary Storm Sewer Sewer Park Acres City Area Pop.

----City Employment------

# of Per Employees 1,000 Pop.

5.70%

15% 21.9% 26.9% 36.1% 34.7% 24.6% 18.5%

SLIDE 4

APPLICATION BY CHARACTER Total Budget PROPOSED 2011

36.2% 29.2% 1.5% 29.0% 4.1%

EMPLOYEE SERVICES OTHER CURRENT CAPITAL OUTLAY CAPITAL IMPROVEMENT DEBT SERVICE

EMPLOYEE SERVICES OTHER CURRENT CAPITAL OUTLAY CAPITAL IMPROVEMENTS DEBT SERVICE

SLIDE 5

21.9% 6.0% 2.0% 8.5% 3.4% 13.3% 2.7% 29.0% 1.9% 1.3% 4.1% 5.9%

PUBLIC SAFETY PUBLIC WORKS AIRPORT LEISURE TIME LIBRARY SEWER UTILITY TRANSIT CAPITAL PROJECTS STORMWATER UTILITY DEBT SERVICE GENERAL GOV’T. OTHER

APPLICATION BY FUNCTION WITHOUT CIP PROJECTS ALLOCATED PROPOSED 2011

SLIDE 6

REVENUE SOURCES PROPOSED 2011 TOTAL BUDGET

26.2% 2.7% 2.1% 10.2% 22.5% 36.3% Property Taxes Non Property Taxes Licenses & Fines Other Govts Charges for Services

Misc. / Prior Yr

SLIDE 7

2011 PROPOSED BUDGET ANALYSIS OF MAJOR REVENUES

2011 Budget 2010 Budget Increase/(Decrease) Tax Levy & Tax Abatements 45,967,888 44,272,624 1,695,264 Local Government Aid 5,101,571 5,101,571

Hotel/Motel Tax 3,500,000 3,250,000 250,000 Cable TV Franchise Fee 1,275,000 1,300,000 (25,000) Inspection Permits 2,020,000 1,885,000 135,000 In Lieu of Tax 10,845,623 10,755,268 90,355 Sewer Utility Charge 17,261,577 15,820,000 1,441,577 Storm Water Utility Fee 5,014,143 4,432,372 581,771 Library Fund

City Share
County Share

4,893,321 948,696 4,802,357 894,168 90,964 54,528 Municipal Recreation Fund

Fee Revenues
Non-Fee Revenues

7,376,732 6,330,899 7,124,995 5,787,986 251,737 542,913 Parking Fund

Parking Fines
Parking Ramps
Street Meters
Parking Lots

531,624 3,469,696 885,682 394,323 525,000 3,189,070 790,000 342,019 6624 280,626 95,682 52,304

SLIDE 8

Amount of Property Tax Levy (including abatement) attributable to Capital Improvement Project Budget from 2005 ‐ 2011

$5,285,000 $4,708,657 $4,929,749 $4,824,716 $4,824,716 $4,963,500 $1,000,000

$‐ $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 2005 2006 2007 2008 2009 2010 2011 ( proposed)

$2,529,914

LGA $3,529,914 TOTAL

SLIDE 9

$11,139,885 $7,784,426 $7,511,068 $6,329,526 $5,719,725 $6,343,929 $7,620,306 $5,679,345 $8,979,816 $7,307,970 $8,959,155 $5,101,571 $5,101,571

$0 $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000 2003 certified 2003 actual 2004 2005 2006 2007 2008 2008 after unallotment 2009 certified & budgeted 2009 LGA after unallotment 2010 certified LGA 2010 LGA after unallotment 2011 anticpated LGA

City of Rochester LGA History Since 2003

*In addition to the LGA unallotment, the City also had an additional $1.85M of MVC unalloted as well.

