HomeMy WebLinkAboutCouncil Provided Information - 5/21/2024TO: City Council Members
FROM: Sam Owen, Policy Analyst
DATE: May 21, 2024
COUNCIL STAFF REPORT
CITY COUNCIL of SALT LAKE CITY
Item Schedule:
Briefing: May 7, 2024
Public Hearing: May 7 & May
21, 2024
Potential Action: May 21, 2024
(property tax proposal)
RE: Metropolitan Water District of Salt Lake & Sandy Property Tax Proposal
ISSUE AT -A -GLANCE
A majority of the five Metropolitan Water District Board Trustees appointed by Salt Lake City will
briefly present to the Council about the 2024 property tax proposal. This is one requirement in the
State law that governs how the District sets its property tax levy.
The Council is scheduled to decide on the property tax proposal at its formal meeting, May 21, 2024.
Each City Council of the member cities, Salt Lake City and Sandy City, must approve the proposal for
the tax to increase. Sandy City approved the proposal following their hearing earlier in May. As
discussed in previous briefings, if Salt Lake City does not approve the tax proposal, it does not move
ahead, and the District could instead increase water sales prices to member cities to recover the
revenue.
ADDITIONAL INFORMATION
The Metropolitan Water District of Salt Lake and Sandy stores, treats and conveys culinary water
supplies for Salt Lake City and Sandy City. The District is one of the taxing entities that appears as a
line on the property tax bill for Salt Lake City property owners. Water is delivered to City residents
through Salt Lake City Public Utilities.
The District is proposing a property tax increase that would generate new property tax revenue from
Salt Lake City taxpayers, netting an additional estimated $6.77 million. Cost impact from the tax
proposal to a residential property of median value in Salt Lake City ($596,000) would be about $49
annually.
Property tax makes up about one quarter of the District's annual revenue. The remainder comes from
a regular capital assessment to member cities, as well as water sales, primarily to member cities. The
District also proposes bonding revenue of about $24.3 million for the new fiscal year.
CITY COUNCIL OF SALT LAKE CITY
451 SOUTH STATE STREET, ROOM 304 SLCCOUNCIL.COM i
P.O. BOX 145476, SALT LAKE CITY, UTAH 84114-5476 TEL 801-535-7600 FAX 801-535-7651
The District highlights a current grouping of required capital improvements and projects totaling
$117.9 million. Anticipated annual fiscal impact is an estimated $9.3 million per year, from just these
new capital expenses. These figures capture part of the District's planned capital improvement
program expenses.
The Council reviews the rest of the District's budget, and does not formally adopt it. The Council
appoints five of the seven -member Board of Trustees. The total FY25 expenditures and revenues
figure is an estimated $100.3 million, up from last year's total $51.2 million. Budget figures could shift
pending outcome of the property tax proposal.
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FY25 Tentative Budget
Salt Lake City Council Meeting
May 21, 2024
Thank you for the opportunity to provide this report to the Council. The Metropolitan
Water District of Salt Lake & Sandy has tentatively adopted a tentative budget that
includes a proposed property tax that exceeds the certified rate that would normally apply
for fiscal year 2025. Pat Comarell, Cindy Cromer, Joan Degiogio, and I represent a
majority of the Trustees appointed by Salt Lake City to the Metro Board. We are
providing this report under Utah Code Section 1713-1-1003.
The District's tentative budget includes a property tax of 0.00035, which is an increase
from the current certified rate of 0.000200 for Salt Lake City. The proposed tax increase
would generate $8,639,514, between Salt Lake City and Sandy City. These additional
funds will be used to meet the District's increased costs, including Cottonwoods
Connection Project, Deer Creek Dam Intake Project, Jordan Aqueduct System Capital
and O&M costs, and Central Utah Project OMR&R costs. The District's General
Manager discussed these costs and the purpose of the property tax increase in more detail
during the May 7th work session. The proposed property tax rate increase would
generate approximately a 72% increase in the property tax revenue for the District,
between Salt Lake City and Sandy City.
We are happy to answer any questions the Council has.
Memo
TO:
DATE:
FROM:
SUBECT
CC:
ISSUES
City Council leadership
February 2, 2024
Metropolitan Water District of Salt Lake & Sandy
FY25 Proposed Increase to the Certified Tax Rate
MWDSLS Board of Trustees
The Metropolitan Water District of Salt Lake & Sandy ("District") needs an increase in revenue to
address critical water infrastructure and to pay for the cost increases from other entities (i.e., Central
Utah Water Conservancy District, Jordan Valley Water Conservancy District, and Provo River Water
Users Association). The following is a summary of these critical capital projects and costs from other
entities:
Description
Annual Cost
Type of
Long -Term
Entity responsible
Expense
Financial Impact
for securing
funding
Cottonwoods Connection Project
$2,276,800
Capital
$41.5 Million
Metropolitan Water
(District/SLC/SC)
(repayment of 30
District of Salt Lake
Purpose: Required project to
year loan/bond)
& Sandy
address aging infrastructure and Salt
Lake Aqueduct seismic and other
elements of resiliency.
