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-5- Tax capacity is considered the actual base available for taxation. It is calculated by applying the state’s property classification system to each property’s market value. Each property classification, such as commercial or residential, has a different calculation and uses different rates. Consequently, a city’s total tax capacity will change at a different rate than its total market value, as tax capacity is affected by the proportion of its tax base that is in each property classification from year-to-year, as well as legislative changes to tax rates. The City’s tax capacity increased 6.9 percent for taxes payable in 2020, and increased 4.5 percent for taxes payable in 2021. The following graph shows the City’s change in tax capacities over the past 10 years: $– $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000 $14,000,000 $16,000,000 $18,000,000 $20,000,000 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Local Tax Capacity The following table presents the average tax rates applied to city residents for each of the last three levy years: 2019 2020 2021 Average tax rate City 25.5 25.4 25.1 County 52.9 52.3 47.7 School 26.3 25.0 23.9 Special taxing 8.3 8.2 7.8 Total 113.0 110.9 104.5 Rates Expressed as a Percentage of Net Tax Capacity City of Arden Hills The overall decrease in the average tax rate was spread across each of the taxing authorities as presented in the table above. The improvement in tax capacity values previously discussed, contributed to the change in the City’s average tax rate.