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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 4.2 percent and 8.7 percent for taxes payable in 2025 and 2024, respectively. The following graph shows the City's changes in tax capacity over the past 10 years: Local Net Tax Capacity $2,000,000 $1,600,000 $1,200,000 $ 800,000 $400,000 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 The following table presents the City's certified tax levy and resulting tax rates applied to city residents for each of the last five levy years: Tax Levies and Rates S 800,000 42.O4�o $669,115 $697,018 $718,736 $700,000 41.0% $558,210 40.8% The City's certified levy has continued to grow over the last five years, while the tax rate has decreased the last few years with the change in the tax base. -7-