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Property tax info – MAIN PAGE
Council again lowers property tax levyMaking Bloomington even more sustainable and competitiveIn September, the City Council set the preliminary total property tax dollar levy for 2012 at $44,441,371. The maximum 2012 levy is a decrease from 2011, which in turn was a decrease from 2010. The City strives to be more sustainable, not only environmentally, but also economically and financially. To maintain excellent services, the City continues to budget efficiently and plan for the future while being cost effective.
October 2011 Briefing article: Key issuesImpact on homesBloomington reduced its total City levy despite state changes in Market Value Homestead Credit and relative values between residential and commercial properties. The City Council's objective is to hold the median value home's 2012 property taxes for City services at $67.82 per month, the same amount as in 2010 and 2011, with the average value home seeing a 1.45 percent decrease for 2012. See table below.
Supporting your investmentThe preliminary levy sustains Public Safety, Planning, Prevention and Maintenance, and Quality of Life services key to building and renewal, that along with public infrastructure investments support your home and business investment over the long term. The final City property tax levy for 2012 will be set in December. While the preliminary levy is a cap that cannot be exceeded when setting the final levy, the City Council will continue to look at ways to decrease the levy. Property tax levy and general fund adoption schedule
Values and your property taxDuring this economic downturn, a question often heard is, "When home values have declined, why don't property taxes also decline?" While there may not be a simple answer, a good place to start is with an illustration. The graph, below, shows single-family residential property values over the past 20 years. During the 1990s, market values, as reflected in the median-valued home, averaged about 3.3 percent annual growth. Beginning in 2000, many shifted their investments to residential real estate, which resulted in a housing market bubble. If there had not been a bubble and home market values had increased at the same rate as in the 1990s, home values still would not have appreciated to their current level even given the decline of the past few years.
Over the past 20 years, the City's overall property tax levy increased, on average, at a rate that parallels home price increases in the 1990s. The City's overall property tax levy, when adjusted for actual community growth, increased at about two-thirds the home value appreciation rate. In other words, the City did not increase its property taxes during the past decade at anywhere near the rate that market values of homes increased. At the same time, service quality increased along with significant investments in the City's infrastructure. Real market growthSince 2001, the City's market value in property increased by more than 40 percent, even after a downturn in values since 2008. Commercial/industrial market values are up 29 percent and since the 2001 property tax reform, their tax capacity is up 23 percent.
While the City continues to add housing units, Bloomington has seen a decrease in the number of occupants per household like other developed cities.
The Census Bureau reports 537 new Bloomington housing units between 2000 and 2010. This, as well as additional commercial/ industrial developments, increased the number of taxpayers in Bloomington by more than 6 percent since 2001. In 2011, Bloomington issued building permits for more than 600 additional dwelling units already under construction, further increasing that number.
The City also absorbed the loss of Local Government Aid since 2003 and a total of $11 million in Market Value Homestead Credit. Yet Bloomington, as a result of long-term efforts to be more efficient in providing services, remains very competitive when it comes to City taxes for all property types.
City property taxes very competitiveThe City's ongoing objective is to provide the best in services, while keeping property taxes competitive with neighboring communities. For years, the City used the median value home as a benchmark, although using values as a basis for comparison can be confusing as similar homes in different communities can have widely ranging values. The monthly median valued property taxes for services have stayed steady at $67.82 for 2010, 2011 and 2012. Another benchmark is to look at the amount that average single-family homes in each community pay for their property tax-supported services. This is calculated by taking the total amount of property taxes paid by all single-family homes and dividing that by the total number of single-family homes to determine the monthly amount. This average single-family home benchmark eliminates the issue of comparing communities based on values because it focuses on what each single-family homeowner, on average, pays to the City, which is 29 cents out of every property tax dollar they pay. As noted in the following table, Bloomington, over the past 3 years, has averaged less than these comparable (except Eden Prairie) communities' preliminary levy. Bloomington is expected to be even more competitive.
Source: Hennepin County
This comparison shows, as do the median value comparisons, that Bloomington is among the most competitive and, when adjusted for property tax aids and Fiscal Disparities, is even more competitive.
Bloomington is the largest net contributor to Fiscal Disparities due to its long-term success in attracting commercial/industrial businesses, which pay about 12 percent of their total property tax to the City. They make up approximately 33 percent of Bloomington's market value and nearly 50 percent of its tax capacity – the largest of any Hennepin County community with a population over 10,000. As an example, Bloomington's commercial/industrial market value in tax base share and total value is more than double Edina's.
To be this property tax cost competitive, the City's compensation and number of employees also has to be in line with these communities. It is the productivity of the City's employees that yields such cost-effective results. Visit the City's website to see what each of Bloomington's services cost on a monthly basis and compare those costs with what you pay for other services such as cable, cell and Internet. Click on the following link to see what each of Bloomington’s services cost on a monthly basis and compare those costs with what you pay for other services such as cable, cell and Internet. Balancing the budgetThe City Charter requires a balanced general fund budget each year. Over the past three years, as well as prior years, the City's total current revenues from its governmental funds have not only been sufficient to fund all of its current governmental expenditures and annual debt service, but also, when combined with other financing sources and available fund balance, sufficiently covers its total capital outlay for the year. This commitment to community renewal has resulted in the City's primary net governmental assets increasing 7 percent since 2008.
In decreasing its 2012 levy, the City looked at the longer term through financial modeling. Between 2013 - 2017, property tax levies that support services and bonded debt will average below the total of the long-term annual average market value home appreciation plus historic annual community growth. Capital and service investments
Long-term financial modeling is one reason Bloomington is one of only 31 local governments nationally with AAA bond ratings from all three ratings agencies. Key to achieving this distinction is the City's financial strength that includes policies that prohibit the use of debt to finance current operations, as well as long-term expectations for debt, with 80 percent of debt paid back in 10 years. The City's percentage of debt to market value is less than rating agency guidelines for AAA and substantially less than other AAA communities in the metro area.
As a result of its excellent credit rating, the City, in some years, has been able to issue debt at a lower rate than it is earning on its investments. These excellent ratings are helped by the City's financial position, which provides for infrastructure replacement, community renewal and working capital to take advantage of favorable construction and capital markets. Total cost comparisonsThe culmination of all these efforts has kept the average home's property taxes, and also its water and sewer utility costs, among the lowest in the metro area. When added together, these make for a very attractive combination of quality services at affordable prices.
The City Council manages for the long term by modeling the future years and then working to keep both home and commercial property taxes very competitive with neighboring cities. The City Council has used the City's organizational and financial strength to make Bloomington the very attractive community it has become over the decades and is committed to maintaining a first-class community, protecting your investment in Bloomington well into the future. For more information...City services, property taxes and home values
For more information, contact:
Lori Economy-Scholler, Chief Financial Officer
Property tax info – MAIN PAGE
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