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Item 6C CITY OF Item 6C SOUTHLAKE MEMORANDUM August 29, 2017 To: Shana Yelverton, City Manager From: Sharen Jackson, Chief Financial Officer Subject: Ordinance No. 1179, 1St Reading, Tax Levy Ordinance Action Requested: The purpose of this item is to seek Council approval on the tax levy at a tax rate of$0.462. Background Information: The FY 2018 budget as submitted to the City Council proposes a tax rate of $.462 per $100 of a property's taxable value. State law requires the City to adopt the tax rate in two components. Part of the tax rate, $.10 (22%) per $100, pays for the retirement of debt that is due during the 2017 budget year. The remainder of the tax rate, $.362 (78%) per $100, is used to support General Fund operations of the City. On July 25t", the Tarrant and Denton Appraisal Districts certified to City management the appraised values of all properties in Southlake. Total taxable value in the City is $6,662,494,784 (net of TIF value), which is the value of properties as of January 1, 2017. Upon adoption of a tax rate upon the second reading, the City's tax collector, Tarrant County, will be notified of the adopted rate. Tarrant County will then apply the tax rate to the taxable values of properties in Southlake, and generate tax statements after October 1, 2017. This year's proposed tax rate ($0.462) exceeds the effective tax rate ($0.44612). A motion to adopt the ordinance must include the following: "I move that the property tax rate be increased by the adoption of a tax rate of 0.462, which is effectively a 2.2 percent increase in the tax rate." The tax rate remains steady for the fifteenth year at $0.462 but the proposed FY 2017 budget includes tax relief in the form of a 20% homestead exemption. The property owner of an average-valued home will see the equivalent of a tax rate reduction of $0.0924 which is 19.5% reduction in the tax rate. Financial Considerations: For FY 2018 tax rate allocation of .362 for general fund operations and .10 for debt service. As previously mentioned, this will provide a distribution of 78% of the rate for operations and 22% for debt service. Strategic Link: F1 Adhere to financial management principles and budget Citizen Input/ Board Review: Public hearing is scheduled for September 19tH Legal Review: None required Alternatives: In the absence of approving and adopting the ordinance, the existing tax rate and related allocation between maintenance and operations and debt service would remain in force until otherwise provided. Supporting Documents: Ordinance No. 1179 Staff Recommendation: Approval of Ordinance No. 1179, on 1 st reading, levying ad valorem taxes at the rate of $.462 for the Fiscal Year beginning October 1, 2017 and ending September 30, 2018. ORDINANCE NO. 1179 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SOUTHLAKE, TEXAS, FIXING AND LEVYING MUNICIPAL AD VALOREM TAXES FOR THE FISCAL YEAR BEGINNING OCTOBER 1, 2017 AND ENDING SEPTEMBER 30, 2018, AND FOR EACH YEAR THEREAFTER UNTIL OTHERWISE PROVIDED, AT THE RATE OF $0.462 PER ONE HUNDRED DOLLARS ($100.00) ASSESSED VALUE ON ALL TAXABLE PROPERTY WITHIN THE CORPORATE LIMITS OF THE CITY OF SOUTHLAKE, TEXAS, AS OF JANUARY 1, 2017, TO PROVIDE REVENUES FOR THE PAYMENT OF CURRENT EXPENSES AND TO PROVIDE AN INTEREST AND SINKING FUND ON ALL OUTSTANDING DEBTS OF THE CITY; DIRECTING THE ASSESSMENT THEREOF; PROVIDING FOR DUE AND DELINQUENT DATES TOGETHER WITH PENALTIES AND INTEREST THEREON; PROVIDING FOR PLACE OF PAYMENT; PROVIDING FOR APPROVAL OF THE TAX ROLLS PRESENTED TO THE CITY COUNCIL; PROVIDING FOR THE REPEAL OF INCONSISTENT ORDINANCES; PROVIDING FOR A SEVERABILITY CLAUSE; AND DECLARING AN EFFECTIVE DATE. WHEREAS, the City Council of the City of Southlake, Texas (hereinafter referred to as the "City") hereby finds that the tax for the fiscal year beginning October 1, 2017, and ending September 30, 2018, hereinafter levied for current expenses of the City and the general improvements of the City and its property must be levied to provide the revenue requirements of the budget for the ensuing year; and WHEREAS, the City Council has approved, by a separate ordinance adopted on the 19th day of September, 2017, the budget for the fiscal year beginning October 1, 2017, and ending September 30, 2018; and WHEREAS, all statutory and constitutional requirements concerning the levying and assessing of ad valorem taxes have been complied with. NOW THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF SOUTHLAKE, TEXAS: