Agenda - Council Work Session - 06/14/2011

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PROPERTY TAXES Minnesota cities rely heavily on local property tax levies to support their governmental fund activities. In recent years this dependence has been heightened, as revenue from state aids and fees related to new development have dwindled due to the struggling economy. This has placed added pressure on local taxpayers already beset by higher unemployment, lower property values, and tighter credit markets. As a result, municipalities in general are experiencing increases in tax delinquencies, abatements, and foreclosures. This instability has led to significant fiscal challenges for many local governments, and increased the investing public's concerns about the security of the municipal debt market. Property values within Minnesota cities experienced an average increase of 1.5 percent for taxes payable in 2009 and an average decrease of 3.0 percent for those payable in 2010, reflecting the weak housing market and economic recession experienced in recent years. In comparison, the City's market value increased 3.5 percent in 2009 and decreased 7.6 percent in 2010. It is important to remember that the 2010 market value is based on estimated values as of January 1, 2009, 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 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010