HomeMy WebLinkAboutCity Council Packet 04-10-2012 BOECITY OF PLYMOUTH
BOARD OF EQUALIZATION
AGENDA
APRIL 10, 2012, 6:00 p.m.
COUNCIL CHAMBERS
1. Call to Order.
2. City Assessor's Report.
3. Public Comments.
4. Adjourn.
Board of Equalization April 10, 2012
City of
Plymouth
2012
Annual Assessment Report
City Assessor:
Commercial Appraiser
Appraisal Staff:
Assessment Technician
Janene Hebert, SAMA
Jake Pidde, CMA
Mike VanderLinden, AMA
Cindy Bowman, CMAS
Paul Kingsbury, CMA
Peggy Schulman
The assessing division can be reached at
763-509-5360
or
assessinggplymouthmn.gov
Page 1
Table of Contents
2012 Assessment
Summary
Total Market Value
Distribution of 2012 Estimated Market Value by Property Type
Establishing Market Values
Local Board of Appeal & Equalization
Authority
Overview
2012 Assessment
Sales Ratio Study
Property Classification Breakdown
2012 Assessment Statistics
2012 Residential Property Information
2012 Non -Residential Property Information
Statutory Requirements
Value Exclusions
This Old House
Veterans Exclusion
Homestead Market Value Exclusion
Foreclosure Data
Appeal Process
1
4
6
X
14
15
17
19
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Summary
The 2012 property assessment has been submitted to Hennepin County and property owners have
received a Notice of Estimated Market Value. The 2012 property assessment applies to property
taxes payable in 2013 and reflects market conditions from October 1, 2010 through September 30,
2011.
The 2012 assessment affects all property owners in the City of Plymouth. As required by state
law, the city assessor is required to reassess all properties each year.
State statute requires All real property subject to taxation shall be listed and assessed every year
with reference to its value on January 2, preceding the assessment. This has been done and the
owners of property in Plymouth were notified of any change. Minnesota Statute 273.11 reads:
All property shall be valued at its market value. It further states
that "in estimating and determining such value, the Assessor shall
not adopt a lower or different standard of value because the same
is to serve as a basis for taxation, nor shall he adopt as a criterion
of value that price for which such property would sell, or in the
aggregate with all the property in the town or district but he shall
value each article or description ofproperty by itself, and at such
sum or price as he believes that same to be fairly worth in money.
The law provides that all property must be valued at market value, not that it may be valued at
market value. This means that no factors (such as economics, personalities or politics) other than
market, shall affect the assessor's value and the subsequent action by the Local Board of Appeal
Equalization.
Market value is simply defined as the highest price estimated in terms of cash which a property
will bring if exposed for sale on the open market by a seller who is willing but not obligated to
sell, allowing a reasonable time to find a purchaser who is willing but not obligated to buy, both
with knowledge of all the uses to which it is adapted and for which it is capable of being used.
The real estate tax is an ad valorem (at value) tax, a tax based on the value of property, not on the
ability of the property owner to pay.
The 2012 assessment which includes new construction, quintile adjustments, and/or market ad-
justments, reflects a 1.0% overall valuation decrease from the 2011 assessment. The amount of
new construction between January 2011 and January 2012 was $84,528,200. The market change,
exclusive of new construction was —1.9%.
2011 Total City Value
2012 Total City Value (Preliminary)
Percentage Change
Value of New Construction
Percentage New Construction
Value Change to Existing Property
8,802,943,800
8,716,720,300
86,223,500)
1.0%
84,528,200
1.0%
1.9%
Page 3
12,000,000,000
10,000,000,000
8,000,000,000
6,000,000,000
4,000,000,000
2,000,000,000
0
TOTAL MARKET VALUE
Opp ppy 0 pp3 p, I Opp Op6 pp 1 Op$ Op9 py0 py1 p LtitititiItiItitititititi
This graph illustrates the change in total market value from 2000 to 2012. Plymouth experi-
enced consistent growth from 2000 through 2007. The increase occurred as a result of new
construction, property improvements, and inflation. The total market value in Plymouth peaked
in 2007 with a high of $9.9 billion and has decreased to $8.7 billion for 2012.