Section 1. That all of the above premises are found to be true and correct and are incorporated into the body of this Ordinance as if copied in their entirety. Section 2. That there is hereby levied and ordered to be assessed and collected for the fiscal year beginning October 1, 2017, and ending September 30, 2018, and for each fiscal year thereafter until it be otherwise provided by and ordained on all taxable property, real, personal and mixed, situated within the corporate limits of the City of Southlake, Texas, and not exempt from taxation by the Constitution of the State and valid State laws, an ad valorem tax rate of$0.462 for the general operations of the City on each One Hundred Dollars ($100.00) assessed value of taxable property, and shall be apportioned and distributed as follows: a. For the purpose of defraying the current expenses of the municipal government of the City, a tax of $0.362 on each One Hundred Dollars ($100.00) assessed value of all taxable property. THIS TAX RATE WILL RAISE MORE TAXES FOR MAINTENANCE AND OPERATIONS THAN LAST YEAR'S TAX RATE. THE TAX RATE WILL EFFECTIVELY BE RAISED BY 2.9 PERCENT AND WILL RAISE TAXES FOR MAINTENANCE AND OPERATIONS ON A $100,000 HOME BY APPROXIMATELY $19.37. b. For the purpose of creating a sinking fund to pay the interest and principal on all outstanding debt of the City, not otherwise provided for, a tax of $0.10 on each one Hundred Dollars ($100.00) assessed value of all taxable property, within the City which shall be applied to the payment of such interest and maturities of all outstanding debt. Section 3. That all ad valorem taxes shall become due and payable on December 31, 2017, and all ad valorem taxes for the year shall become delinquent after January 31, 2018. There shall be no discount for payment of taxes prior to January 31, 2018. A delinquent tax shall incur all penalty and interest authorized by State law Sections 33.01 and 33.11 of the Property Tax Code, to-wit: a penalty of six percent (6%) of the amount of the tax for the first calendar month it is delinquent plus one percent (1%) for each additional month or portion of a month the tax remains unpaid prior to July 1st of the year in which it becomes delinquent. Provided, however, a tax delinquent by July 1st incurs a total penalty of twelve percent (12%) of the amount of the delinquent tax without regard to the number of months the tax has been delinquent. A delinquent tax shall also accrue interest at a rate of one percent (1%) for each month or portion of a month the tax remains unpaid. Taxes that remain delinquent on July 1, 2017, incur an additional penalty of twenty percent (20%) of the amount of taxes, penalty and interest due; such additional penalty is to defray costs of collection due to contract with the City's attorney pursuant to Section 6.30 of the Property Tax Code. Section 4. Taxes are payable at the office of Tarrant County Tax Collector. The City shall have available all rights and remedies provided by law for the enforcement of the collection of taxes levied under this ordinance. Section 5. That the tax rolls, as presented to the City Council, together with any supplement thereto, be, and the same are hereby approved. Section 6. That any and all ordinances, resolutions, rules, regulations, policies or provisions inconsistent or in conflict with the provisions of this Ordinance are hereby expressly repealed and rescinded to the extent of the inconsistency or conflict. Section 7. If any section, article, paragraph, sentence, clause, phrase or word in this Ordinance, or application thereto any person or circumstances is held invalid or unconstitutional by a Court of competent jurisdiction, such holding shall not affect the validity of the remaining portions of this Ordinance; and the City Council hereby declares it would have passed such remaining portions of this Ordinance despite such invalidity, which remaining portions shall remain in full force and effect. Section 8. That the necessity of and levying municipal ad valorem taxes of the City for the next fiscal year as required by the laws of the State of Texas, requires that this Ordinance shall take effect immediately from and after its passage, and it is accordingly so ordained. PASSED AND APPROVED on first reading this day of , 2017. Laura Hill, Mayor ATTEST: Carol Borges City Secretary PASSED AND APPROVED on second reading this day of , 2017. Laura Hill, Mayor ATTEST: Carol Borges City Secretary APPROVED AS TO FORM: City Attorney Date: Adopted: Effective: