The Coon Rapids City Council Sept. 5 unanimously approved a preliminary property tax levy for 2018 that is 4.8 percent higher than this year.
The proposed tax levy of $26.85 million compares with the $25.61 million levy that was approved for 2017 by the council in December 2016.
“Most of the levy is for the general fund and capital projects,” said Finance Director Sharon Legg.
It also includes debt payments on bonds issued for park improvements approved by voters in the November 2013 park bond referendum and for revenue bonds that were sold by the council for construction of the Coon Rapids Ice Center, according to Legg.
The council will approve a final levy and budget for 2018 following a truth in taxation public hearing at its Dec. 5 meeting. The levy can be reduced but it can’t be increased, Legg said.
The proposed tax levy and budget were presented to the council at a work session Aug. 8 and while no changes were made to the levy, Legg had an updated fiscal disparities distribution figure for the Sept. 5 meeting.
Legg had used the 2017 fiscal disparities distribution to the city for the work session estimated, but the 2018 distribution had become available since then, Legg said.
Under the fiscal disparities law passed by the Minnesota Legislature in 1971, communities in the seven-county metro area contribute 40 percent of their commercial, industrial and public utilities property tax base to an area wide pool and communities, like Coon Rapids, with a below-average property tax value per person receive a larger share of the pool than those with a higher-than-average value, according to a Metropolitan Council document.
Figures presented by Legg to the council show that Coon Rapids contributed $7.16 million of value to the fiscal disparities pool for pay 2018 and received $11.6 million in value from the pool.
The fiscal disparities distribution is calculated by using the value the city gets from the pool multiplied by the prior year’s tax rate, she told the council.
That translated into $5.13 million in fiscal disparities distribution for 2018, up from $4.88 million this year, which produced a net levy of $21.72 million, according to Legg.
This resulted in Legg’s estimates of the 2018 tax levy bite on residential properties being a little less than she had projected at the August council work session.
But because of a spike in residential property values for 2018 tax purposes, an average of 13 percent across the city, and little or no change in commercial and industrial property values, the tax burden has shifted to homeowners, Legg said.
“Some homeowners have been hit hard by this,” she said.
According to Mayor Jerry Koch, many homeowners in the mid-range value range will be eligible for a property tax rebate next year. “It’s a simple form to fill out,” Koch said.
The formula used for setting values on residential, commercial and industrial properties each year for tax purposes is uniform statewide, said Council Member Wade Demmer.
Legg provided the council with the city tax levy impact on six benchmark homes, which the city has tracked “for years,” she said.
-Home increasing in value from $114,700 to $121,200 (5.7 percent) will see a city tax increase from $388 to $399, 2.89 percent.
-Home with a value increase from $148,900 to $174,400 (17.1 percent) will see a jump in the city tax from $553 to $643, 16.37 percent.
-Home increasing in value from $189,900 to $213,700 (12.5 percent) will result in a city tax hike from $750 to $824, 9.76 percent.
-Home rising in value from $206,400 to $229,900 (11.4 percent) will have a city tax increase from $830 to $898, 8.2 percent.
-Home with a value jump from $283,800 to $307,900 (8.5 percent) will see the city tax rise from $1,203 to $1,256, 4.4 percent.
-Home with a value decrease from $384,100 to $372,400 (3 percent) will have a decline in the city tax from $1,686 to $1,552, 7.98 percent.
Details on the proposed 2018 tax levy and budget can be found on the city’s website, according to City Manager Matt Stemwedel.