I
Page 4
Distribution of 2012 Estimated Market Value by Property Type
Commercial/
Industrial 22.3°
Apartments 6.4%
2012 Estimated Market Value
Residential
Commercial/Industrial
Apartments
Total
Zesidentia171.3%
6,214,816,800
1,941,853,400
560,050,100
8,716,720,300
This chart shows the total estimated market value by property type. Residential properties ac-
count for 71.3% of the estimated market value in Plymouth. Commercial and Industrial proper-
ties make up 22.3% and Apartments constitute the remaining balance of 6.4% of the estimated
market value in Plymouth.
3
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Establishing Market Values
The intent of the annual assessment process is to make an accurate estimate of the market value for
each parcel of property. Doing so requires updated information about the properties and the local
real estate market. The Plymouth assessing division maintains a permanent record of every property
in the city. The records consist of size, location, physical characteristics, condition, and a photo of
the exterior. Records are updated as new information becomes available. State Statute require
properties to be reinspected every five years. Information is updated during the scheduled quintile
review, when improvements are made to a property, or when a physical review is requested by the
property owner. The information is electronic, allowing statistical comparisons of properties.
In the City of Plymouth, 94% of the 26,014 assessed parcels are residential. The assessing staff
uses city-wide comparisons of similar styles, quality, and classes of homes to make the annual
property assessment. This comparison results in the same market value adjustment being made to
like properties throughout the city. The city is divided into over 600 homogenous neighborhoods
that allow adjustments to be made based on locational influences.
It is important to know that assessors use a Mass Appraisal System for valuing residential and real
property. This is different from appraisals used by banks, mortgage companies and others. Private
appraisals focus on one property at a time. The CAMA (computer assisted mass appraisal) system
involves the comparison of thousands of properties with the actual residential market sales from the
same district, and market sales of the same quality and type of property throughout the city. New
houses, additions and remodeling are valued based on their individual characteristics and the cur-
rent replacement cost of construction as well as contributory value.
Sales Data
To have the local assessment operate efficiently requires a significant knowledge of the real estate
market. The assessing division makes a record of all sale transactions using the Certificate of Real
Estate Value (CRV) filed at Hennepin County at the time of sale. This sale information is com-
bined with sale information obtained from the Multiple Listing Service (MLS) and other sources.
The staff also examines multiple salesproperties that have sold more then once over a period of
years. After taking into account any physical changes that may have taken place, the assessor is
able to determine what is happening in the real estate market during that time period. In all circum-
stances, sale information obtained by the assessing office is carefully scrutinized. Evidence sug-
gesting a forced sale, foreclosure, a sale to a relative, or anything besides an "arms -length" transac-
tion requires the sale to be removed from all of the statistical studies.
The value placed on properties is accomplished only after a thorough marketplace study is con-
ducted. Replacement costs are verified with local builders, as well as cost manuals which are cre-
ated by experts in the field of building and appraising. Sales of property are constantly analyzed to
see what is happening in the marketplace. The assessors/appraisers do not create value; they only
measure its movement.
Equitably assessing property values is part science, part judgment, part communication skills, and
largely a mystery to many property owners. The task becomes more difficult because property con-
struction, financing and ownership are more complex today than ever before. Training cannot tell
us how to find the perfect value of a property, but it can consistently produce the same estimate of
value for identical property by different assessors. That is the working definition of equalization.
0
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The following pages contain helpful information that will make your job as a member of the
Board of Appeal & Equalization more productive.
The assessing division contacted other western suburban communities to get a comparison of
overall market adjustments they have made to their existing residential properties. These
amounts do not include increases in value due to new construction. As illustrated, Plymouth
has market value adjustments for 2012 consistent with surrounding municipalities.
