Council approves final tax levy at 15.44% increase, adopts TIF district spending plan
Council also discussed the establishment of a new tax abatement program during Monday night's meeting.
WORTHINGTON — The Worthington City Council heard a short truth in taxation presentation during its Monday night meeting and approved the final tax levy for the city of Worthington in the amount of $6,558,607, a 15.44% increase over 2022.
The council had pre-certified a property tax levy increase of 17% during its Sept. 12 meeting. The levy includes a general purpose tax levy of $5,531,834 and special tax levies of $975,773, which includes economic development tax abatements of $51,000.
City Administrator Steve Robinson noted during the truth in taxation meeting that one of the major impacts to the budget was a more than $500,000 increase in salaries and benefits. Additionally, the personnel benefits and compensation make up the largest amount of the city’s expenses.
“Just over 58% of our budget is dedicated to personnel,” Robinson said. “We're like almost every other business and the largest share of our operating costs are with personnel.”
With the levy certified, the city’s tax rate will be set at 55.77%, an 8% decrease from the 2022 tax rate. It puts the city back in line with the average tax rate over the last 10 years.
“As we discussed at length over the previous meetings, the tax rate is actually what everyone’s property taxes are based on,” Robinson said, before noting that the 2023 rate would again place Worthington in the lower third of tax rates for comparable Minnesota cities.
The tax rate is computed by dividing the levy by the net tax capacity of all taxable properties in the city, which then determines the amount of property taxes paid by all property owners.
“If everything stays the same, the valuation of your house stays the same, the tax bill should go down on the city portion,” said Mayor Mike Kuhle, before thanking city staff for their work on the budget.
The council also held a public meeting regarding a spending plan for the Tax Increment Financing District in Darling Third Addition, which would transfer the unobligated tax increment to a separate fund.
“The benefit of this is it really gives communities an opportunity to have a lot more flexibility on how those obligated funds are used,” said Rebecca Kurtz with Ehlers, Inc., who presented information on the matter.
Currently, the Darling Third Addition TIF district has roughly $2.3 million in unobligated funds. Without using the spending plan, Kurtz noted, those funds would need to be used on redevelopment projects in the community. If the council moved forward with a spending plan, they’d be allotted the opportunity to use those funds on any projects between now and Dec. 31, 2025, as long as that project creates or retains jobs and can be used by private development.
“Really, any type of project that is construction or rehab that creates jobs and is done by a private developer could use these funds,” she said, noting that child care facilities are one eligible use for the funds, but that the spending plan provided various opportunities.
Council voted unanimously to adopt the spending plan.
Nobles Home Initiative
Following the council’s recent decision not to continue the city’s participation in the Nobles Home Initiative program with Nobles County and Worthington's District 518 beyond its termination at the end of this year, the council moved Monday night to establish its own tax abatement program.
The program will abate property taxes for new residential units constructed in the city of Worthington for a period of five years and will apply to applications received on or after Jan. 1, 2023, until the program’s expiration.
“The main driving point of this is the actual abated taxes will be calculated each year based on the actual taxes to pay. That is the primary change,” said Robinson of the difference between the two programs. “Much of it is similar or identical to the current programs that have been in place since 2014.”
In other news, the council:
- Approved the third reading of a proposed ordinance to vacate the platted public utility easement and public drainage and utility easement in Glenwood Heights' first addition.
- Approved a 2022 year-end audit services proposal from Abdo, Eick and Meyers, LLP. The maximum cost will not exceed $43,000 for the financial statement audit, $4,000 for each major program covered by a single audit, and additional fees for out-of-pocket expenses.
- Approved a text amendment to change city council meeting times from 7 p.m. to 5:30 p.m. An ordinance to amend the council’s extra meeting compensation from $50 per day to $100 per meeting was also approved.
- Hired Flaherty and Hood to provide services during the 2023 legislative session to create a pilot program targeted at workforce development on behalf of the Southwest Council of Mayors. The fee for services is $25,000, distributed among the participating cities on a per capita basis.
- Approved 2023 hangar lease rates at Worthington’s Municipal Airport, which will see no change from 2022.
- Accepted a donation of a city park bench in memory of Ladonna Carlson, to be placed in Chautauqua Park.
- Approved an agreement with the YMCA regarding promotion, management and operation of the city’s summer youth recreation programs. The management fee paid by the city to the YMCA for 2023 is $61,320, a 5% increase over 2022, to be paid in 12 monthly installments.
- Approved a 15% fee adjustment to YMCA Day Camp fees and a $10 increase to the Summer Sports Programs fees, and adjusted the daily fees for the facility. The proposed 2023 fees are $5 for youth, $10 for adults and $20 per family.
- Approved work orders for two projects at the Worthington Airport to be completed in agreement with the firm Bolton and Menk, at the combined cost of $47,000, of which the airport will pay 5%.
- Amended the airport agricultural lease to include automatic yearly renewal.
- Resolved to support a transportation alternatives grant application for a project that would include the construction of a trail from Lake Street at Second Avenue to Minnesota 60.
- Authorized city staff to pursue negotiations regarding an easement in the Cherry Point neighborhood, where an open drain ditch exists. Improvements are planned for the installation of storm sewer pipe to allow for the open ditch to be closed, which will protect homes in the vicinity from flood damage. All but one of the surrounding property owners have signed off on the easement, and in order for the project to move forward, staff feels it is necessary to negotiate a value for the easement with the property owner.
- Amended the city's rental housing code relating to the requirement of smoke and fire detectors, fire extinguishers, carbon monoxide detectors and minimum density requirements for bedrooms. Changes dealing with the enforcement of the ordinance and regarding the appeals process were also suggested.