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URBAN AND RURAL DISTRICT TAXATION SUMMARY CITY OF PEQUOT LAKES,MN HISTORY: On June 4th of 2002, a resolution was passed by the Sibley Township Board and the City of Pequot Lakes Council to proceed with an orderly annexation of the two entities. The resolution was ratified by a Chief Administrative judges order. This method of annexation is provided by Minnesota Statute 414.031. At the time of the annexation,the resolution formed a rural and urban taxing district with a city levy tax ratio of 2 dollars in the urban district to 1 dollar in the rural. (A copy is included). Minnesota Statute 272.67, a copy of which is also included with this summary, allows for the formation of the two districts and provides for modifications to the original agreement in the same manner as which the districts were formed. Commercial property was not included in the rural taxing district. However the beginning levy for rural commercial was lower than commercial in the urban district. A 6 year phase in of increases to equal the urban commercial district's rate was established. It should be noted in Minnesota Statute 272.67,that"the rural district shall include only such unplatted lands as in the judgment of the governing body at the time of the adoption of the ordinance are rural in character,". Sandy has checked with the State Department of Boundaries and Adjustments as well as the League of Minnesota Cities, and both agree that there is nothing that prevents a review of the existing districts for potential changes to the previous provisions in the 2002 resolution. QUESTION: 10 years has now passed and we have a commercial tax rate that is substantial in our commercial district. The homeowners in the urban residential district pay a significantly higher property tax than the same homeowner in the rural district. Many of those urban district homeowners do not have access to city sewer or water. The question is, is it time to review the services provided to each district in relation to the taxes levied for a potential change to the taxing levy ratio? TAXATION SUMMARY: TOTAL RURAL TAX DST URBAN TAX DST Taxable Valuation $238,931,400 $ 150,459,900 (63%) $ 88,471,500 (37%) Tax Revenue $ 1,486,432 $ 592,268 (40%) $ 894,164 (60%) (We were not able to obtain the value of the commercial properties and the revenue generated at this time. It is our hope those numbers will be available in the near future)