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APPENDIX III SUMMARY OF TAX LEVIES, PAYMENT PROVISIONS, AND MINNESOTA REAL PROPERTY VALUATION (effective through levy year 2009 /payable year 2010) Following is a summary of certain statutory provisions effective through levy year 2009 /payable year 2010 relative to tax levy procedures, tax payment and credit procedures, and the mechanics of real property valuation. The summary does not purport to be inclusive of all such provisions or of the specific provisions discussed, and is qualified by reference to the complete text of applicable statutes, rules and regulations of the State of Minnesota. Property Valuations (Chapter 273, Minnesota Statutes) Assessor's Estimated Market Value. Each parcel of real property subject to taxation must, by statute, be appraised at least once every five years as of January 2 of the year of appraisal. With certain exceptions, all property is valued at its market value, which is the value the assessor determines to be the price the property to be fairly worth, and which is referred to as the "Estimated Market Value." Limitation of Market Value Increases. Minn. Stat., Sec. 273.11, Subdivision 1 a, was amended in 2005. For assessment years 2005 and 2006, the amount of the increase shall not exceed the greater of (1) 15% of the value in the preceding assessment, or (2) 25% of the difference between the current assessment and the preceding assessment. For assessment year 2007, the amount of the increase shall not exceed the greater of (1) 15% of the value in the preceding assessment, or (2) 33% of the difference between the current assessment and the preceding assessment. For assessment year 2008, the amount of increase shall not exceed the greater of (1) 15% of the value in the preceding assessment or (2) 50% of the difference between the current assessment and the preceding assessment. Taxable Market Value. The Taxable Market Value is the value that property taxes are based on, after all reductions, limitations, exemptions and deferrals. It is also the value used to calculate a municipality's legal debt limit. Indicated Market Value. The Indicated Market Value is determined by dividing the Taxable Market Value of a given year by the same year's sales ratio determined by the State Department of Revenue. The Indicated Market Value serves to eliminate disparities between individual assessors and equalize property values statewide. Net Tax Capacity. The Net Tax Capacity is the value upon which net taxes are levied, extended and collected. The Net Tax Capacity is computed by applying the class rate percentages specific to each type of property classification against the Taxable Market Value. Class rate percentages vary depending on the type of property as shown on the last page of this Appendix. The formulas and class rates for converting Taxable Market Value to Net Tax Capacity represent a basic element of the State's property tax relief system and are subject to annual revisions by the State Legislature. Property taxes are determined by multiplying the Net Tax Capacity by the tax capacity rate, plus multiplying the referendum market value by the market value rate.