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ARDEN HILLS CITY COUNCIL— SEPTEMBER 10, 2012 4 Director of Finance and Administrative Services Iverson stated that a preliminary levy needs to be established and certified by September 15 each year to the County. The final levy is not adopted until December, however, once a preliminary levy is established, the amount can be reduced, but it cannot be increased. Mayor Grant asked for clarification regarding the drop in residential property values, which was 5.6% in Arden Hills compared to the county average of 7.6%. This means that homes in Arden Hills are still holding their value compared to other cities in the County. Director of Finance and Administrative Services confirmed that it was the median-valued home that was used in the figures that were provided. While some homes have decreased in value, others may have increased. Councilmember Holden indicated that she understood the fire contract increase of 5.52% is due to additional staff being scheduled as the duty crew program gets implemented. She inquired about the increase in the 911 dispatch contract. Director of Finance and Administrative Services Iverson explained that when the 911 dispatch contract began, there were no previous statistics to use to formulate an average cost. Since it was uncertain how much the service was going to be, a three-year rolling average formula was created. The City did not see an increase initially, but now that we are in the second year of the three-year rolling average, the increase in cost is now being passed on to all the cities. Councilmember Holden inquired about the increase in costs associated with IT services. Director of Finance and Administrative Services Iverson stated that when the City initially contracted with the City of Roseville for its IT needs, there was no increase in costs. As time passed, the number of cities belonging to the group has increased and Roseville has added more staff to accommodate for the additional equipment (i.e. adding laptops, cell phones, etc.). The City of Roseville had been absorbing those additional costs, and they are slowly passing those increases on to the cities. Mayor Grant noted that if Council did not increase the levy, the owner of a median valued home would still see an increase of 5.4%to the City tax rate. Director of Finance and Administrative Services Iverson stated that the local portion of the levy is divided by the local taxable value. Because the local taxable value has gone down, there is less of a base to divide the levy into, and that is why there is a tax rate increase. Councilmember Werner asked based on a median priced home, and assuming a 4.1% increase in the levy, what that increase means dollar-wise. Director of Finance and Administrative Services Iverson noted that it is an annual increase of $20.50 or 1.68 per month. Discussion continued regarding the tax levy and possible budget cuts.