HomeMy WebLinkAboutCity Council Packet 04-11-2006 BOEAgenda
City of Plymouth
Board of Appeal and Equalization
Tuesday, April 11, 2006
5:30 p.m.
Council Chambers
1. Call to Order.
2. City Assessor's Report.
3. Public Comments.
4. Adjourn.
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MEMO
CITY OF PLYMOUTH
3400 PLYMOUTH BOULEVARD, PLYMOUTH, MN 55447
DATE: April 11, 2006
TO: Plymouth Board of Appeal & Equalization
FROM: Nancy Bye, City Assessor
SUBJECT: 2006 LOCAL BOARD OF APPEAL & EQUALIZATION
The statistical analysis and general information regarding the 2006 Local Board of Appeal &
Equalization follows. The assessing staff utilizes this information to determine values for the
annual January 2 Assessment. This will hopefully make your job as a member of the Board
of Appeal & Equalization easier to understand.
The purpose of the Local Board of Appeal & Equalization is to hear testimony from property
owners on their objections to the Assessor's 2006 estimated market value or property
classification. This may be done in three ways: (1) in person, (2) in writing, or (3) by the
property owner's representative.
The Board of Appeal & Equalization is not empowered to adjust taxes, but only deal with the
2006 estimated market value or classification questions.
At the conclusion of the meeting the Board of Appeal & Equalization will recess, and will
reconvene on April 25, 2006 at 5:30 p.m. Decisions on all appeals will be made at that time
based on staff reports and information submitted.
Please read through the information and feel free to contact me with any questions or
comments you may have before the Board convenes.
Nancy Bye
Extension #5351
E-mail NBye@ci.plymouth.mn.us
MINNESOTA - REVENUE
MEMO
Date: March 17, 2006
To: All County Assessors
From: Jolm Hagen, Manager
Infonnation and Education Section
Subject: Recommended talking points for presentations at Local Boards of Appeal
and Equalization.
We are all aware of the importance of public relations. In recent years, the assessment
process has been under a great deal of scrutiny. Many of the issues that have received
attention would not have been issues if better public relations practices were in place.
Another focus has been on increased standardization of the assessment process.
In an effort to improve public relations practices and standardize LBAE meetings, we
have developed some talking points for your presentation to each LBAE. While we
strongly recommend that you address the items in this memo, you are certainly able to
include additional infonnation.
At the beginning of each local board meeting, take a few minutes for introductory
comments and to complete Section 1 of the Local Board of Appeal and Equalization
LBAE) Certification Form. You should address the following:
Reiterate the quorum and training requirements, and let them know that you must
certify that these requirements have been met or it will become an open book
meeting. hnfonn thein that additional training sessions will be offered on an
ongoing basis but not until after local boards are finished.
Let the local board know that the Department of Revenue will be monitoring
changes to `parcels owned by a member of the board, the spouse, parent, son or
daughter of a board member, or property in which a board member has a financial
or other interest in the property. " Please reiterate the LBAE training
recommendation that the board vote "no change" to avoid the appearance of having
a conflict of interest. The appeal should be recorded, so it can be brought before the
County Board of Appeal and Equalization. While making changes to such parcels is
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not prohibited, please let thein know that these changes will be monitored and must
be noted on the form.
Finally, the department will be conducting random surveys of persons who attended
local boards to monitor the public's perception of the board's performance.
We hope that sharing this information with all LBAE members will help to alleviate some
of the past issues regarding local board practices. Thank you for your cooperation on this
matter.
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TABLE OF CONTENTS
DESCRIPTION PAGE#
LOCAL BOARD OF APPEAL & EQUALIZATION AUTHORITY 1
2006 BOARD OF APPEAL & EQUALIZATION SUMMARY 2
INTRODUCTION TO THE 2006 ASSESSMENT El
INTRODUCTION TO PLYMOUTH ASSESSING DIVISION 10
2006 ASSESSMENT STATISTICS 11
2006 SALES RATIO STUDY 15
DISTRIBUTION OF MARKET VALUE 16
SINGLE FAMILY HOUSING BREAKDOWN 17
2006 ASSESSMENT SALES STATISTICS 18
RESIDENTIAL VALUE DISTRIBUTION 19
APPEAL PROCESS 20
LAKESHORE STUDY 21
LOCAL BOARD OF APPEAL & EQUALZATION AUTHORITY
Minnesota Statutes, Section 274.01, provides that the council of each city shall be or shall
appoint a Board of Appeal & Equalization. The Plymouth City Charter requires that the
City Council act as the Local Board of Appeal & Equalization. The 2004 Legislative
session enacted a bill that requires members of the Local Boards to attend a training session
that outlines their duties and responsibilities. Councilpersons Bildsoe and Hewitt attended
that training session that is mandatory for the 2006 Local Board of Appeal & Equalization.
Assessments of property are made to provide the means for the measuring of the relative
share of each taxpayer in meeting the costs of local government. 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 snake 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 of aggregate. If the total of such assessments does lower the aggregate
assessment made by the Assessor 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.
In reviewing the individual assessments, the board inay 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 fonn of notice except that the person whose property is to be
increased in assessment must be notified of the intent of the board to snake the increase. The
Local Board of Appeal & Equalization assures the property owner an opportunity to contest
the valuation that has been placed on his/her property or to contest or protest any other matter
relating to the taxability of his/her property except the tax. The board is required to review
the matter and make any corrections that it deems just.
1
2006 BOARD OF APPEAL & EQUALIZATION SUMMARY
The majority of properties in the City of Plymouth saw changes in their estimated market
value. The value changes range from general citywide increases to substantial increases due
to locational market activity. Average percentage increases in valuation are as follows:
Property ype
Residential
Residential Lakeshore
Condominiums
Townhomes
Apartments
Commercial/Industrial
Value Percent Change
From 2005 to 2006
7.8
4.1
4.2
5.2
3.0
7.2
Value Percent Change
From 2004 to 2005
6.5
17.0
5.0
5.0
0
5.5
Value Percent Change
From 2003-2004
9.0%
11.0%
6.0%
7.0%
3.0%
2.0%
Exceptions to the above market value changes would include new construction, quintile
areas, reappraisals, and/or other market adjustments.
The condominium and townhouse market continues at a consistent rate of appreciation. This
is based on the aging baby boomers and the demand for maintenance free living. Vacant land
sales are indicating a tremendous upswing in the market value of buildable land. Vacant
land that can be built upon is becoming increasingly difficult to locate. The schedule that is
used by the Assessing Division is as follows: Land outside the MUSA with no utilities is
valued at $110,000 an acre. Land inside the MUSA with no utilities is valued at $150,000 an
acre. Land inside the MUSA with utilities is valued at $180,000 an acre. The value
calculations exclude any wetlands or unbuildable areas when determining the acreage. The
majority of rural sales has been by developers speculating their ability to develop in the near
future.
On March 10, 2006 estimated market value notices were mailed to all Plymouth property
owners.
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'd . The City of Plymouth
continued to have a high quantity of building permits for new construction and remodeling
projects. This does not include the 4,950 quintile parcels that had to be reviewed and re-
appraised.
The Legislature in its 1993 session passed a law imposing a limit on how much an assessor's
estimate of market value is permitted to increase from one year to the next for taxation.
Under the law, assessors are required to continue to estimate the market value of all
properties. However, the law requires the use of a limited market value for purposes of
determining property tax bills. Approximately 1,729 of the 24,661 parcels in the City qualify
for a limited value. These properties are taxed on their limited market value, not their
estimated value. $68,943,600 of estimated market value is not being taxed due to the limited
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taxation law. The Limited Law is gradually being phased out over the next several years and
is scheduled to sunset in 2009.
The assessment just completed for 2006 represents many hours of staff research and time.
We feel confident the 2006 assessment is fair and well equalized throughout the City of
Plymouth.
Respectfully submitted
Assessing Department Staff
INTRODUCTION TO THE 2006 ASSESSMENT
The 2006 Assessment affects all property owners in the City of Plymouth. As required by
current state law, the Assessor is required to reassess all property each year.
State Statute reads: "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 have been notified of any change. Mimlesota State
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 the 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 of proppAyb
itself, and at such sum or price as he believes the same to be fairly worth in money." The
statute says all property shall be valued at market value. This means that no factors other
than market (such as economics, personalities or politics) shall affect the Assessor's value
and the subsequent action by the Board of Appeal & Equalization.
Market value has been defined many different ways. Simply stated, it is "the highest price
estimated in terns 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 tax which is based on the value of property and not on the
ability of the property owner to pay. The values placed on all real estate in Plymouth are
based on the amount of land and the improvements upon the land, while no consideration is
given to who owns the land.
The 2006 Assessment (not the 2006 taxes) reflects an increase of 8.65% overall valuation
increase over the 2005 assessment (including new construction, quartile adjustments, and/or
market adjustments). This can be demonstrated as follows:
2005 TOTAL CITY VALUE
2006 TOTAL CITY VALUE
PRELIMINAR
2006
PERCENTAGES
8,690,753,300 9,443,307,700
Total Value Increase: 752,554,400 8.65%
Value of New Construction: 135,341,500 1.55%
Appreciation of Existing Property: 617,212,900 7.10%
M
CITY OF PLYMOUTH PERCENTAGE
VALUE GROWTH
2006 RESIDENTIAL PROPERTY VALUES
Total Estimated Market Values According to Assessor Records
rtj city of
P) Plymouth,
This represents a compilation of information and
data from city, county, state and other sources that has
not been field verified. Information should be field
verified and compared with origianl source documents.
I1/T l
N
W+E
S
MARKET VALUE RANGES
125,000 and under
125,001 - $200,000
200,001 $300,000
300,001 - $400,000
400,001 - $500,000
0 $500,001 - $700,000
Over $700,000
2006 ASSESSMENT INTRODUCTION
During this past year, our staff has concentrated on collecting data on property field cards.
Once collected the data was entered into and calculated by the computer system. The output
is then analyzed for accuracy and parity.
Those areas of the city that equal 20% of all existing properties have been physically
reviewed during 2005 and represent over 5,131 parcels, excluding 2,479 building permits.
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. 65% of all
homes reviewed were internally inspected. A preliminary sales study was analyzed, prior to
placing a final value on each property inspected.
Plymouth's preliminary residential median ratio entering the 2006 assessment was 87.9 %.
Hennepin County detennines this ratio. They compare the January 2, 2005 estimated market
values to sales occurring from October 1, 2004 through September 30, 2005. The average
residential increase for the January 2, 2006 assessment was 7.6%. This was determined by
comparing the January 2, 2006 estimated market values to the same sales, thus establishing
the 2006 estimated market values at a median sales ratio of 96.1 and a mean ratio of 95.8
with a coefficient of dispersion of 5.7. 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.
This past year the appreciation on existing homes was in the single digits.
The 2005 median sale price of existing housing stock in the City was $367,900; this price
does not include townhouses or condos. This is extracted from the Hennepin County Ratio
Study of all arms -length transactions involving single family homes.
Lakeshore in Plymouth was adjusted according to the sale activity on each individual lake.
The average lakeshore property received an increase of approximately 4.1%. The median
sale price of existing lakeshore property in 2005 was $695,100.
Various townhouse and condominium complexes were adjusted according to market activity
as well as studied to determine if the number of bedrooms per unit affected the sales prices.
The average increase to the townhouses was 5.7%. The increase to condominiums was
approximately 4.3% The median sale price of condominiums was $183,900. The median
townhouse sale price was $254,800.
7
Commercial and industrial values increased by about 7.2% on an aggregate growth from
2005 to 2006. Included in this change are the different property types that changed either
greater than or less than the average.
The cominercial real estate markets are poised for continued robust growth in 2006,
following strong perforinances in virtually every segment of the market in 2005. Demand
for both office and industrial space exceeded expectations in 2005, pushing vacancy rates
lower and setting the stage for the begirming of a rebound in new speculative
development.
Meanwhile the retail market remained vibrant and growing. Investor demand for
commercial real estate properties continued to grow, spurred by a seemingly endless
supply of investor capital and improving fundamentals in the major market categories.
Smaller owner -user office condos are still holding strong because interest rates have
remained low and buying continues to snake sense. How hot they remain will depend on
how stable those rates stay and how brokers deal with office vacancy rates in the future.
While real estate is generally a stable investment, the questions about the viability of
someday reselling office condos are legitimate. The key issue is to snake the decision
based on the viability of the condo as a good home for ones business.
Like 2005, continued demand from investors for institutional quality properties helps
prolong capital flows and prolong values as leveraged buyers continue in a generally
similar, however slightly rising, interest rate environment for 2006.
Lastly, traffic congestion throughout the Twin Cities and changing lifestyles continue to
snake Plymouth an attractive location for both business owners and real estate investors.
The apartment market was starting to improve in 2005 with the vacancy rate dropping,
fewer concessions and some increases in rents. In 2005 institutional and local buyers
were purchasing the newer, higher bracket apartments. Plymouth's Park Place
Apartments complex on 34t1i Ave. recently sold for $50,000,000/$100,000 a unit. With
the increase in valuations on the Class "A" apartment complexes, the 2006 apartment
assessment increased 3% from the 2005assessment.
The value we place on the property is accomplished only after we have conducted thorough
studies in the market place. Costs of replacement are checked with builders in the area, as
well as cost manuals that are available, which are put together by experts in the field of
building and appraising. Sales of property are constantly analyzed to see what is happening
in the market place. The assessors/appraisers do not create value; they only measure its
movement.
Assessing property values equitably is partly science, partly judgment, partly communication
skills, and largely a mystery to many property owners. Add to that the fact that property
construction, financing and ownership are more complex today than ever before and the task
becomes more difficult.
H.,
Training cannot tell us how to find the "perfect" value of a property, but training can
consistently produce the same estimate of value for identical property by different assessors.
That, after all, is a working definition of equalization.
The following pages contain infonnation that hopefully will inform you and snake your job as
a member of the Board of Appeal & Equalization a more productive one.
7
Plymouth Assessing Department
City Assessor
Nancy D. Bye CAE
Senior Appraiser Commercial Appraiser
Jan Olsson RES Janene Hebert SAMA
Appraiser Appraiser Appraiser
Mike VanderLinden Cindy Bowman CMA Paul Kingsbury CMA
CMA
Part-time
Appraiser
Vacant
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Assessment
Technician
Peggy Schulman
2006 ASSESSMENT STATISTICS
Total City Parcel Count (01-02-05) 24,661
Total City Parcel Count (01-02-06) 24,752
Parcel Count Per Appraiser 2006 Assessment 4,125
Assessor's Industry Standard per Appraiser 3,000
2005 Total Estimated Market Value $8,690,763,300
2006 Total Estimated Market Value (Preliminary) $9,443,307,700
2004 to 2005 Total City Valuation Growth 8.00%
2005 to 2006 Total City Valuation Growth 8.65%
2004 Total Building Permits 2,671
2005 Total Building Permits 2,479
2003 Plymouth's Median Home Sale Price $323,900
2004 Plymouth's Median Hoene Sale Price $356,200
2005 Plymouth's Median Hoene Sale Price $367,900
Does not include townhouses or condos)
2005 "Median" Sales Ratio (Assessment Level) 95.1%
2006 "Median" Sales Ratio (Assessment Level) 96.1%
2005 Coefficient of Dispersion (Assessment Accuracy) 6.3%
2006 Coefficient of Dispersion (Assessment Accuracy) 5.8%
2004 Approximate Number of Sales (including new construction) 2,247
2005 Approximate Number of Sales (including new construction) 2,312
11
2006 SALES RATIO STUDY
Equalizing is done today through the process of sales studies. These studies compare the
Assessor's value with that same property's actual sale price. This comparison gives us ratio
indicators that are recognized by the County and the State Commissioner of Revenue. The
ratio indicators must reach acceptable levels or they will trigger corrective action for general
across-the-board adjustments by the County Assessor or the Commissioner of Revenue.
These general corrections are essentially a "shotgun blast" type correction that affects the
adequate and inadequate values alike, and although they correct equalization across
jurisdiction lines, they do just the opposite within a jurisdiction by increasing inequity
The Commissioner of Revenue and the Hennepin County Assessor have mandated that any
jurisdiction falling below a 90.0% plateau will be forced into corrective action, and then
everyone suffers.
Our coefficient of dispersion in this year's study is 5.8%. This is comparable to other
jurisdictions of our size in Hennepin County. (Anything under 10 is considered excellent.)
This is a direct result of our computerization of the appraisal process and demonstrates our
ability to administer fair and equalized valuations at both ends of the value spectrum.
Our price -related differential is currently at 100.610. This shows our ability to treat higher
priced homes as equally as the lower priced homes. 100 is consideredep rfect.
IR
Distribution of 2006 Estimated Market Value by Property Type
6%
18 q
IJ%
ESTIMATED MARKET VALUE
2006 2005
Percentage
Residential 76% $6,647,117,000
Commercial/Industrial 18% 1,534,209,300
Apartments 6% 517,357,000
TOTAL EMV 8,698,683,300
110
2006
7,244,123,600
1,665,849,100
533,335,000
9,443,307,700
MEMO
CITY OF PLYMOUTH
3400 PLYMOUTH BOULEVARD , rLYMOU -II, MIN 55447
DATE: March 1, 2005
TO: Assessing Staff
FROM: Nancy Bye, City Assessor
SUBJECT: LIVING UNIT BREAKDOWN
The following is a listing of the type and the number of living units for each that is on the
tax rolls for assessment year January 2, 2005.
2006 Assessment represents an increase of 194 living units over January 2, 2005.
Total number of homesteads (1/2/06) 20,823
17
2005 ASMT 2006 ASMT
TYPE OF DWELLING OF UNITS OF UNITS
Apartment Units 7,059 7,059
Single Family Homes 15,660 15,690
Duplex 80 72
Condominiums 2,764 3,035
Townhomes 3,029 2,937
Permalease 37 35
Mobile Homes 61 58
Farm Houses 15 13
Seasonal Res. (Cabins) 6 6
Co -Op Units 210 210
TOTAL LIVING UNITS: 28,921 29,115
2006 Assessment represents an increase of 194 living units over January 2, 2005.
Total number of homesteads (1/2/06) 20,823
17
MEMO
CITY OF PLYMOUTH
3400 PLYMOUTH BOULEVARD, PLYMOUTH, MN 55447
DATE: January 26, 2006
TO: Nancy Bye, City Assessor
FROM: Jan Olsson, Senior Appraiser
SUBJECT: ASSESSMENT - HENNEPIN COUNTY STUDY
SALES STATISTICS
OVERALL SALES RATIO
2006 Estimated Market Values were used on all sales)
STYLE OF SALES AVG. SALE PRICE MEAN RATIO
Ramblers 171 341,700 0.944
Splits 201 319,100 0.965
Two Stories 220 413,300 0.925
Rambler - Cluster
Homes 15 333,600 0.995
Splits - Cluster
Homes 25 289,400 0.969
Two Stories - Cluster
Homes 12 288,400 0.966
Condominiums 268 183,900 0.964
Townhomes 187 254,800 0.973
TOTAL 1,099
The above figures are based on the sale of existing homes that meet the state criteria for arm's length
transactions.
Approximate Number Homes Sold (Including New Construction) 2,312
Average Sale Price of Single Family Homes $367,900
cc: Appraisal Staff
W.
PLYMOUTH RESIDENTIAL PROPERTY VALUE
DISTRIBUTION 2006
VALUE PERCENT OF HOMES
Under $100,000 0.41 96
100,001 to $200,000 15.64 3,390
200,001 to $300,000 35.28 7,655
300,001 to $400,000 25.00 5,423
401,000 to $500,000 12.72 2,758
500,001 to $700,000 8.86 1,920
Over $700,000 2.09 454
TOTAL 100% 21,696
2006 Residential Value Distribution
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
VALUE
19
MARKET VALUE APPEAL PROCESS
NOTICE OF MARKET VALUE
ABATEMENT PROCESS
DISCUSS WITH ASSESSOR'S OFFICE ( (ADMINISTRATIVE
REVIEW)
LOCAL BOARD OF APPEAL & EQUALIZATION
DENY APPEAL
COUNTY BOARD
OF EQUALIZATION
CHANGE
VALUE
APPROVE APPEAL
DENY APPEAL
STATE TAX COURT
20
2006 RESIDENTIAL LAKE SHORE SALES STUDY
2004 SALES)
NUMBER NAME 1 YEAR AVERAGE AVERAGE
OF OF OF LOT SALE
PARCELS LAKE SALES VALUE PRICE
116
37
48
33
139
43
53
8
59
536
Parcels
Bass
Gleason
Hadley
Lost
Medicine
Mooney
Parkers
Pike
Schmidt
4
1
2
1
3
1
0
0
1
13
Sales
225,000 TO
505,800
210,000 TO
645,000
210,000 TO
675,000
200,000 TO
249,900
300,000 TO
500,000
210,000 TO
893,100
220,000 TO
300,000
200,000 TO
234,400
220,000 TO
300,000
943,000
955,000
454,950
460,000
652,300
770,000
0
0
592,500
Hennepin County Sales Study of all Residential Lake Shore Sales in Plymouth for the 2006
Assessment included:
TOTAL SALES: 7 MEDIAN RATIO: 93.3 Preliminary Ratio
AFTER ADJUSTMENTS MEDIAN RATIO: 99.1
Lakeshore properties were given a city wide average increase, then attention was paid to the
location of the lakes, the similarity of the lakes, and the market activity in the last year in the
various neighborhoods surrounding each lake to determine if further adjustments were
necessary.
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