Agenda - Council Work Session - 06/09/2015

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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 the City’s 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 decreased 9.1 percent for 2013 and increased 9.1 percent in 2014. The City had a large tax increment financing district that was decertified at the end of 2013, contributing to the increase in the 2014 taxable tax capacity presented in the graph below. The following graph shows the City’s change in tax capacities over the past 10 years: Local Net Tax Capacity $30,000,000 $25,000,000 $20,000,000 $15,000,000 $10,000,000 $5,000,000 $– 2005200620072008200920102011201220132014 The following table presents the average tax rates applied to city residents for each of the last two levy years, along with comparative state-wide and metro area rates. Rates expressed as a percentage of net tax capacity City of All CitiesSeven-County State-WideMetro AreaRamsey 20132014 2013201420132014 Average tax rate 44.244.2 City48.8 48.8 46.146.0 43.644.8 County48.5 47.6 47.146.6 School28.5 28.9 30.829.7 30.330.9 Special taxing7.2 7.3 6.94.9 9.49.5 125.5123.6 Total133.0 132.6 132.9133.0 The school tax rate for the City represents an average of Independent School District (ISD) No. 11, Anoka-Hennepin and ISD No. 728, Elk River Area Schools. As presented in the table above, the average tax rates for the City and other taxing authorities are similar to the state-wide and metro area averages. In total, the City is below both averages for both the current year and prior year presented. -5-