City of Rosenberg Property Taxes & Tax Rates July 28, 2015July 28,

Tax Rates Debt Rate – The portion of the total tax rate used to generate revenues for the Debt Service Fund to pay existing debt obligations including principal and interest. The current debt rate is $ Debt Rate – The portion of the total tax rate used to generate revenues for the Debt Service Fund to pay existing debt obligations including principal and interest. The current debt rate is $ Maintenance and Operating Rate (M&O Rate) – The portion of the total tax rate used to generate revenues for General Fund maintenance and operating costs. The current M&O rate is $ Maintenance and Operating Rate (M&O Rate) – The portion of the total tax rate used to generate revenues for General Fund maintenance and operating costs. The current M&O rate is $ Total Tax Rate – The total of the Debt Rate and M&O rate. Effective tax rate is calculated on the total rate. The current total tax rate is $0.49. Total Tax Rate – The total of the Debt Rate and M&O rate. Effective tax rate is calculated on the total rate. The current total tax rate is $

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Debt Rate Required Debt Service (1) Less “Other Sources” (2) 2015 Total Taxable Value / $ Total Taxable Value / $100 ($6,892,827 + $720,000) - $3,236,236($6,892,827 + $720,000) - $3,236,236 $1,900,000,000 / $100$1,900,000,000 / $100 Calculated Debt Rate ~ $0.23Calculated Debt Rate ~ $0.23 (1) – Required Debt Service is based on current debt plus future debt issues in FY2016.(1) – Required Debt Service is based on current debt plus future debt issues in FY2016. (2) – “Other Sources” – includes transfers from the Water/Wastewater Fund, RDC and the Civic Center Fund to cover 100% of their debt obligations. 4

Summary of Debt Rate The Debt Rate is a calculation. Council does not set the debt rate. The Debt Rate is a calculation. Council does not set the debt rate. The Debt Rate should remain as stable and consistent as possible. The Debt Rate should remain as stable and consistent as possible. Based on the calculation, we have capacity to increase debt requirements by approximately Based on the calculation, we have capacity to increase debt requirements by approximately $278,000 for debt paid by property taxes $278,000 for debt paid by property taxes $442,000 for debt paid by the Water/Wastewater and the Subsidence Funds $442,000 for debt paid by the Water/Wastewater and the Subsidence Funds We can issue the following without increasing the debt rate: We can issue the following without increasing the debt rate: $10 million of Certificates of Obligation for water/wastewater and road improvements (Bryan, Spacek and Old Richmond Roads) in 2015 $10 million of Certificates of Obligation for water/wastewater and road improvements (Bryan, Spacek and Old Richmond Roads) in 2015 $10 million for water/wastewater and GRP projects in 2016 $10 million for water/wastewater and GRP projects in

Tax Revenues from New Value Preliminary Value of New Improvements - 70,932,455 Preliminary Value of New Improvements - 70,932,455 Increase in Tax Revenues – $347,000 Increase in Tax Revenues – $347,000 The additional value from new improvements is included in the Debt Rate Calculation. This allows some capacity to issue additional debt and remain within the current debt rate. The additional value from new improvements is included in the Debt Rate Calculation. This allows some capacity to issue additional debt and remain within the current debt rate. 6

Truth in Taxation The Texas Constitution and the Tax Code require local taxing units to make tax payers aware of tax rate proposals known as “Truth-In-Taxation” and requires cities to calculate the Effective Tax Rate (ETR). The Texas Constitution and the Tax Code require local taxing units to make tax payers aware of tax rate proposals known as “Truth-In-Taxation” and requires cities to calculate the Effective Tax Rate (ETR). The ETR will generate the same amount of tax revenue on the same properties that existed the previous year. The ETR will generate the same amount of tax revenue on the same properties that existed the previous year. Under these regulations, a total tax rate greater than the ETR requires two public hearings. Under these regulations, a total tax rate greater than the ETR requires two public hearings. The proposed budget assumes the adoption of the effective tax rate. The proposed budget assumes the adoption of the effective tax rate. The City’s ETR will be presented at a later date when certified values are received from the Fort Bend CAD. The City’s ETR will be presented at a later date when certified values are received from the Fort Bend CAD. 7

Homestead Exemptions Current Homestead Exemption is 1% of the market value of residence homesteads, minimum exemption of $5,000. Current Homestead Exemption is 1% of the market value of residence homesteads, minimum exemption of $5,000. 5,151 homeowners qualify for a Homestead Exemption. 5,151 homeowners qualify for a Homestead Exemption. Homestead Exemptions currently reduce amount of taxes collected by $119,930. Homestead Exemptions currently reduce amount of taxes collected by $119,930. Increase the Homestead Exemption to a minimum of $10,000 would reduce the City’s current property tax revenues by an additional $120,000. Increase the Homestead Exemption to a minimum of $10,000 would reduce the City’s current property tax revenues by an additional $120,000. Increasing the Homestead Exemption would have an impact on the effective tax rate calculation. Increasing the Homestead Exemption would have an impact on the effective tax rate calculation. Increasing homestead exemptions is an alternative to relieve tax burden on homeowners. Increasing homestead exemptions is an alternative to relieve tax burden on homeowners. The deadline to submit for a change in exemptions is July 1 and could be considered for the 2016 tax year. The deadline to submit for a change in exemptions is July 1 and could be considered for the 2016 tax year. 8

Summary of Tax Rates Reducing the tax rate by $0.01 saves the average homeowner $ Reducing the tax rate by $0.01 saves the average homeowner $ There are 5,151 homesteads in which the homeowner benefits from the reduction. There are 5,151 homesteads in which the homeowner benefits from the reduction. Reducing the tax rate by $0.01 costs the City (reduces the revenues) $190,000. Reducing the tax rate by $0.01 costs the City (reduces the revenues) $190,000. Increasing the homestead exemption to $10,000 would reduce revenues by an additional $120,000. Increasing the homestead exemption to $10,000 would reduce revenues by an additional $120,000. The one-half cent sales tax addition equates to a $0.21 reduction in the property tax rate. The one-half cent sales tax addition equates to a $0.21 reduction in the property tax rate. 9