HomeMy WebLinkAbout11/02/2020 08 Ad Valorem Taxes, Fiscal Year 2021 - Public Hearing 't..an,gtntj ka
d� E$A
dot
aY
BUSINESS OF THE CITY COUNCIL
YAKIMA, WASHINGTON
AGENDA STATEMENT
Item No. 8.
For Meeting of: November 2, 2020
ITEM TITLE: Public hearing and ordinances pertaining to Ad Valorem Taxes to
be levied for collection in Fiscal Year
2021
SUBMITTED BY: Bob Harrison, City Manager
Steve Groom, Director of Finance & Budget
SUMMARY EXPLANATION:
This agenda item includes two (2)separate Ordinances.
Ordinance A identifies Council's intent to authorize an increase in the tax levy over 2020 levels. It
is required by RCW 84.55.120. This is legally necessary to increase the 2021 tax collections by
any amount over 2020 levels.
Ordinance B fixes the maximum tax levy for collection by the City in 2021. This Ordinance
complies with RCW 35.33.135 and in accordance with Article VI I, Section 2 of the City Charter,
requires a super-majority approval (i.e. a minimum affirmative vote of five members) by City
Council.
ITEM BUDGETED: Yes
STRATEGIC PRIORITY: Public Trust and Accountability
APPROVED FOR SUBMITTAL BY THE CITY MANAGER
RECOMMENDATION:
Pass Ordinances.
ATTACHMENTS:
Description Upload Date Type
L C Ca r Memo 10/19/2020 r Memo
L ordinance A 10/1 /20 0 C rdinance
D rdinance 10/19/20 0 Ordinance
2
ky.1
f w
FINANCE
MEMORANDUM
TO: The Honorable Mayor and Members of City Council
Bob Harrison, City Manager
FROM: Steve Groom, Finance Director
Kimberly Domino, Finance Division Manager
DATE: October 16, 2020
RE: 2021 Property Tax Levy
Staff respectfully recommends the approval of both Ordinances A and B, necessary to set the
2021 property tax levy.
Council Action to be Taken
Review and Approve Ordinance A and Ordinance B, attached.
Background
This agenda item includes two (2) separate ordinances, steps required by statute to establish the
property tax levy. Ordinances A and B will set the property tax levy for collection in 2021, based
on the limit of a 1% increase over the prior year base levy, plus new levies for construction and
annexation. The law defines the rate of inflation as measured by the Implicit Price Deflator (IPD)
for consumer goods. For this year, as confirmed by MRSC, the IPD decreased to 0.60152%which
statutorily allows for an increase of 1% if city council determines there is substantial need. The
2021 budget was developed assuming a 1% increase in the overall levy.
• Exhibit I is the County Assessor's communication of assessed valuation.
• Exhibit II details the calculation of the property tax levy with a base of 101% of the prior
year using preliminary information obtained from the County Assessor's office. According
to state law, the certification of ad valorem taxes must be filed with the Board of Yakima
County Commissioners on or before November 30, 2019 or the City will receive no funding
from this source in 2020. The Commissioners have requested to receive this packet by
November 17'h so that they can incorporate all of the requests into their required
legislation.
• Exhibit Ill is the County Treasurer's communication of prior year refunds.
1 of 2
3
FINANCE
• Ordinance A identifies Council's intent to authorize an increase in the tax levy over 2020
levels. It is required by RCW 84.55.120. This is legally necessary to increase the 2021 tax
collections by any amount over 2020 levels.
• Ordinance B fixes the maximum tax levy for collection by the City in 2021. This ordinance
complies with RCW 35.33.135 and in accordance with Article VII, Section 2 of the City
Charter, requires a super-majority approval (i.e. a majority plus one or five members) by
City Council.
Discussion —Valuation and Property Tax
The total 2021 City of Yakima proposed property tax levy includes the 101% levy, and amounts
for new construction and prior year refunds. The total operating tax rate for next year is estimated
to be $2.56 per $1,000 of Assessed Valuation (AV), a decrease of approximately 12 cents per
thousand of Assessed Valuation. The 2020 rate was $2.67. The amount of the new levy in Exhibit
II is slightly different from the budgeted amount due to the timing of collections; some collections
of prior year taxes are likely to occur in 2021.
According to the preliminary valuation estimate provided by the County Assessor (see Exhibit I),
the underlying assessed value of all taxable property in the City grew by approximately 7%, and
the total Revenue increased 2.4%, including new construction and State assessments. These
estimates, found on Exhibit II.
2 of 2
4
EXHIBIT I
st RVI(
-; a a a aataaaa
Sonya Clar Tee
City of Yakima
129 North Second Street
Yakima, WA 98901
September 22nd, 2020
The attached Levy calculation forms include information needed for your 2021 property tax levy certification.
Because certain elements of value are not provided to the County Assessor until later in the year the calculations
include certain estimates. In addition, exemptions and changes to property can change the total assessed value
which can adjust the final maximum levy in some cases. We have also included a Tax District Personnel Form
that we would like you to fill out and return.
The forms go into more detail, but the most important numbers are as follows:
2021 Maximum Allowed (estimate) $20,296,218.57
2021 1%Amount $197,990.77
2021 Maximum% 0.01%
2021 Maximum$ Increase $197,990.77
If you are choosing some amount other than the 1% increase, please check with me to go over what your
request should be.
If you have any questions you may contact me at (509)574-1112 or by e-mail at jacoLtate coNakima.wa.us.
Sincerely,
Jacob Tate
Property Database Manager
Yakima County Assessors Office
Yakima County Assessor 128 N 2nd St#112, Yakima, WA 98901 Phone(509)574 1100 Fos(509)574-1101
5
District Name Yakima City
Levy Calculations have changed in the last few years. To get to what you may request and
how you should word your request we are supplying the below information.
Current Tax Base* $7,941,594,873
*This includes estimated state assessed and personal property amounts.
Current Levy Max Amount Calculations
2020 Max Lawful $19,625,907.22
Times 1.01 (if you certify a resolution adopting an increase) = $19,822,166.29
Additional Request Monies For NC = NC amount last years certified Rate.
$111,906,300 Times 2,67322473= $299,150.69
To calculate additional funds for annexations you take the above two numbers summed and multiply by
what the current rate would be using the above estimated tax base minus the annexation amount,
$1,138,400 Multiplied by Rate of: 2.5340 = $2,884.73
Final Before State Rate Limit: $20,124,201.72
Maximum Levy Request is lesser of above or Maximum Statutory
Rate * Tax base.
Maximum State Limit $27,107,469.76
Max Current Request Allowed $20,124,201.72
The Resolutions/Ordinances must reference a % increase over last years levy, and a $amount
increase over last years levy. You must also certify a total budget request amount. The %
increase over last year*does not*include added funds for New construction, State Assessed or
Annexations. The budget request must include those as it certifies the total amount you
request. You are still limited to the above Maximum Current Request Allowed.
Previous Amount Levied $19,799,077.11
Funds for New Construction $299,150.69
Funds for Annexations $2,884,73
Starting Point $20,101,112,53
Plus 1% of Previous Amount ($ increase) $197,990.77
Plus 1% of Previous Amount (total) $20,299,103.30
$ increase over previous year if you take maximum: $23,089.18
% increase over previous if you take maximum: 0,1166°/0
If you have any questions please call Jacob Tate at (509) 574-1112.
EXHIBIT II
City of Yakima
Property Tax Limitation Calculation
2020 Tax 2021
Assessed Rate Rate/ Levy
Value($000) Applied Change Dollars
2020 Actual $7,406,439.444 $ 2.6732 $ 19,799;077
Implicit Price Deflator (IPD) -0.60152% Increase 0.601:59,6 119,095
Substantial Need (resolution required) 0.398:59,6 78,895
2020 Tax Levy @ 101% 19,997,068
Valuation Increase 422,110.729 n/a n/a
New Construction 111,906-300 $ 2-6732 299,151
State Assessed Value - $ 2.6732 -
Tax Limit Before Annexations 7,940,456.473 $ 2.5561 20,296,219
Add for Annexation 1,138.400 $ 2.5340 2,885
Limit for Subsequent Years 7,941,594.873 $ 2.5561 20,299,103
Plus Refunds 20,263
Plus Contingency 100,000
Total Ordinance $ 20,419,366
Estimated change in rate per$1,000 of assessed value (0.1172)
2020 2021
Assessed Maximum Maximum
State of Washington Constitutional Limits Value Rate Levy
2020 Assessed Valuation 7,941,594.873 3.6000 $ 28,589,742
Less: Library Levy 0_5000 $ 3,970,797
2020 Levy for Collection in 20201 3.1000 $ 24,618,944
10/16/2020 2021 Property Tax Calculation
7
EXHIBIT III
A A A
LA 4 YAKIMA COUNTY TREASURER
Ilene Thomson
County Treasurer
MEMORANDUM
October 9, 2020
TO: Taxing Districts
FROM: Ilene Thomson, Yakima County Treasurer
Subject: Tax Year 2021 — Refund Levy— RCW 84.69.180
RCW 84.69.180 allows taxing districts other than the state to levy an annual refund
levy to recover the tax dollars lost to the district for the purpose of:
a. Funding refunds paid within the preceding twelve months, including
interest, and
b. Reimbursing the taxing district for taxes abated or cancelled, offset by
any supplemental tax collected within the preceding twelve months.
RCW 84.69.180 also gives a taxing district the authority to recover that portion of
their levy which was reduced within the preceding twelve months due to tax record
adjustments such as senior exemptions, DOR exemptions, government
exemptions and others.
We calculate the information from October 1s1 through September 30th of each
year. By establishing this earlier date, each district will have the opportunity to
discuss this levy with your Board of Directors prior to submitting your levy requests.
We will be providing this information to the County Assessor who you would work
with, as you do with all levies. In addition, we will continue to submit the calculation
to the Board of County Commissioners.
Listed below are the refund levy amounts calculated in accordance with RCW
84.69.180 for the period of 10/01/2019 through 09/30/2020, including interest paid.
District Name Fund Name Amount
City of Yakima Expense $20,262.58
If you have any questions or concerns, please contact our Accounting Division at
574-2780 or Treasacc co. akima.wa.us.
128 Noah Second Sheet, Room 115 . PO Box 22530 .Yakima, \ 98907-2530
Phone: 509-574-2800 . FA 509-574-2801
www valomacounty.usntreasurer
8
ORDINANCE A
ORDINANCE NO. 2020-
AN ORDINANCE relating to the annual property tax levy; declaring the City Council's intent
to increase the City's 2021 regular levy up to 101% along with new
construction, annexation, refunds and growth in state-assessed property
values from the amount levied the previous year.
