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ARDEN HILLS SPECIAL CITY COUNCIL—DECEMBER 6, 2010 3 6. PUBLIC HEARINGS A. Truth-In-Taxation Hearing and Presentation Director of Finance and Administrative Services Iverson presented the Council with a detailed account of the proposed 2011 budget and tax levy. She explained why and how property taxes vary from year to year. It was noted the median market value on a single family home in Arden Hills went down by 1% from 2010 to 2011 while commercial/industrial property values dropped 12%. Commercial property values dropped due to the large amount of vacant properties - throughout the northeast metro area. She noted that property tax values were set by the County in the spring of each year. Due to this property value shift, residential property taxes would increase as a result of the decrease in commercial/industrial values. Councilmember Grant clarified that property taxes could rise, without an increase from the City, because of County taxes, school district levies, special taxing districts, etc. Therefore, the discussion this evening was strictly on the City's impact. Director of Finance and Administrative Services Iverson indicated the City would not be receiving market value homestead credit from the state in 2011. This reduced the amount of money received from our tax levy and did affect the 2011 budget, along with other State law changes. Ms. Iverson reviewed how to calculate property taxes in detail with the Council. She noted the proposed levy for 2011 had a 0.8% increase over 2010. Director of Finance and Administrative Services Iverson indicated the City's proposed levy was higher than the levy limit allowed due to Special Levies the City has for PERA increases, Public Safety wages and benefit increases and the 2010 and 2011 unallotment of market value homestead credit. The impact on property taxes was reviewed with an assumed 1% decrease in the market value of homes. Councilmember Grant questioned why the City of Arden Hills' property value held steady while neighboring community's value dropped upwards of 6%. Director of Finance and Administrative Services Iverson was unaware of the differences but indicated she would speak with the County to gain further information and would report back to the Council. She explained the City does have the third lowest tax rate in Ramsey County and fourth lowest in comparison to surrounding communities. Director of Finance and Administrative Services Iverson reviewed revenues for 2011 indicating staff was expecting them to remain the same. Revenues have been conservatively estimated as the City is primarily built out and has little redevelopment and expansion planned. Operating costs remain flat unless there have been increases in contract services. She noted the unalloted market value homestead credit accounted for a 2% increase in the levy. Staff reviewed the key budget projects and elements proposed for 2011. Mayor Harpstead opened the public hearing at 6:50 p.m.