Residential Single Family Market Adjustments by Jurisdiction
excluding new construction/including class shift)
Jurisdiction 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Bloomington 9.00% 8.50% 7.90% 7.10% 1.90% 2.90% 5.50% 5.60% 3.70% 6.30%
Eden Prairie 10.30% 7.50% 7.50% 6.20% 3.20% 0.90% 4.70% 6.10% 3.30% 4.50%
Edina 8.50% 8.90% 7.60% 10.90% 3.00% 1.10% 1.90% 4.80% 2.70% 3.50%
Maple Grove 9.50% 9.60% 8.40% 8.60% 2.80% 2.90% 5.00% 5.40% 3.50% 6.20%
Minnetonka 10.50% 8.50% 6.60% 7.80% 2.20% 1.80% 4.30% 6.40% 2.30% 3.60%
Plymouth 9.00% 9.00% 6.30% 7.60% 2.20% 2.60% 4.80% 5.70% 2.40% 3.80%
Average 9.50% 8.70% 7.40% 8.00% 2.60% 2.00% 4.40% 1-5.70% 3.00% 5.50%
Page 7
Local Board of Appeal & Equalization
Authority
Minnesota Statutes, Section 274.01, states that the council of each city shall be or shall appoint
a Board of Appeal & Equalization. The Plymouth City Charter requires the city council to act
as the Local Board of Appeal & Equalization. The 2004 legislation enacted a law that requires
members of the Local Boards to attend a training session that outlines their duties and
responsibilities. The current council is compliant.
Property assessments ensure fair valuations, which impacts the relative share of the cost of local
government services. It is the duty of the Assessor to assess all real and personal property
except that which is exempt or taxable under some special method of taxation. If the burden of
local government is to be fairly and justly shared among the owners of all property of value, it
is necessary that all taxable property be listed on the tax rolls and that all assessments be made
accordingly.
The authority of the local board extends over the individual assessments of real and personal
property. The board does not have the power to increase or decrease by a percentage all of the
assessments in the district of a given class of property. The County Board of Equalization can
make changes in the aggregate assessments by class.
Although the local board has the authority to increase or reduce individual assessments, the
total of such adjustments must not reduce the aggregate assessment made by the Assessor by
more than one percent. If the total does lower the aggregate assessment by more than one
percent, none of the adjustments will be allowed. This limitation does not apply, however, to
the correction of a clerical error or to the removal of a duplicate assessment.
6
Page 8
Overview
The residential market continues to be sluggish. Listings are up and sales are down. The average
time on the market for a sale is an average of 100 days at an approximate 89% of list price. The
majority of residential properties in Plymouth saw a decrease to their 2011 estimated market value.
The average percentage changes in valuation are as follows:
Property Type
Value Percent
Change
2008-2009
Value Percent
Change
2009 to 2010
Value Percent
Change
2010 to 2011
Value Percent
Change
2011 to 2012
Residential 4.80% 5.70% 2.10% 4.40%
Residential Lakeshore 3.90% 8.10% 5.20% 1.50%
Condominiums 6.00% 9.70% 5.50% 10.40%
Townhomes 6.00% 6.10% 3.20% 5.80%
Apartments 6.40% 8.50% 0.10% 11.10%
Commercial/Industrial 5.10% 4.30% 3.70% 3.80%
In reviewing the individual assessments, the board may find instances of under valuation. Before
the board can raise the market value of property, it must notify the owner. The law does not
prescribe any particular form of notice except that the person whose property assessment is to be
increased must be notified of the intent of the board to make the increase. The Local Board of
Appeal & Equalization assures the property owner an opportunity to contest the valuation that was
placed on the property or to contest or protest any other matter relating to the taxability of the
property except the tax. The board is required to review the matter and make any corrections that
it deems just.
Exceptions to the above market value changes include new construction, quintile areas,
reappraisals, and/or other market adjustments.
7
Page 9
The stages of development for Northwest Plymouth laid out in the comprehensive plan have
changed the method for valuing rural property. There are now 5 different development stages
with adjustments being factored in for distance from utilities, terrain, usability etc. Stage A,
A.1 and B are being valued at $160,000 an acre, Stage C is at $120,000 an acre with Stage D at
100,000 an acre. The Department of Revenue has also defined a method for assessing wet-
lands which is consistent throughout Hennepin County. Development in Plymouth has gone
from stagnant to seven new subdivisions that are currently under construction.
The 2012 assessment represents many hours of staff research and time. We feel confident the
2012 assessment is fair and well equalized throughout the City of Plymouth.
On March 16, 2012, a total of 26,014 value notices were mailed to Plymouth property owners.
Respectfully submitted,
Assessing Department Staff
Page 10
2012 Assessment
Sales Ratio Study
The sales ratio study is a tool assessors use to help determine values for properties. The study
helps plan the upcoming assessment and evaluate the current assessment. If results of the study
are not within acceptable guidelines of between 90% and 105%, the assessor is required by law
to either decrease or increase values so that they more closely reflect the market.
