seattle parks presentation for possible voter-approved funding

7/27/2019 Seattle Parks presentation for possible voter-approved funding

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Vote-Approved Funding Options for the

Department of Parks and Recreation

October 3, 2013



Charges forServices

$26.019%

General

Subfund

Support$89.066%

PrivateContributions

$0.5

0%Space Rentals

& Misc.

Revenues$7.15%

CRS & ParksLevy

$10.9

8%

Use of FundBalance

$2.02%

2014 Parks Operating

Resources - $135 million($ in millions)

Budget Basics –

The General Fund, REET and DPR

October 3, 2013Funding Options - Parks

Funding for Operations

City’s General Fund is roughly $1.0 Billion.

DPR’s operating budget for 2014 is $135 million, of which roughly $89 million is GF.

Many DPR revenues do not grow significantly overtime and may struggle to keep up with cost of service.

REET$18.0

49%

Golf Debt

$5.6

15%

CDBG$0.8

2%

Private Funding/ Donations /

Grants$2.98%

Seattle

Voter-Approved Levy

$7.9

21%

KC Levy$1.7

5%Other$0.2

0%

2014 Parks CIP Resources - $37million($ in millions)

Funding for Capital

DPR’s capital budget for 2014 is $37 million

Major maintenance funding is primarily providedfrom Real Estate Excise Tax (REET) revenues.

DPR competes with other Departments for thatfunding. DPR estimated backlog of capitalprojects is $270M over the next 6 years.

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General Fund Tax Revenue

Growth Remains Subdued

October 3, 2013

3.3% 3.4%

2.3%

3.9% 4.1%

1.3%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

1995-2000 2005-2007 2011-2016F

A v e r a g e A n n

u a l G r o w t h R a t e

Average Annual Post-Recession General Fund Tax

Revenue Growth Rate

Real Growth

Inflation7.2% 7.5%

3.6%

Funding Options - Parks

General Fund tax growth is much lower than previous post-recession periods.

Limits City’s ability to expand General Fund-backed budgets.

Forecasts through the next biennium indicate the General Fund is about inbalance, with no additional resources available.

3



Options for Additional

Property Tax Funding


City Levy Lid Lift

– Voter-approved (50%) increase in City-administered property taxes.

– Can be used for operating and/or capital.

– Can be a temporary or permanent tax increase.

– Examples = Parks Levy, Housing Levy, Families and Education Levy, BTG Levy, & Library Levy

(Note that all are temporary)

Bond – Voter-approved (60%) increase in City-administered property taxes.

– Can only be used for capital projects.

– Taxes collected for term of bonds that are issued.

– Examples = Seawall and Library Bonds

(continued on next slide)

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Options for Additional

Property Tax Funding


Metropolitan Parks District (MPD)

– Per RCW 35.61.010, voter-approved (50%) taxing authority that is independent from City.

– Can raise funds from a property tax that is administered specifically for the MPD.

– Funding can only be used for parks and recreation purposes – both operating and capital.

Examples:

Normandy Park MPD (city council serves as governing body)

Metro Parks Tacoma (separately elected board)

William Shore Memorial Pool Park District (city & county council members plus one board-elected member)

Brief History:

The first Metropolitan Parks district was formed in Tacoma in 1907.

2002 Significant Legislative Changes:

Allow combinations of cities, counties

More flexibility re MPD governing structure

15 new districts have formed since 2002

http://www.mrsc.org/subjects/parks/spd-mpdlist.aspx

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Lid Lift – Options for term and structure


Levy lid lifts are subject to different constraints depending on length of term:

Short-term – 6 years or less

- No limitations on annual growth rate.

- Can bond (borrow) against revenues but only for term of levy.

Medium-term – 9 years or less- Can only grow at 1% per year.

- Can bond (borrow) against revenues but only for term of levy.

Permanent (10 years or more)- Can only grow at 1% per year.

- Cannot bond (borrow) against revenues.

