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City to take general fund hit after undeveloped commercial land drops

A change in state law has extended the number of years undeveloped commercial property can be assessed at a less valuable agricultural rate. As a result, the City of Solon’s total valuation for the upcoming fiscal year will drop by an estimated $2 million. (photo by Doug Lindner)

SOLON– The season of giving is over.
It’s time for taking back.
The City of Solon will absorb what amounts to a $10,000 hit in its general fund for the upcoming fiscal year because of a change in the valuation of undeveloped property.
Budget discussions began in earnest for the Solon City Council during a regular meeting last week where city administrator Cassandra Lippincott announced the news.
Undeveloped commercial and multifamily residential lots in the Fox Ridge subdivision have been reassessed by Johnson County as a result of a legislative change, she said.
For the 2013-2014 fiscal year, land formerly valued at over $100,000 for tax purposes will be assessed at agricultural values closer to $1,200.
That will drain an estimated $2 million in assessed value from the city’s property tax rolls, Lippincott reported.
“It basically ate up all the growth we’ve had over the last several years,” Lippincott stated Friday.
At the Jan. 2 meeting, she presented preliminary figures for the budget, including the new valuations.
“This is the smallest growth year I’ve experienced,” she told council members. The city’s taxable valuation will increase 3.87 percent, while the total valuation increased less than one percent. “In the years that I’ve been here, I don’t think we’ve seen less than seven percent.”
The city had been modestly planning for five percent growth, she added.
The revision to the assessed valuation went into effect this year after being changed by the legislature last year, according to Gary Bilyeu, chief deputy with the Johnson County Assessor’s office.
And Solon is not the only community effected, Bilyeu said.
State law now allows platted property to be assessed at agricultural land value for a maximum of eight years before being taxed as commercial or residential land.
The city doesn’t have to refund any money– it just can’t collect what it had been on the undeveloped land.
The timing is unfortunate– the decrease in revenue puts early general fund budget numbers in the red by about $180,000, Lippincott said. But $177,000 of that amount comes from capital improvement requests from various city departments, including $35,000 for the purchase of a leaf collection unit, $30,000 for new downtown holiday decorations, $25,000 for two new ball diamonds, $15,000 for a park shelter and set-aside funds for a possible splash pad, among other items.
The city was also projecting an additional full-time staff person for the public works department.
In previous years, Lippincott said, growth allowed the city some wiggle room for funding extras. “This year, there’s not as much flexibility,” she said.
Based on her preliminary figures, the city’s property tax rate might increase for the next fiscal year. The city has maintained its current levy, $10.71 per $1,000 assessed valuation, for two years, but Lippincott is working with a preliminary levy that would be closer to $10.88.
The city’s rate is among the lowest for Johnson County municipalities, with only Lone Tree ($9.31) and Swisher ($8.10) taxing less for the current fiscal year.
The drop in revenue prompted a more cautious approach for council members during the budget workshop, although Mayor Cami Rasmussen lobbied for the additional full-time public works staffer.
“It’s something that’s been evident to me this entire year,” Rasmussen said, pointing out the department needed another full-timer when the position held by parks and recreation coordinator Travis Young was created. “We’re at the point where we can’t manage anymore.”
Young’s time is split between public works and parks and recreation, a move made by the city in an attempt to increase recreational opportunities for residents.
Council member Steve Stange expressed concern that another staffing request was coming so quickly.
The city’s recreation programs are utilized by residents and non-residents, he said, and the non-residents should be picking up more of the tab. Currently, a small additional fee is charged for non-residents who participate in city programs.
“We just eating so much of this for the outside community,” he said of the associated costs. “The city of Solon taxpayers are having to soak that up.”
Rasmussen had suggested at a previous meeting the city review the recreation programs with an eye toward becoming more self-supportive, something she brought up again at last week’s meeting.
Council member Ron Herdliska asked for figures relating to recreation program usage, but those won’t be available until city departments present their budgets at a special council session scheduled for Jan. 9.
“I think recreation is something that’s important,” Herdliska said. “It brings our adults, our seniors and our kids all together.”
“It comes down to priorities,” Stange countered. “And that’s where we’ll have to hammer it out.”
A special budget session is already set for Jan. 9, and it’s possible an additional session will be scheduled before the end of the month.

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