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MVHC Reimbursement The 20091egislative session ended without an agreement on how to balance the State budget. As a result, the governor is expected to use his unallotment power which essentially allows him to reduce, defer, or suspend appropriations to address any state revenue shortfall. It is widely expected that the governor will use his unallotment power to reduce local government aid (LGA) and market value homestead credit (MVHC) reimbursement. At this point we don't know how much the governor's reductions will be. However, throughout the session none of the tax bills being advanced had any LGA or MVHC for Roseville. For 2010 and possibly beyond, it is expected that Roseville will lose $400,000 in state aid. Tax Increment Financin� The Legislature did allow two general changes regarding tax increment financing (TIF) intended to provide added flexibility given the current economic conditions. The five-year rule was extended to 10 years for redevelopment, and renewal and renovation TIF districts for those certified between June 30, 2003, and Apri130, 2009. They also extended the four-year knockdown rule to six years for those districts certified between Jan. 1, 2005, and April 20, 2009. These changes would apply to the City's Twin Lakes TIF District established in 2005. City Staff will provide a broader overview on these implications at a later date. 2009 Property Values Earlier this year, City Staff received information from the Ramsey County Assessor's Office which provided an aggregate look at next year's property values. The full report is included in AttachmentA, and is in the form of a memo from the Assessor's Office. The Council is stron�lv cautioned in attempting to extrapolate Roseville-specific information from this report as it does NOT contain all of the information that is needed to determine property value impacts. For example, some of the stated property value is captured in TIF districts. In addition, the City receives a fiscal disparity contribution which affects our local tax rate. This information is not yet available. However, initial reviews suggest that Roseville's tax base could decline in 2010 by as much as 3%. This in of itself does NOT mean that the City will collect less tax dollars. A decline in the tax base simply means that the City's tax rate, independent of all other factors, will increase. Bear in mind that the City establishes an annual tax levy independent of the property tax base. In effect, we get what we levy for. At the household level, the affect on individual homeowners will vary significantly due to the relative change in each home's valuation. While many homes will see decreases in value, others may stay the same or even possibly increase. A similar effect occurred with this year's property taxes. As a result, some homes will see a decline in their property taxes and some will see an increase — independent of the levy the City's establishes for 2010. POLICY OBJECTIVE Not applicable. FnvaNCiaL IlviracTs The financial impacts on 20101egislative impacts and property values are not entirely known at this time. Page 2 of 3