Deer Creek Dam Intake Project
$1,240,000
Capital
$37 Million
Provo River Water
(PRWUA costs)
(30 years
Users Association
Purpose: Required project to
repayment)
replace aging dam infrastructure
that delivers 85,000 AF of water
(80% of water portfolio) to the Salt
Lake Valley.
Jordan Aqueduct/Jordan Valley
$5,023,680
Capital and
$32.5 Million
Jordan Valley Water
Water Treatment Plant Capital and
(5 year
0&M
(10 years of
Conservancy District
O&M (JVWCD costs)
average)
capital projects)
Purpose: Address aging
infrastructure that delivers water to
Northwest quadrant of Salt Lake
City.
Central Utah Project OMR&R
$1,501,500
O&M and
$6.9 Million
Central Utah Water
(CUWCD costs)
repair and
(forecasted target
Conservancy District
Purpose: Expenses related to the
replacement
increase)
District's investment in Central Utah
of CUP
Project water.
facilities
Total
$9,371,370
$117.9 Million
RECOMMENDATION
To meet the District's revenue needs, the board of trustees recommends increasing the certified tax rate
to 0.00035. By way of information, the District's maximum tax rate is 0.0005.
In 2008, the District increased the certified rate to 0.00035. Over time, the rate has eroded as the value
of properties has increased. Since 2008, the District has not implemented a certified rate increase. Taxes
are a reliable source of revenue and the investment in water infrastructure projects will benefit future
generations. The investment in capital projects that will last more than 75 years supports generational
equity.
AUTHORIZATION FROM SALT LAKE CITY AND SANDY COUNCILS
As of January 1, 2015 current statute (17B-2a-608) states than increasing the certified tax rate requires
approval by "the legislative body of each municipality that appoints a member to the board of trustees
under Section 17B-2a-604." The appointed board of trustees of the Metropolitan Water District of Salt
Lake & Sandy must receive approval from their appointed authority to increase the certified tax rate to
0.00035.
The timing of the city councils' approving the District's certified tax rate needs to occur after the District
adopts the tentative FY25 budget on April 15, 2024 and before the budget public hearing on May 20,
2024. The statutory deadline for budget adoption is June 22, 2024.
With the approval of both city councils, the certified rate would increase as budgeted and be formally
adopted after a Truth in Taxation hearing in August.
A question to be resolved is how the two cities want to present the tax increase to their councils for
approval.
Attachment A describes in more detail the statutory requirements of each city council.
CONCENSUS FROM CITY COUNCILS
There must be consensus from both councils and each city will be taxed at a uniform and equal rate. If
either council does not approve an increase to the certified tax rate, then the District will propose an
increase to the water rate. The water rate must also be uniformly applied to all cities comprising this
District. The District will propose an 39.33% water rate increase to both member cities (36.33%
generates the revenue equal to the property tax and the 3% water rate increase was already forecasted
in the FY25 budget).
Table 1 calculates the annual impact of an increase to the certified tax rate to Sandy City and Salt Lake
City property owners. On average, a property owner in the Metropolitan Water District of Salt Lake &
Sandy's service area would see an annual property tax increase of $47.00.
Table 1: Annual impact of property tax increase to Property Owner
City
Median
Market
Value of
Property
Taxable
Home Value
(55% of
median)
Current
Year Tax
Rate
Proposed
Next Year
Certified Tax
Rate
Percent
Increase
Annual
Increase to
property
owner
Monthly
increase
Sandy
$628,000
1 $345,400 110.000216
1 0.00035
62.04%
$46.28
$3.86
Salt Lake
$576,000
11 $316,800
U.000200J
0.00035
75.00%
$47.52
$3.96
Table 2 represents the net revenue generated from the certified tax rate increase. The District would
receive an additional $8.6 million in tax revenue. Table 2 also shows the estimated tax revenue from
each member city.
Table 2: Dollar amount generated from an increase in the certified tax rate
City
2023 Tax
2023 Tax
Proposed
Estimated 2024
Net Revenue
Year Certified
Revenue
Certified Tax
Tax Revenue
Increase
Tax Rate
Rate
Sandy City
0.000216
$3,010,170
0.00035
$ 4,877,590
$1,867,420
Salt Lake City
0.000200
$9,030,509
0.00035
$15,802,603
$6,772,094
Total MWDSLS
Taxes
$12,040,679
0.00035
$20,680,193
$8,639,514
Table 3 represents the current water sales revenue and the projected water rate increase of 36.33% to
match the revenue net revenue increase of the proposed property tax.
Table 3: Dollar amount generated from an increase to water rates
City
FY24 Water
Sales Revenue
Percent
Increase
Estimated FY25 Water
Sales Revenue
Net Revenue Increase
Sandy City
$ 6,658,388
36.33%F
$ 9,077,381
$2,418,993
Salt Lake City
$17,121,570
36.33%
$23,341,836
$6,220,266
Total MWDSLS
Water Sales to
$23,779,958
36.33%
$32,419,217
$8,639,259
Member Cities