The sales ratio study period includes sales that have occurred in a twelve month period. For the
January 2, 2012 assessment, the assessor reviews sales that occur between October 1, 2010 and
September 30, 2011. By design, there is a lag between the sale and when it is used to help
estimate value so it can be verified and reviewed for accuracy.
The average single family residential (off the lake) decrease for the January 2, 2012, assessment
was 4.4%. This was determined by comparing the January 2, 2012, estimated market values to
the same sales, thus establishing the 2012 estimated market values at a median sales ratio
of .951 and a mean ratio of .951 with a 4.7 coefficient of dispersion. The price related
differential is currently at 100.6. This indicates the ability to treat high as well as low valued
homes fairly. 100 is considered to be perfect. In accordance with the results of this sales study,
certain areas of the city, certain styles, and certain sizes of houses were adjusted in value, either
lower or higher than the prior year value, to more properly reflect actual market values.
The 2011 median sale price of existing residential housing stock (off the lake) was $296,500;
this price does not include townhouses or condos. This is extracted from the Hennepin County
Ratio Study of all arms -length transactions involving detached single family homes.
Lakeshore property was adjusted according to the sale activity on each lake. The median
lakeshore property decrease was approximately 1.5%. The median sale price of existing
lakeshore property in 2011 was $600,000.
Townhomes and condominiums also decreased in market value. The median sale price of
condominiums was $139,000, a median decrease of 10.4%. The median town home sale price
was $195,000, down 5.8% from 2010.
STYLE OF SALES MEDIAN SALE
PRICE
Ramblers 56 244,000
Splits 75 255,000
Two Stories 110 387,500
Rambler -Cluster Homes 8 265,250
Splits -Cluster Homes 1 246,152
2 Stories -Cluster Homes 3 260,000
Condominiums 35 139,000
Townbomes 62 195,000
Zero Lot Line 2 371,250
TOTAL 360
N
MEDIAN RATIO
957
955
940
931
921
922
952
951
955
Page 11
It is important to remember that a sales ratio of slightly less than 100 percent is desirable in or-
der to avoid having numerous properties valued at more than their actual market value. With
the median sale ratio at 100%, one half of the properties would be assessed at less than market
value and one half assessed higher, putting too many over the actual market value. With a
sales ratio of 95 percent it means that half of the properties are below 95 % of actual market
value, half are higher, and a relatively low number are valued by the assessor at more than ac-
tual market value. The acceptable range from the Commissioner of Revenue is 90 to 105 per-
cent. Hennepin County sets the target ratio at 95 percent. Annual standards of measurement
mandated by the Department of Revenue and enforced by Hennepin County tightly constrain
the flexibility staff has to make adjustments to property values.
10
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2012 Assessment Statistics
Total City Parcel Count (01-02-11) 25,757
Total City Parcel Count (01-02-12) 26,014
of Parcels Each Appraiser is Responsible For 5,203
Assessor's Industry Standard per Appraiser 4,249
2010 Total Estimated Market Value $8,802,943,800
2011 Total Estimated Market Value (Preliminary) $8,716,720,300
2009 to 2010 Total City Valuation Growth -2.10%
2010 to 2011 Total City Valuation Growth -1.00%
2010 Total Building Permits 3,273
2011 Total Building Permits 2,611
Does not include townhouses or condos)
2009 Plymouth's Median Home Sale Price $329,000
2009 Plymouth's Average Home Sale Price $359,000
2010 Plymouth's Median Home Sale Price $320,000
2010 Plymouth's Average Home Sale Price $338,900
2011 Plymouth's Median Home Sale Price $296,500
2011 Plymouth's Average Home Sale Price $324,270
2011 "Median" Sales Ratio (Assessment Level) 95.20%
2012 "Median" Sales Ratio (Assessment Level) 95.10%
2011 Coefficient of Dispersion (Assessment Accuracy) 5.20%
2012 Coefficient of Dispersion (Assessment Accuracy) 4.70%
2011 Approximate Number of Sales (including new construction) 963
2012 Approximate Number of Sales (including new construction) 960
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Plymouth 2012 Residential Property Information
Value Range
Under $100,000
100,001 to $200,000
200,001 to $300,000
