Agenda - Council - 01/13/1981 - Laserfiche WebLink

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(/ :al':Iint't sub~idi7.eJ hou..ing. Also bcc:lu"c more 1'''1''''. tion mc.-:ins :l grc:lter sh:lrc of the taX base, th< prelOsure to keep poor fami::::s out of .an area because the)' do not "pay their own way" is r('duced. The law should also promote better bnd-use phnning. Communities will not fc'el as pressured into zoning marginal bnds for industrial and commercial development. Em;ronmcntal concern is likely to in- crease when a community knows it wiII benefit from industrial dc\'clopmcm even outside of its own juris- diction. Finany, the new)aw will have a le\'c1ing effect on the tax monies paid into a community irrespective of its developmental st:lge. All communities go through pniods during which the COStS of development and redevelopment arc great. The shared areawide tax base will lessen the burden of these stages of growth on the community's fiscal pocket. How the Act Works In order to understand how the new act works it is helpful tD discuss three separate calculations: (1) the community's tax base; (2) the community's share of the .reawide tax b~e; and (3) the community's tax ra,te. ~s as been true to the past, each local government IS stili informed of the total dollar value of its tax base; local- ities still determine their dollar tax levy; and each unit of gO\'ernment still receives its own tax receipts. The following changes occur in the way county auditors will calculate the property tax. Calculating the Community's Tax Base Under the new law, in 1972. for the Twin Cities area, a community's valuation (its tax base) will be the sum of the following: (1) all residential property valucs and all other property values not defined as commercial-indus. trial property (e.g., farm property); (2) all commercial- industrial propert~'\'3lues,except 40 per cent of the total net growth of commercial-industrial property over the .971 values; and (3) the communit}"s assigned share of he areawide tax base. . This tax base is the municipality's official taxable \'alue. This v:tlue will be used for determining debt and. levy limits and will be used b)' overlapping t:l.xing units, such as school districts. Calculating the Community's Share of the Areawide Tax Base Determining the share of the areawide tax base for anyone community is one of the most difficult aspects of the law to understand. Below. three separate calcula- tions are discussed that det.ermine the community's share of the :ueawiJc tax base. (a) The areawide tax base is 40 per cent of the sum of the net growth in commercial-industri:ll propcrty valuations for aU municipalitics in the metropolitan area 2 -_....:... ..._ I.._.....~--- ~ ---. .... __n_ -- ----0 -- will he shared :mJ ch:lIl~es in value will lIot be distin- guh,hc:J for buildings built before or after 1971.) Thus: sum or the net asst's~,J valuation arcawiJe tax base = or cOlnmcrcial.inJustrial property "40')(, during the: previous year Cor all municipalities (b) A distribution index is then computed for each community to dctc:rmine its share of the areawide tax base. A community's distribution indcx is equal to two times the proJuct of its population and the proportion of the avciage per capita \'aluation for the entire sevcn- county area to the community's per capita valu:ltion. Thus, the community distribution index is equal to: population of X community total valu~tion_ or alt municipalities total pu;>ulation X2 valuation of community population or community (c) To determine the share of the areawide tax base for a community. the areawide tax base is multiplied by the proportion of each municipality's distribution index over the sum of the indices for all municipalities. The resulting figure is the areawide ta.x base for any given year that is attributable to any particular municipality. Thus: arcawide tax fo.r community = areawide tax base X distribution index for community sum of the distribution indices ror all communities Consequently. a high community \'aluation would result in a smaller share; a low community valuation would result in a greater share_ A high popubtion would result in a greater share and a low population would result in a lower share. In other words, if the munici- pality's m:uket value of all real property per capit~ is the same as the metropolitan value per capita. its share will be equa.l to its population as a per cent of the entire area's population. If its market \'aiue per capita is below avera.ge, its share wiR be larger, and if its market value per capita is above a\'crage its share will be smaller. Calculating the Community's Tax Rate The tax rate is still calculated from the dollar amount to be lc,'ied 011 the taxable value of th:tt community. The community's tax rate .on the shared tax base, how- c\'er, will be a weighted a\"crage of tho: tax rates of aU units of go\'crnment in the Twin Cities area. Couse- q ucntly, a piece of commcrcialcimlustrial property would h~l\'e two tax rates: (1) rhe local taX rate applied to the part of its \':llue which rcm:tins local and (2) the arca\\"i.lc tax rate ,r.. :-,lied to the P:lft of its \"aluc which makes up the arcawi.ie t1x bas.:. .. .