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<br />-5- <br />Tax capacity is considered the actual base available for taxation. It is calculated by applying the state’s <br />property classification system to each property’s market value. Each property classification, such as <br />commercial or residential, has a different calculation and uses different rates. Consequently, a city’s total <br />tax capacity will change at a different rate than its total market value, as tax capacity is affected by the <br />proportion of the City’s tax base that is in each property classification from year-to-year, as well as <br />legislative changes to tax rates. The City’s tax capacity increased 1.5 percent for taxes payable in 2016, <br />and increased 2.3 percent for taxes payable in 2017. <br /> <br />The following graph shows the City’s change in tax capacities over the past 10 years: <br />$– <br /> $2,000,000 <br /> $4,000,000 <br /> $6,000,000 <br /> $8,000,000 <br /> $10,000,000 <br /> $12,000,000 <br /> $14,000,000 <br /> $16,000,000 <br /> $18,000,000 <br />2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 <br />Local Tax Capacity <br /> The following table presents the average tax rates applied to city residents for each of the last three levy <br />years, along with comparative state-wide and metro area average rates from the two most recent years for <br />which the information is available: <br /> <br />2015 2016 2015 2016 2015 2016 2017 <br />Average tax rate <br />City 46.9 46.5 43.4 43.0 27.3 26.5 27.2 <br />County 44.7 44.1 42.9 42.3 58.9 58.9 55.9 <br />School 27.1 27.5 28.3 28.6 27.4 26.2 25.3 <br />Special taxing 6.9 6.9 8.8 8.7 9.2 9.1 8.6 <br />Total 125.6 125.0 123.4 122.6 122.8 120.7 117.0 <br />Note: State-wide and metro area average tax rates are not available for 2017. <br />Rates Expressed as a Percentage of Net Tax Capacity <br />All Cities <br />State-Wide <br />Seven-County <br />Metro Area <br />City of <br />Arden Hills <br /> <br />There are a number of reasons contributing to the change in the average total tax rate. The City’s portion <br />of the tax capacity rates for its residents has historically been well below the average for Minnesota cities <br />state-wide and for cities in the seven-county metro area because of the City’s high property values and <br />strong commercial tax base. The City does not have any outstanding debt levy requirements, which also <br />contributes to the lower than average city tax rate.