5.5. SR 07-09-2007
ITEM #: 5.5.
MEMORANDUM
TO: Mayor and City Council
Lori johnson, City Administrator
FROM: Scott Clark, Community Development Director
Tim Simon, Finance Director
DATE: july 9, 2007
SUBJECT: Financial Land Use Study
At the July 9 City Council meeting, Tim Simon, Finance Director, and Scott Clark,
Community Development Director, will present a "Land Use Financial Model" that has
been developed over the past year. The overall premise is to track future development
growth and to ascertain the affect on the City's overall tax rate projections. Our community
is unique in the fact that we will have a capped population of approximately 35,000 residents
serving a city that is almost 45 square miles in geographic size.
The model contains the following information:
. Projected growth over the next 20 years; it is anticipated that 98% of the
City's present sewered and future rural area development will be built out at
that time.
. Growth patterns are exclusive of the gravel mining area.
. Expenditures include projections on new staff, new programs, and possible
tax levied bonds.
. As a model, all assumptions can be quickly changed to ascertain key variables
that affect our budget position such as inflation, market rate increases, and
new programs.
The modeling is intended to serve as a long term budgeting tool and this presentation is
intended to give the Council an understanding on how it can be used. It should be noted
that this information excludes the gravel mining area. The intention (and a good example of
the use of this model) is that when a gravel mining land use study is constructed the financial
implications of the development (real estate value, increased expenditures for service,
potential tax levied bonds, etc.) can be built into the model to ascertain its affect on the long
term tax rate.
This model will be used in conjunction with the ClP discussions that will start taking place in
August.
If you have any questions prior to the meeting, please contact staff accordingly.
S:\Council\Tim\Financial Land Use Study 07 09 07.doc
Land Use Financial Model
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· Projections to 2025
· Elk Rivers Uniqueness
. 35,000 future populatlon/45 sq. mi. to service
. Old/New
· Significant portion of urban service area is
complete
· 2,800 residential lots remain (urban and rural)
· 609,000 sJ. commercial
· 840,000 sJ. industrial/warehouse
. Gravel mining area excluded from study
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L d U F- - I M d I EI~~"
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· Overall goal is to measure the city's future tax
base and its ability to provide adequate
revenue for necessary operations/programs
and strategic initiatives.
· General fund revenue/expenditures and other
levy impacts to the tax rate
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· Program is interactive/all assumptions can be
tested
What the Model Examines ('ltt~
· Growth of Real Estate value
. New residential, commerCIal and industrial projects (homes
valued at $240,000)
. Market rate increase on existing tax capacity
. Permits as a revenue source'
· Additional Tax Resources
· Balancing Budget needs
. Increased operational costs as population increases
. Increased needs due to aging community
. Funding new strategic objectives
. Decrease of growth related revenue sources
. to offset the building expense
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Next Steps
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· Examine expenditure priorities (operational
and capital)
· Examine future revenue alternatives (how to
do business)
· Help maintain consistent tax rate
" Based on future development (land use)
o Based on expenditure and revenue projections
· Use as a model and update frequently
(several times per year)
" OP
" Budget
" Tax Rate
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