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Property values within Minnesota cities experienced average increases of 11.0 percent for taxes payable in 2007 and 7.0 percent for those payable in 2008, reflecting the slowdown in growth of market values. In comparison, the City's market value increased by 15.7 percent in 2007 and 5.7 percent in 2008. It is important to remember that the 2008 market value is based on estimated values as of January 1, 2007, and the housing market is still experiencing difficult times. The following graph shows the City's changes in taxable market value over the past 10 years: $2,500,000,000 $2,000,000,000 $1,500,000,000 $1,000,000,000 $500,000,000 $— Taxable Market Value 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 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 has a different calculation and uses different rates. The graphs show that tax capacities have not increased at the same rate as market values, primarily due to property tax reform occurring over this period of time. The following graph shows the City's change in tax capacities over the past 10 years: $21,000,000 $18,000,000 $15,000,000 $12,000,000 $9,000,000 $6,000,000 $3,000,000 $— Local Tax Capacity 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 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 has a different calculation and uses different rates.