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NEW BUSINESS MEMORANDUM DATE: August 26, 2013 TO: Honorable Mayor and City Council FROM: Patrick Klaers, City Administrator Sue Iverson, Director of Finance and Administrative Services SUBJECT: 2014 Proposed Preliminary Budget and Tax Levy INTRODUCTION In preparation for adoption of the preliminary tax levy at the first meeting in September, this memo addresses the following information: preliminary tax levy, residential property values, operating budget, salary and benefit changes, and preliminary fund balance projections. RESIDENTIAL PROPERTY VALUES According to information provided by Ramsey County in May of this year, the median home value in Arden Hills will increase from $257,500 for 2013 taxes, to $264,700 for 2014 taxes which is a 2.8% increase in value compared to the county average increase of 0.2%. According to Ramsey County, assessed value had declined for five consecutive assessments as a result of the recession and loss of financing liquidity and had been fueled by pessimistic buyer expectation. There are now encouraging signs that the markets have stabilized, or are stabilizing; we are now experiencing a slight increase of residential values, rising apartment values, and the commercial markets are also showing promise of appreciation but are still down (from Ramsey County Assessor Stephen Baker). Foreclosures are at a lower percentage than they have been in many years. In order to evaluate the true impact to the residential property owner, you need to take into account the increase in fiscal disparities (increase of 5.8%) and the change in the taxable value (increase of 1.7% after exclusions). To help illustrate this, the following table shows the impact to the residential property owner due This results to the increase in fiscal disparity dollars and changes in the assessed market value. in a net Tax Rate decrease of 2.1% before any levy changes are made.