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Report Estimates Unite Edina Detachment Would Cost Hopkins $550K

Hopkins property owners would see school taxes grow by about 1.5 percent, while Edina school tax bills would drop by about 2 percent.

A proposal to carve off a piece of Edina from the Hopkins school district would cost Hopkins more than $550,000 in lost revenue, increase property taxes for those who remain in the district and jack up taxes for those whose properties change districts, according to a report released Thursday.

Click on the PDFs to the right of this article to read the full report.

The district requested the report in order to determine the financial ramifications of a request from Parkwood Knolls and Walnut Drive property owners who want to leave the Hopkins school district because they think its schools are not in locations that serve the families’ educational needs.

The district has never had a school in Edina in its 130 years.

Even though districts are typically named after one of the cities they serve, they are separate local government entities, legally distinct from those cities. Hopkins Public Schools, for example, covers all of Hopkins, most of Minnetonka, half of Golden Valley and parts of Eden Prairie, Edina, Plymouth and St. Louis Park.

The report, which Hopkins Public Schools commissioned from Ehlers Inc., examined two ways the detachment would affect the districts: changing their revenues and changing the taxes paid by property owners. It calculated what those changes would’ve been for 2012 and assumed that no students would’ve changed schools because of the detachment.

Of the 202 school-aged children in the area, 127 already attend Edina schools and just nine attend Hopkins schools, according to Unite Edina 273, the group spearheading the detachment effort.

Ehlers determined that the detachment would shift 156.67 “resident pupil units” from Hopkins to Edina. Those units are used to calculate operating referendum revenue.

 It would also decrease:

  • 2011 referendum market value (used to calculate referendum market value rates) by $373 million, down 4.23 percent;
  • 2010 net tax capacity (used to calculate the capital projects levy) by $4.23 million, down 4.38 percent;
  • 2011 local net tax capacity (used to calculate tax capacity rates) by $4.13 million, down 4.70 percent.

That equates to a $557,747 loss in revenue for Hopkins—increasing residential homestead property taxes by 1.55 percent and commercial-industrial property taxes by 1.49 percent.

That’s slightly less than Unite Edina 273’s initial estimates. In October, it predicted that detachment would cost Hopkins $281,000 annually in operating levy taxes and $280,000 in taxes for the capital projects levy.

Alan Koehler, who’s been spearheading Unite Edina 273's detachment campaign, said he had just learned about report. The group will need more time to absorb the information released by the district, but Koehler said none of the statistics seemed significantly different from their projections.

"It's such an arcane world now that I didn't really know what to expect," Koehler said. "At this point, I don't have much to offer in terms of reaction."

Meanwhile, the report estimates Edina would see revenue increase by $519,811. That would decrease property taxes by 2.03 percent and 1.95 percent for residential homestead and commercial-industrial, respectively.

Ehlers predicted much bigger changes for properties in the detaching area. They would have to pay higher rates for referendum market value taxes and non-debt tax capacity taxes. The firm also assumed that they’d still have to help pay off Hopkins debt incurred while they were in the district, although that can be waived if both Hopkins and Edina school boards agreed.

If that doesn’t happen, though, the detaching property owners could see school property taxes grow 14 to 15 percent.

With the financial analysis in, Hopkins staff are working on their final report for the School Board, said district spokeswoman Jolene Goldade. That report will be included in the board packet sent to directors on about Dec. 14. The School Board will consider the detachment issue at its Dec. 20 board meeting.

***

What would change …

… in Hopkins?

Residential pupil units: down 156.67 (1.9 percent)

Net change in all district revenue: down $557,747

  • Operating referendum: down $275,000
  • Capital projects levy: down $270,000
  • Basic community education levy: down $8,028
  • Early childhood family education levy: down $4,680

Property taxes for others in the Hopkins school district

  • Residential homestead property: up 1.55 percent
  • Commercial-industrial property: up 1.49 percent

… in Edina?

Residential pupil units: up 156.67 (1.81 percent)

Net change in all district revenue: up $519,811

  • Operating referendum: up $286,000
  • Capital projects levy: $221,000
  • Basic community education levy: $8,028
  • Early childhood family education levy: $4,680

Property taxes for others in the Edina school district

  • Residential homestead property: down 2.03 percent
  • Commercial-industrial property: down 1.95 percent

… for property owners that change districts?

School property taxes would increase 14 to 15 percent because they’d pay higher tax rates for the referendum market value taxes and non-debt tax capacity taxes and because they continue paying taxes on Hopkins debt.

Patch Editor Ryan Gauthier contributed to this report.

Alan November 29, 2012 at 11:12 PM
Hopkins should not accept this without proper compensation for at least 10 years of lost revenue..
David Abrams November 30, 2012 at 01:40 PM
Open enrollment is already the law in Minnesota. Parents have complete choice on where their children go to school. There is no value to the kids in this change and it serves no purpose to the neighborhood. Should be turned down.
David F November 30, 2012 at 02:11 PM
Open enrollment is not a given since some Edina schools are at capacity. The bigger question is if this happens with Hopkins will it happen to other school districts with similar issues? It could open a can of worms.
James Warden (Editor) November 30, 2012 at 02:45 PM
For those who are curious, here's how detachment would’ve changed tax bills, according to the report. Hopkins Residential Homestead Property • $200,000 home: + $13.39 (1.58 percent) • $400,000 home: + $27.96 (1.55 percent) • $600,000 home: + $42.80 (1.53 percent) Commercial-Industrial Property • $500,000 property: + $38.15 (1.49 percent) • $1,000,000 property: + $77.85 (1.48 percent) Edina Residential Homestead Property • $200,000 home: - $19.24 (2.07 percent) • $400,000 home: - $39.77 (2.03 percent) • $600,000 home: - $60.59 (2.01 percent) Commercial-Industrial Property • $500,000 property: - $52.82 (1.96 percent) • $1,000,000 property: - $107.30 (1.94 percent) Detachment properties • $200,000 home: + $125.55 (14.79 percent) • $400,000 home: + $256.80 (14.21 percent)
Johnson November 30, 2012 at 10:56 PM
This article is MISLEADING. Please remember: The percentages referred to in this article are for only the **school** portion of property taxes, which are approximately 1/3 of total property taxes. This means that THE ACTUAL CHANGES TO A RESIDENT'S TOTAL PROPERTY TAXES ARE ONLY 1/3 OF THOSE PERCENTAGES LISTED IN THE ARTICLE. It is so unfortunate that the author of the article only clarified the numbers after the article was released, in the website's comments section. Many people will read the article, but never see the website's comments, and they'll walk away with an alarming (and false) impression of potential changes. These false impressions may cause the initiative to fail, when otherwise it might have passed.
Johnson November 30, 2012 at 11:02 PM
"A lie can travel halfway round the world while the truth is putting on its shoes." ~Mark Twain

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