City Council - Regular Meeting

consideration, discussion, and possible action. Item A is a public hearing regarding the proposed property tax levy for general fund, liability, property, and self- insurance costs, and special revenue levies for employee benefits. So, we'll go ahead and open up the public hearing at 5:31 p.m. Uh, Jean, I'll turn it over to you. Thank you, Mayor.

In 2023, um, the legislature passed House File 718, which required we have required that the city have a standalone public hearing with regards to our property tax levies. Um, the original requirement was for general fund. um our liability and property insurance and our special revenue levies um that includes our employee benefits. We have opted to include the debt service amount in here um for two reasons. One, we know what that number is going to be um and number two um I felt like um it would limit confusion um with residents to have that rate set. They know it's 1488 versus taking out the debt service and and confusing. So um we have included that in here. We are maintaining the the rate at 14.88 per thousand. Um the general fund rate is going to go down 22 cents. That is the state mandated uh requirement due to house file 718. Our li liability and property insurance is going up just a bit over a penny. Our special revenue levy which is employee benefits is going up 4 cents. That is due to IP. IERS is based on wages. Um, council approved a based wage increase of three and a half% for staff. The police union negotiated three and a half% and public 3%. So that is the 4 cents there. Um, debt service levy is going up 16 cents to 357 per thousand. So that's how we come up with the 14.88. Um, just want to give you a little statistic. In 2018, our rate was $15.40 40 cents per thousand and each year we were whittling away at that um down to 14.88 in 2024. Uh so 52 cents total. Um incidentally from 23 to 24 we lowered it from 1511 to

1488 which is 23 cents which is exactly um what we are required to lower it now. Uh since House File 718, we have had to um decrease our growth our amount of revenue growth by 3%. So just a little over 3% each year uh for a total of 9.7% in those three years. I have no doubt had we been able to leverage our growth that we would be under 1488 and we would have whittleled away at that. Um so unfortunately we were not able to do that. So that's why we recommend maintaining that 1488. Uh we don't know about the unknowns. Legislature has uh two a senate file, a house file, and then a governor's bill that we're looking at right now. Um it things are more than likely going to change. So, um the public notice, um if anybody took a look at it, um it does have those numbers that I just mentioned in here and it gives you a little bit more. Um it gives the valuations and and the amount of tax dollars we'll get in in addition to the levies. um at the bottom. I think the reason for this form was um I think the legislators legislative intent was for them to be more transparent. Um last year when we looked at it, they did a hypothetical of 100,000 to 100,000 and then 300 to 300. This year they did put a valuation increase which um is a little bit better because as we know valuations do go up. Um, so they did they took a hypothetical of 100,000 to 110,000 and 300 to 330,000. So 10% on both. Um, and with

our rate maintaining at 1488 and the roll back going down 3% um, the difference on $100,000 is a little over 3% on residential and about 10.98% on commercial. Again, had we been able to leverage our growth a little bit more, I do believe these would be lower this year. That's all I have on the levies. I don't know if anyone has a question. I was going to talk about property insurance costs because I think it's maybe relevant to um some of the discussions that we're having about property taxes.

Yeah. Yeah. Go for it. Okay. U sorry Jean before you go on uh one thing that I've brought this up before and I want to say it again just to be consistent.

Jean was explaining how our levy stayed the same but yet the levy shifted away from our general fund a predominant amount then went to debt service. And what I like to explain to folks is that somebody that might be disappointed that our levy stayed the same. Same person might say, "Hey, I like to see our government become more lean." Our general fund is what pays all the operations. That's what pays the people, the service. Our debt service is what physically puts things in the ground. It's what repairs streets, roads, maintains trails, all the physical assets. So, somebody might say it's better for those I'm going to say one-time expenditures. At least we're shifting dollars towards putting money in the ground versus adding more to operations. If you tend to be somebody that has that perspective,

it also helps pay like for instance, this next uh loan that we're um doing next month in the next couple months, plow trucks. Um, so streets, we're getting two of those and that helps maintain um street items as well. So those larger purchases, fire truck in the future, things like that. Okay, so property insurance. Luke and Jen and I went to a Simpson College uh AI uh training, which was really eye opening for me. Um, I probably just was ignorant or feared it, but um, now I'm kind of seeing the benefits of it. It's pretty cool. Um, obviously, you know, you got to put in the right information, but so I did some, uh, on a couple different tools with, uh, chat, GPT, and Gemini. Um, I looked up property tax or not property tax, property insurance increases. um over the last several years, I think um a lot of homeowners uh in Iowa, as a matter of fact, I have a stat here that said among homeowners with a mortgage, roughly 70 to 85% escrow. Um and so that means that their property insurance um taxes are going in with their mortgage um on a and it's on their monthly payment. And I think that potentially property um insurance could be have a factor. I have a hunch. Um so uh the last five years the uh increase has been 96% in property insurance. Um the compounded annual growth rate is just under 12%. Um these are not smooth increases and 23 is like 11% 24 was 21%

uh 19% and 256 had high volat volatility at like 28%. So we're seeing really big increases. Um and I looked at Iowa and the de moine region. Um I did look at national too and I'll get into that. Uh, so if you look at the year-by-year trend of what people are actually paying and and I and understanding that deductibles and coverages can vary. Um, in 22 on a $375,000 home on average uh household was paying $2,389 a year for property insurance. 2026 is estimated up to $3765. So, a $1376 increase, which is about $275 a year

a month.

They they um say Iowa is rising really fast. Iowa has the second highest loss ratio in the US, which is 118%. Which means for every dollar insurers collect in pre premiums, they pay out a $118 in claims. um convective storms, hail and wind in 2025 alone caused over 50 billion in insured losses across the Midwest. Construction costs are also up since CO. Um we rank third highest in home insurance rates in the US, Iowa that is uh behind Minnesota and Colorado. We just uh the main drivers severe weather risk, hail, tornadoes, and wind storms. I I thought that was important important to mention because we have been getting phone calls about property taxes going up and I think some people don't make the connection that on their uh monthly bill uh the escrow uh could be changing because of property insurance. So just thought it was worth mentioning.

Sure. Couldn't agree more just as a realtor and investors Kaylin, have we received any oral or written comments on this? We have one written comment. It's in your packet. Um, it was from Chad Ross at 518 West Pine Avenue asking at uh cutbacks before raising property taxes at this time and Jean responded to him packets. Uh,

any public comments? Hearing none, we'll go ahead and close public hearing at 5:42 p.m. Item 3B is a resolution to approve the proposed property tax levy for general fund liability property and self- insurance costs and special revenue levies for employee benefits. So, we just had a public hearing on this item. Jean, you got anything else? This would approve the debt service rate as well since resolutions. Gotcha. Discussion from councel questions. All right. Can I get a motion to approve the resolution as presented?

Second. Okay. Who said that? George. Okay. So, motion by Per, seconded by Micki. Any further discussion? Hearing none. Kaylin, would you call a role? Council member Bourjon. Yes. Brown. Yes. Cool. Yes. Mine. Yes. Porter. Yes. All right. That motion carries. Item number four is a uh adjournment. Can I get a motion to adjourn? Motion. Second. Motion by Brown, seconded by Mani. All those in favor say I. I. I. Bose. Same. We are adjourned with special meeting at 5:43 p.m. Okay. And we will start the next meeting