SLIDE 10

$(3,355,459) $(3,628,817) $(4,810,359) $(5,420,160) $(4,795,926) $(5,460,540) $(3,831,915) $(6,038,314) $(1,825,158) $(6,038,314) $(45,204,962)

$(50,000,000) $(45,000,000) $(40,000,000) $(35,000,000) $(30,000,000) $(25,000,000) $(20,000,000) $(15,000,000) $(10,000,000) $(5,000,000) $‐ Annual LGA loss from 2003 proposed base

f $11,139,885

Cumulative LGA loss for City of Rochester since 2003, with actual and proposed LGA cuts through 2011

SLIDE 11

20.06% 13.18% 5.74%

0.00% 5.00% 10.00% 15.00% 20.00% 25.00% LGA % of Total Gov't. Operating Budget

1990 2000 2011

LGA as a % of City Governmental Operating Budget

SLIDE 12

Property Taxes, LGA, HACA & Market Value Credit (Per Capita, Inflation Adjusted)

$0 $50 $100 $150 $200 $250 $300 $350 $400

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Property Taxes LGA/HACA/Market Value Credit

Per Capita Property Taxes

(Excluding Market Value Credit)

2000 $249
2004 290
2009 374
Per Capita LGA/HACA/Market

Value Credit

2000 $160
2004 113
2009 93
Per Capita Total of Property Taxes,

LGA/HACA/Market Value Credit

2000 $409
2004 403
2009 467
Population
2000 85,806
2004 94,820
2009 104,578

SLIDE 13

City of Rochester Tax Capacity rates since 2002 Year City of Rochester Tax Capacity Rate

2002 41.30 2003 40.83 2004 40.67 2005 41.44 2006 41.47 2007 41.51 2008 42.24 2009 40.76 2010 42.81

41.30 40.83 40.67 41.44 41.47 41.51 42.24 40.76 42.81

0.00 5.00 10.00 15.00 20.00 25.00 30.00 35.00 40.00 45.00 2002 2003 2004 2005 2006 2007 2008 2009 2010 Series1 Series2

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City 2009 City Property Tax Capacity Rate Comparison 2009 LGA / Capita Comparison Minneapolis 57.05 $ 205.70

St. Paul

32.38 $ 199.85 Duluth 25.40 $ 342.65 Winona 31.22 $ 349.10 Austin 33.64 $ 311.31 Moorhead 33.97 $ 202.75 Mankato 36.56 $ 189.63

St. Cloud

40.14 $ 170.41 Rochester 40.76 $ 71.34 Albert Lea 44.18 $ 281.57 Owatonna 44.77 $ 149.96

Comparison of 2009 City tax Rates and LGA / Capita between Rochester and other Minnesota cities

SLIDE 15

51.8% 26.2%

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0%

% Property Tax of Gov't. Operating Budget % Property Tax of Total City Budget

Series1

2011 Property Tax as a % of City Gov’t Operating Budget and Total Budget (incl. CIP)

$45,967,888 $88,661,067 $175,284,450

$‐ $20,000,000 $40,000,000 $60,000,000 $80,000,000 $100,000,000 $120,000,000 $140,000,000 $160,000,000 $180,000,000 $200,000,000

2011 Proposed Property Tax 2011 Gov't Operating Budget 2011 Total City Budget ( incl. CIP)

Series1

SLIDE 16

2011 City Property Tax Comparison to Public Safety Costs *The 2011 City Public Safety costs include Police, Fire, Emergency Mgmt. & Building Safety and equate to 83.7% of the property tax levy amount

$45,967,888 $38,470,931

$34,000,000 $36,000,000 $38,000,000 $40,000,000 $42,000,000 $44,000,000 $46,000,000 $48,000,000

2011 Proposed Property Tax 2011 City Public Safety Costs

Series1

SLIDE 17

2011Recommended Property Tax Levy $45,967,888 Minus property taxes allocated to Capital Improvements ‐$1,000,000 Property Taxes available to fund City service $44,967,888 Proposed expenditures for: Police Department $20,625,482 Fire Department $13,196,801 Street Maintenance $5,366,684 Traffic Management $1,215,877 Street Lighting $1,346,600 $41,391,444