WHEREAS, RCW 84.55.120 requires a taxing district that collects regular levies to hold a
public hearing on revenue sources for the district's following year's current expense budget,
including consideration of possible increases in property tax revenues; and
WHEREAS, pursuant to RCW 84.55.120 and the City Charter, on November 2, 2020,
upon due and proper legal notice, the Yakima City Council held a public hearing to consider the
City's general government revenue sources for the 2021 current expense budget, and the total
proposed property tax levy amount pertaining to 2021 revenues from real and personal property
taxes; and
WHEREAS, RCW 84.55.120 provides that no increase in property tax revenue, other than
that resulting from the addition of new construction, improvements to property, and any increase
in the value of state-assessed property, may be authorized by a taxing district, except by adoption
of a separate ordinance or resolution, pursuant to notice, specifically authorizing the increase in
terms of both dollars and percentage; and
WHEREAS, RCW 84.55.005 sets the limit factor for the increase in the regular property
tax levy at the lesser of one hundred one percent or one hundred percent plus inflation, which is
defined as the percentage change in the implicit price deflator (IPD) for personal consumption
expenditures for the United States as published for the most recent twelve-month period by the
bureau of economic analysis of the federal department of commerce by September 25th of the
year before the taxes are payable; and
WHEREAS, the applicable percentage change in the Implicit Price Deflator was 0.6015%;
and
WHEREAS, RCW 84.55.0101 allows a taxing district to use a limit factor of one hundred
one percent upon a finding of substantial need by the legislative authority by a super-majority
vote; and
WHEREAS, the City Council, after the public hearing on November 2, 2020, and after duly
considering all relevant evidence and testimony presented, has determined that the City requires
an increase in property tax revenue from the previous year, along with the addition of new
construction and improvements to property and any increase in the value of state-assessed
property, in order to discharge the expected expenses and obligations of the City, and as being
necessary and in the best interests of the citizens of the City of Yakima; and
9
ORDINANCE A
WHEREAS, the amount of property tax levied for collection in 2020 was $19,799,077.11
for general government purposes; and
WHEREAS, the discretionary increase in property tax levied attributable to the inflation
factor for collection in 2021 shall be in the amount of$197,990.77,which is a percentage increase
of 1.0%from the previous year; and
WHEREAS, the non-discretionary increases in property tax levied for collection in 2021
can only be estimated due to the absence of final values to be provided by the Yakima County
Assessor, now, therefore,
BE IT ORDAINED BY THE CITY OF YAKIMA:
Section 1. The following increases in the regular property tax levy, over the amount of
the previous year's levy, are hereby authorized to be cumulatively levied for collection in 2021:
A. A discretionary increase of$197,990.77, attributable to the inflation factor
which is a percentage increase of 1.0% over the amount levied for
collection in 2020; plus
B. An estimated increase of$2,884.73 for recent annexations; plus
C. An estimated increase of$299,150.69 for new construction and
improvements to property; plus
D. An estimated increase of$20,262.58 for a refund levy; plus
E. An increase authorized by state law for state-assessed property values.
Section 2. The City Clerk is directed to transmit and file a certified copy of this ordinance
with the Board of Yakima County Commissioners and the Yakima County Assessor on or before
November 30, 2020.
Section 3. Pursuant to Article VI, Section 2 of the Yakima City Charter, this ordinance
shall take effect on November 2, 2020.
PASSED BY THE CITY COUNCIL, signed and approved this 2nd day of November, 2020.
ATTEST: Patricia Byers, Mayor
Sonya Clear Tee, City Clerk
Publication Date:
Effective Date:
10
ORDINANCE B
ORDINANCE NO. 2020-
AN ORDINANCE fixing and levying the amount of ad valorem taxes necessary to discharge
the expected expenses and obligations for the 2021 Budget for the City of
Yakima.
WHEREAS, the City Council finds that the total net amount of $20,419,366 in revenue
must be raised by ad valorem taxes on real and personal property within the corporate limits of
the City of Yakima to discharge the expected expenses and obligations for the 2021 Budget for
the City of Yakima, now therefore,
BE IT ORDAINED BY THE CITY OF YAKIMA:
Section 1. There is hereby fixed to be raised by general property taxes upon real and
personal property within the City of Yakima the amount of$20,419,366 for the following purposes:
General Government Levy
Operating Funds $19,349,392
Firemen's Relief & Pension Fund 1,069,974
Amount of tax levy for General
Government Purposes (I) $20,419,366
Special Purpose Tax Levy 0
Total Levy Amount (I) $20,419,366
(I) Includes an additional $100,000 to provide for final adjustments in State
assessed, refunds, new construction, and annexation values.
Section 2. The City Clerk is directed to transmit and file a certified copy of this
ordinance with the Board of Yakima County Commissioners and the Yakima County Assessor on
or before November 30, 2020.
Section 3. Pursuant to Article VI, Section 2 of the Yakima City Charter, this ordinance
shall take effect on November 2, 2020.
PASSED BY THE CITY COUNCIL, signed and approved this 2nd day of November, 2020.
ATTEST: Patricia Byers, Mayor
Sonya Clear Tee, City Clerk
Publication Date:
Effective Date: