7A, 2011 Operating Levy Payable 2012 and 2011 Truth-In-Taxation

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Memo City Council 2012 Proposed Preliminary Budget and Tax Levy 2 RESIDENTIAL PROPERTY VALUES According io information provided by Rarnsey County in March of this year, the median horrze value in Arden Hills will decrease from $276,000 �ar 2011 t�es, to $272,800 for 2012 taxes which is a 1.16% drop i� value compared to the county average decrease of 4.41 %. The MVHC program was replaced with the ner�v Market Value Exclusion (MVE) program, which reduces the local taxable value of homestead properties under $413,800 at which point the credit is phased out. This afFects the Ciiy's tax rate as it redc�ces the overall taxable value of the City. All jurisdictions will see an increase in tax raies in 2012 as a result of this change. • Old MVHC Pro�ram Under the old MVHC program, home property taxes were reduced by a State credit. The prograzx� was designed to hold local goverr�ments harmless by a reimbursement from the �tate of Miz�.nesota for the sum af a�l credits provided. As the City Couz�cii is aware, this credit has been red�ced or eliminated altogether in most years due to Staie budget cuts. (It was only fully funded one year out of the nine that it was in effect.) Another cozx�plicating camponent of the old MVHC program was that the estimated amount of crediis needed to be included in ihe City's levy, even tk�ough no reimb�arsemeni from the State wauld occur. This caused a n�ismatch between the adopted l�vy and the actual levy collections. • New MVE Pro�ram Under the new MVE program, a portion o� t�Ze home's market value is excluded for tax purposes. This creates a new Taxabie Market Value (which is lower than the estimated Market Value}, as well as a red�ced value for tax co�putations (ta�able value). On� b'rg advantage of this prograzn is that the siate credits are eliminated, which mearzs there is no need to add estimated MVHC cred'zts to the a�erall levy amount. The following table pravid�s an exa�ple o� how the new prograa�n will work for five different home values. Hoxnes valued at $76,000 receive the maximum value reductian, and homes valued at $413,800 (value at which th� exclusion is phased out) and above receive no value reduction.