300,001 to $400,000
400,001 to $500,000
500,001 to $700,000
Over $700,000
Total
9,000
8,000
7,000
0 6,000
x 5,000
0
4,000
E 3,000
z 2,000
1,000
of Homes % of Homes
1,209 5.30%
5,738 25.10%
8,329 36.40%
4,454 19.40%
1,847 8.10%
1,126 4.90%
203 0.90%
22,906 100.00%
Distribution of Residential Values
Under $100,001 $200,001 $300,001 $400,001 $500,001 Over
100,000 to to to to to $700,000
200,000 $300,000 $400,000 $500,000 $700,000
Living Unit Breakdown
Type of Dwelling 2011 Asmnt 2012 Asmnt
of Units # of Units
Apartments
Single Family Homes
Duplex
Condominium
Townhomes
Permalease
Mobile Homes
Farm Houses
Seasonal Recreation
Co -Op Units
Total Living Units
7,190 7,190
15,963 15,980
62 62
2,866 2,866
3,568 3,610
26 26
59 59
10 9
5 5
212 212
29,961 30,019
An increase of 58 living units over the 2011 assessment. The total number of homesteads as of January 2, 2012 was 20,713.
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Plymouth 2012 Non -Residential Property Information
Apartment Market
The apartment market has seen a big upswing in 2011. The Minneapolis market saw sales activ-
ity double to nearly $380 million in transactions. Vacancies are near an all-time low in the 2-3%
range and rents are beginning to climb. There is a lot of competition to purchase apartment
complexes with numerous offers being made by numerous bidders. Plymouth had one apart-
ment sale in 2011. This was a 1985 Class B, 500 unit apartment complex which sold for over
100,000 per unit. As for new construction, developers are moving fast to keep up with de-
mand. Plymouth currently has one apartment project being constructed. This is a 90 unit build-
ing on the north side of the city.
Office Market
The office market has seen some stabilization in vacancy rates. There are very few new devel-
opments meaning that some absorption is taking place. From 2011 to 2012, the office market in
Plymouth has remained relatively flat with no real change in rents, vacancy and cap rates. Like
many other sectors of real estate, job growth will determine how well the office market fares.
Retail Market
The retail market has seen a better year in 2011. Vacancy is dropping while rents are holding
flat. Grocery anchored retail has been the strongest investment option not only nationally, but
locally as well. In Plymouth, the Cub Foods anchored Rockridge Center located northwest of
the intersection of Highway 169 and Rockford Road, sold for over $20 million.
Industrial Market
The industrial market has also seen positive absorption. This has also been one of the more de-
pressed markets in Minneapolis and manufacturing jobs will be the key to its recovery. As for
the Plymouth market, there have been some positive signs, most notably in the distribution/
warehouse property type. The demand for high clear height buildings is noted in more than one
sale in the $50+/ft range in Plymouth.
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Statutory Requirements
Market values are assessed locally by the city or township assessor, if there is one, or by the
county assessor. The work of the local assessor is monitored by the county assessor, whose
work is in turn monitored by the Minnesota Department of Revenue. The monitoring agency is
authorized by law to adjust the property assessment to help ensure county -wide and state-wide
equalization of property assessments.
As a result, Plymouth and eight other Hennepin County cities must regularly report to the Hen-
nepin County assessor, who has established the standard that local property assessments reach
at least a 95 percent target ratio of actual market values to sale prices. At times, local assess-
ments have been adjusted by the county assessor or the State of Minnesota to meet this stan-
dard.
State law provides that the assessment shall be an annual assessment with all property in the
taxing jurisdiction re -valued to its market value every January 2. For this assessment 5,717
properties were reviewed (21.8%) fulfilling the state mandated review of 20% of all existing
properties within the City of Plymouth. This is commonly referred to as the "Quintile." In the
areas of re -inspection, new items that previously were not on our records were added, or where
applicable, deleted. Of the homes included in the quintile review, 53.9% were internally in-
spected. A preliminary sales study was analyzed prior to placing a final value on each property
inspected.
0000000000000000000000000000000000000
0 0
0 0
cl COEFFICIENT OF DISPERSION - (Assessment Accuracy) In
o statistics, the measure of absolute dispersion to an appropriate o
average. A measure of relative dispersion. Sometimes referred
o to as an "index of assessment inequality": under 10% is in theClo
excellent range.
0 0
CAPITALIZATION - The process of converting into present Cl
value (or obtaining the present worth of) a series of anticipated
future periodic installments of net income. In real estate ap-
praising, it usually takes the form of discounting.
0 0
0 0
DEPRECIATION - A loss of utility and hence value from any
cause. An effect caused by deterioration and/or obsolescence.
There are several types of depreciation.
Cl 0
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Value Exclusions
This Old House
Since 1993, state law has provided for a deferral of a portion of the market value added to older
homes through renovations commonly known as "This Old House". The law went through many
revisions since it's conception. The law was phased out beginning with the 2003 assessment, and
no additional properties can be enrolled in the program. The last revision allowed deferrals for:
50% of the first $50,000 of improvements to homes 45 years old.
100% of the first $50,000 of improvements to homes over 70 years old.
Total market value of the property must have been less than $400,000 at the time the permit
was issued.
For the 2012 assessment, 41 properties still have qualifying improvement amounts totaling
516,700 that will be deferred. Properties that qualified will remain in the program until their 10
year exemption period is complete.
The 2012 assessment is the ninth year for phasing in the excluded values on properties that were
eligible for the program. For properties with exclusions over $10,000, the excluded value is
phased in over a five-year period, at 20 % per year. For improvements less than or equal to
10,000, the excluded value is phased back in over two years, at 50 % each year. By 2013, all of
the properties with deferred values will have started to be phased back in, and in 2015, all of the
excluded value will be restored.
Veterans Exclusion
The 2008 State legislative session amended the homestead law that provides a market value
exclusion for all or a portion of property used as a homestead by a military veteran with a service
connected disability of 70% or more. To qualify, a veteran must have been honorably discharged
from the United States armed forces and must be certified by the United States Veterans
Administration as having a service connected disability.
A veteran who has a disability rating of 70 % or more qualifies for a $150,000 market value
exclusion. To qualify for this valuation exclusion, a property owner must apply to the assessor by
July 1 of each assessment year.
A veteran who has a total (100 %) and permanent disability qualifies for a $300,000 market value
exclusion. This exclusion is a one-time application and the property continues to qualify until
there is a change of ownership. If a disabled veteran qualifying for an exemption predeceases the
veteran's spouse, and if upon death of the veteran the spouse holds the legal or beneficial title to
the homestead and permanently resides there, the exclusion will carry over to the benefit of the
veteran's spouse for one additional year or until such a time as the spouse transfers, sells, or
otherwise deposes of the property, whichever comes first.
For the 2012 assessment, there are 64 Plymouth properties that have made application for this
exclusion, with a total of $12,315,200 of market value excluded from taxation.
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Page 17
Homestead Market Value Exclusion
In 2011 the Legislature repealed the Homestead Market Value Credit and replaced it with a
Homestead Market Value Exclusion. The homesteaded property no longer receives a credit that
reduces property taxes paid. Instead, a portion of the homestead's property will be excluded
from taxation.
All homesteaded property less than $413,800 in value will receive a Homestead Market Value
Exclusion. This Exclusion is identified on the valuation notices that were mailed.
The Homestead Market Value Exclusion excludes from taxation 40% of the value of the first
76,000 of a property's value. The amount excluded is reduced as the value rises above
76,000 at a rate equal to 9% of the value above $76,000. Properties valued in excess of
413,800 do not receive an exclusion.
The chart below Illustrates the exclusion amounts of various values.
Homestead Market
Taxable Market Value
Market Value
Value Exclusion (
After Homestead
Exclusion)
76,000 30,400 45,600
100,000 28,240 71,760
150,000 23,740 126,260
250,000 14,740 235,260
300,000 10,240 289,760
350,000 $5,740 $344,260
400,000 $1,240 $398,760
450,000 $0 $450,000
The Homestead Market Value Exclusion for the 2012 assessment was $273,435,095.
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Page 18
Foreclosure Data
The City of Plymouth tracks foreclosures for a number of reasons, however the properties are not
used to determine overall assessment valuations. The Department of Revenue requires lender -
mediated sales, such as foreclosures and short sales, to be rejected from the sales ratio criteria in
determining property valuation.
Foreclosure is a legal process that allows a lender/bank to take possession of and sell a property
due to non-payment of a loan that is secured by that property owner. After the completion of the
foreclosure process, the lender/bank has title to the property. The foreclosure process begins when
a borrower/owner defaults on loan payments, and the lender files a Notice of Default. In Minne-
sota, the Notice of Default is referred to as Lis Pendens. Lis Pendens is a publicly recorded notice
of a pending lawsuit against a property that may affect the ownership of the property.
The Sheriff's Sale is the event where the property is sold to the highest bidder. The notice of a
pending sale is published six weeks prior to the event, and the sheriff or designee will serve notice
to the occupant one month prior to the sale. Typically the lender will open bidding with the exact
amount due at the time of the sale. Following the opening bid, other bidders are given an opportu-
nity to bid at higher amounts. The successful bidder will receive a Sheriff's Certificate of Sale.
After the Sheriff's Sale, the borrower has the right to buy back or redeem the property by paying
the successful bidder the amount of the successful final bid plus interest and applicable fees. This
is referred as the redemption period. During the redemption period, which typically lasts six
months, the original owner may continue to live on the property and the successful bidder may not
enter the property without permission of the original owner.
If, after six months, the property is not redeemed, the highest bidder at the Sheriff's Sale is the un-
disputed owner of the property. At this time, if the lender/bank is the owner of the property, the
property is typically listed for sale. The sale that transpires is the sale that is rejected from the
sales study used in analysis' to calculate market value adjustments.
Another type of sale that is considered but excluded from the ratio analysis is a short sale. Short
sales are special arrangements where the financial institution and the in -fault homeowner attempt
to sell the property before the foreclosure process begins, generally for an amount less that the cur-
rent mortgage obligation. These sales are more difficult to track because there is no recording of
this type of sale; it must be monitored searching sales through the Multiple Listing Service and
sales verification.
According to Hennepin County, in 2011 there were 154 properties that went into foreclosure in-
cluding 136 residential properties, 9 residential land parcels, and 7 commercial parcels. The 136
residential parcels represent 0.6% of the housing stock in the city. Only 14% were homestead
properties while the remainder were mostly rental properties, vacant land or commercial proper-
ties. It is also important to note that 20 of the foreclosures were listed within two condominium
complexes. Except for the aforementioned complexes, the foreclosures were evenly dispersed
throughout the city. In 2011, there were 205 foreclosure properties that sold compared to 165 in
2010 and 174 in 2009. Of the 154 properties that went into foreclosure 33 of them sold. The
number of Properties going into foreclosure has decreased from 2010 to 2011 with the majority of
properties being marketed and sold within one year.
17
Page 19
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THIS PEP RESENTS A COMPILATION OF INFORMATION AND DATA
FROM CITY, COUNTY, STATE AND OTHER SOURCES THAT HAS
MIT BEEN FIELD VERIFIED. INFORMATION SHOULDBE FIELD
VERIFIED AND COMPARED WITH ORINGIAL SOURCE DOC UxENTS.
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City of
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Page 20
Appeal Process
Valuation Notice
Discuss value with the Administrative
Assessor's Office Review
Local Board of
Appeal & Equalization
Deny Change
Appeal Value
Hennepin County Board Approve Appeal
of Appeal & Equalization
Deny Appeal
State Tax Court
Appeal Process
Following the mailing of the assessment valuation notices the appeal process is a key aspect to
the annual property assessment. Residents having questions about their 2012 valuation or clas-
sification are urged to contact the local assessing department. This allows staff to discuss prop-
erty characteristics and where needed, conduct an on-site review. No changes will be made to a
valuation without an on-site inspection. Because some properties receive statistical -based ad-
justments to market value, the review allows the assessing staff the opportunity to individually
examine certain properties.
By appealing to the Local Board of Appeal & Equalization the petitioner is granted the opportu-
nity to appeal to a higher authority if unsatisfied with the decision. Where there is evidence a
property has been overvalued or valued inequitably, its market value can be readjusted to an
appropriate amount. An appeal can result in values staying the same, being reduced or, in some
cases, being increased.
19
Page 21