6



MPD – Options for term and Structure


Voters create an MPD through a ballot measure.

The District then sets its funding structure.

MPD general levy Revenue source is a property

Authorized at 75 cents per $1,000 AV (about $96 million in 2014)

Subsequent year caps grow at 1% from the 75 cent level

Flexibility District has significant flexibility within that statutory cap

For transparency, authorizing ordinance would likely need to indicate planned levyamounts. Advisory votes on future significant changes might be desirable.

Eventually, the 1% growth limitation will likely come into play, but could be 30+ years out.

Considerations Ballot measure before voters to create an MPD provides the full 75 cent levy capacity

Levy amount cannot be legally limited at that time

No duration limitations

Creates accountability issues relative to the temporary structure of current levies thatrequire regular re-authorization.

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MPD General Levy

October 3, 2013Funding Options - Parks9

$30.0

$49.5

$81.6

$128.0

$96.0

$106.0

$117.1

$-

$20.0

$40.0

$60.0

$80.0

$100.0

$120.0

$140.0

$160.0

2 0 1 5

2 0 1 6

2 0 1 7

2 0 1 8

2 0 1 9

2 0 2 0

2 0 2 1

2 0 2 2

2 0 2 3

2 0 2 4

2 0 2 5

2 0 2 6

2 0 2 7

2 0 2 8

2 0 2 9

2 0 3 0

2 0 3 1

2 0 3 2

2 0 3 3

2 0 3 4

2 0 3 5

2 0 3 6

2 0 3 7

2 0 3 8

2 0 3 9

2 0 4 0

2 0 4 1

2 0 4 2

2 0 4 3

2 0 4 4

2 0 4 5

2 0 4 6

2 0 4 7

2 0 4 8

2 0 4 9

MPDExample: 5% growth over 30 years, then 1% growth

(in $ million)

Statutory Cap:

- starts at 75 cent per $1,000

- then grows at 1% annually



Potential Advantages of an MPD


Levy Capacity

Under current state law, the City has roughly $55 million per year inavailable capacity. This grows as total Assessed Value increases.

Levy capacity could become a limitation if existing levies increase uponrenewal and/or the City successfully seeks approval for new levies.

Note that voters willingness to pay is perhaps the real constraint on levycapacity. An MPD would be collected from same property owners asthose subject to City levies.

Debt Capacity

MPD would have its own independent debt capacity limits.

However, City’s real constraint is not legal debt capacity but ratherrevenue available to repay debt.

Initial Flexibility

Assuming an initial levy amount less than the full 75 cents, MPD hasflexibility in early years to grow with costs of service.

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Potential Disadvantages of an MPD


Flexibility and Capacity vs. Willingness to Pay

An MPD provides additional levy capacity and flexibility in early yearsto grow the levy with cost of service, but…

How large of a levy will voters authorize? MPD tax base is same asthose subject to City levies.

Will voters be willing to accept higher rates of planned levy growth?

Could the MPD “crowd out” future renewals of other City levies?

Accountability

MPD is permanent, so how will voters trust that tax revenues will bewell spent?

What mechanism will provide voters a chance to feel there issufficient oversight and accountability?

Advisory votes in the future? Oversight boards?

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MPD – Governance and Operations


If an MPD is pursued, how would the following questions beaddressed?

Would that MPD would be proposed with the sameboundaries as the City?

Would the City Council be proposed to serve as the MPD’sgoverning Board?

Would the MPD be restricted to provide funding to DPR?

If yes to all, the MPD could be integrated into current Cityfunding and management structures.

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First Question for Committee =

Fixed-term or Permanent?


Levy lid lift and MPD options are funding mechanisms. The more

appropriate mechanism will become more evident once these

questions are answered:

What are DPR’s funding needs?

(Operating? Capital? On-going? One-time?)

Temporary vs. permanent?

(Either can be permanent)

If permanent, how best can accountability be achieved?

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seattle parks presentation for possible voter-approved funding

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