Proposed 2011 Budget Amounts for Essential Services

SLIDE 18

120.50 0.00 94.50 111.50 61.00 38.75 49.75 17.00 138.00 22.20 95.00 122.00 68.00 47.00 50.50 20.00 165.18 25.00 104.00 134.00 72.00 50.75 63.50 26.00

0.00 20.00 40.00 60.00 80.00 100.00 120.00 140.00 160.00 180.00 Police Dispatch Fire Public Works Park & Rec. Library General Gov't. Building Safety 1990 2000 2010

Comparison of City Employees by Department between 1990 & 2010

SLIDE 19

YEAR

NO. CITY EMPLOYEES

CITY POPULATION CITY EMPLOYEES / 1000 POPULATION 1980 450.25 57,890 7.77 1990 501 70,745 7.08 2000 570.70 85,806 6.64 2010 646.93 104,578 6.19

City Employee / Thousand Population Data Comparison

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Percentage of Market Value

2011 TAX BASE BY PROPERTY CLASS CITY OF ROCHESTER

SLIDE 21

Percentage of Tax Capacity

2011 TAX BASE BY PROPERTY CLASS CITY OF ROCHESTER

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Note:All shares are after the market value School levy is applied and the Market Value Homestead Credit is applied to all three levies.

Average Residential Home

PROPOSED 2011 COMBINED TAX LEVY CITY OF ROCHESTER

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Note: Commercial & Industrial properties began paying a State property tax in 2002

Commercial/ Industrial

PROPOSED 2011 COMBINED TAX LEVY CITY OF ROCHESTER

SLIDE 24

Taxpayer Taxable Market Value Tax Capacity % Total City Tax Capacity Mayo $ 292,784,600 $ 5,780,784 5.50% Sunstone Properties $ 56,288,100 $ 1,123,512 1.07% MEPC Apache Properties $ 54,607,100 $ 1,089,892 1.04% IBM $ 41,552,200 $ 825,239 0.79% BGD 5 Properties $ 34,518,400 $ 688,118 0.65% NNN 3050, LLC. $ 28,099,700 $ 560,494 0.53% IRET Properties $ 38,649,900 $ 528,207 0.50% Maine Land, LLC. $ 26,195,700 $ 518,664 0.49% Leslie Nelson $ 23,696,200 $ 454,969 0.43% Rochester Development, Inc. $ 19,671,000 $ 358,328 0.34%

Top 10 Taxpayers – City of Rochester – Pay 2011

SLIDE 25

Estimated Market Value

Real and Personal Property

Estimated

Market Value for 2010 is $8.6 Billion, up $179 Million or 2.1% from 2009

$0 $1,000,000,000 $2,000,000,000 $3,000,000,000 $4,000,000,000 $5,000,000,000 $6,000,000,000 $7,000,000,000 $8,000,000,000 $9,000,000,000

1994 1996 1998 2000 2002 2004 2006 2008 2010

SLIDE 26

City of Rochester 2011 Proposed Budget Hearing

December 6, 2010

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2010 City of Rochester Growth Information

1) From 1/1/10 to 10/31/10 building permits were issued for 167 (64 less than 2009) single family dwellings (detached and attached) and 142(10 more than 2009) multi‐ family dwelling units were issued; to date a total of 309 units (54 less than 2009). 2) The 2000 Census had a Rochester population of 85,806 persons. The most recent estimate of population for the City for the year 2010 is 104,578 persons. 3) In the calendar year of 2009, the City grew by 288 acres to a City total of 34,470 acres for an area of 53.86 sq. miles. As of this date, the City has annexed 573acres in 2010 The City is 35,043 acres for an area of 54.75 sq. miles

SLIDE 28

Proposed 2010 Budget Amounts for Essential Services

Note that the Police, Fire and Street & Alley Services make up 96.8% of the 2010 Property Tax Levy not attributable to the CIP.

