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Memo <br />City Council <br />2012 Proposed Final Budget and Tax Levy <br />2 <br />RESIDENTIAL PROPERTY VALUES <br />According to information provided by Ramsey County in March of this year, the median home <br />value in Arden Hills will decrease from $276,000 for 2011 t�es, to $272,800 for 2012 t�es <br />which is a 1.16% drop in value compared to the county average decrease of 4.01%. <br />The MVHC program was replaced with the new Market Value Exclusion (MVE) program, <br />which reduces the local taxable value of homestead properties that are valued under $413,800 at <br />which point the credit is phased out. This affects the City's tax rate as it reduces the overall <br />taxable value of the City. All jurisdictions will see an increase in tax rates in 2012 as a result of <br />this change. <br />• Old MVHC Program <br />Under the old MVHC program, home property taxes were reduced by a State credit. The <br />program was designed to hold local governments harmless by a reimbursement from the <br />State of Minnesota for the sum of all credits provided. As the City Council is aware, this <br />credit has been reduced or eliminated altogether in most years due to State budget cuts. <br />(It was only fully funded one year out of the nine that it was in effect.) <br />Another complicating component of the old MVHC program was that the estimated <br />amount of credits needed to be included in the City's levy, even though no <br />reimbursement from the State would occur. This caused a mismatch between the adopted <br />levy and the actual levy collections. <br />• New MVE Program <br />Under the new MVE program, a portion of the home's market value is excluded for t� <br />purposes. This creates a new Taxable Market Value (which is lower than the estimated <br />Market Value), as well as a reduced value for tax computations (taxable value). <br />One big advantage of this program is that the state credits are eliminated, which means <br />there is no need to add estimated MVHC credits to the overall levy amount. <br />The following table provides an example of how the new progra <br />home values. Homes valued at $76,000 receive the maximum <br />valued at $413,800 (value at which the exclusion is phased out) <br />reduction. <br />m will work for five different <br />value reduction, and homes <br />and above receive no value <br />