$19,500,825 $12,822,833 $5,272,615 $1,209,317 $1,226,031

Police Fire Street & Alley Traffic City Lighting

FIRE STREET & ALLEY TRAFFIC LIGHTING POLICE

SLIDE 29

24.97% 21.97% 20.57% 14.04% 8.38% 6.60% 3.46%

Police Fire Public Works Park & Rec. General Gov't. Library Building Safety

30.33% 17.84% 18.79% 11.96% 9.43% 7.60% 4.04%

Police Fire Public Works Park & Rec. General Gov't. Library Building Safety

Comparison of % of Employee Services Budget by Department in 1990 & 2009

1990 2009

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Rental Housing‐4+ Units Combined Tax Bill

$850,000 Market Value Example

2010 2011 Amount Percent Market Value 850,000 850,000 Change Change Property Tax: City 4,549 4,906 357 7.8% County 5,588 5,720 132 2.4% School 3,188 3,264 76 2.4% Total 13,325 13,890 565 4.2%

SLIDE 31

Commercial / Industrial Combined Tax Bill

$750,000 Market Value Example

2010 2011 Amount Percent Market Value 750,000 750,000 Change Change Property Tax: City 6,101 6,580 479 7.9% County 7,495 7,672 177 2.4% School 3,820 3,949 129 3.4% State 6,538 7,125 587 9.0% Total 23,954 25,326 1,372 5.7%

SLIDE 32

Residential Combined Tax Bill

$170,000 Market Value Example

2010 2011 Amount Percent Market Value 170,000 170,000 Change Change Property Tax: City 647 702 55 8.5% County 795 818 23 2.9% School 511 520 9 1.8% Total 1,953 2,040 87 4.5%

SLIDE 33

24.4% 19.2% 22.6% 12.4% 7.9% 10.1% 3.4% 24.5% 3.9% 16.9% 21.7% 12.1% 8.4% 9.0% 3.6% 25.8% 3.9% 16.2% 20.9% 11.2% 7.9% 9.9% 4.1%

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% Police Dispatch Fire Public Works Park & Rec. Library General Gov't. Building Safety 1990 2000 2010

Comparison of the Percentage of City Employees by Department between 1990 & 2010

SLIDE 34

% Increase in number of City Employees by Department between 1990 and 2010

In comparison, the City of Rochester population increased 32.3% in the timeframe from 1990‐2010.

37.1% 10.1% 20.2% 18.0% 31.0% 27.6% 52.9% 29.9%

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0%

Police Dispatch Fire Public Works Park & Rec. Library General Gov't. Building Safety TOTAL

Series1

SLIDE 35

Amount of 2011 Property Tax Levy attributed to General Operating Budget and Capital Improvements Program

$44,252,845 $1,000,000

General Operating Capital Improvements

General Operating – 96.3% CIP‐2.2%

SLIDE 36

$7,784,426 $7,511,068 $6,329,526 $5,719,725 $6,343,929 $5,679,345 $7,307,970 $5,101,571 $5,101,571 $56,879,131 $11,139,885 $11,491,193 $11,781,956 $12,290,791 $12,621,049 $13,254,852 $13,065,735 $13,203,363 $13,335,396 $112,184,220 $‐ $20,000,000 $40,000,000 $60,000,000 $80,000,000 $100,000,000 $120,000,000

2003 2004 2005 2006 2007 2008 2009 2010 2011 TOTAL ACTUAL LGA AMOUNT CPI ADJUSTED LGA AMOUNT BASED UPON CERTIFIED 2003 LGA AMOUNT

Note: The actual LGA amount represents a 49% loss ($55,945,689) over LGA amount projected based upon 2003 certified LGA amount

Comparison of actual LGA amount vs. LGA projections based upon 2003 certified LGA amount (CPI adjusted)

SLIDE 37

The City’s property tax levy increase over 2010 =$1,643,324 or 3.7% of the proposed tax levy. In 2010, the City aid cuts =$5.7 million, which = 12.4% of the proposed tax levy. The State allowed for the aid cuts to be levied back. The proposed levy increase only amounts to 30% of the aid cut amount.