HomeMy WebLinkAboutCity Council Packet 04-10-2007 BOEAgenda
City of Plymouth
Board of Appeal and Equalization
Tuesday, April 10, 2007
5:30 p.m.
Council Chambers
1. Call to Order.
2. City Assessor's Report.
3. Public Comments.
4. Adjourn.
r
I
r^
4521 dal.
s•, 3r",p„ 4' ' l' >, ,ycr' 'a.'445'. a c '! ;a X .: La . .
Y e. 5"
aF, ny'
vNq
F -ate• ' isza,,``jj 1!! i f+3 t'
r.
oil
da
Ag
k
t ' {a -a. `i k
t •
iC a 'S 7r a J, b g.V Sr ilA
Z:4 w r} t x `o r `4`uB 6•/' I $`
d F.' is
p
t,. }'L ger,rti r 1 di u F,.,1 "fix. ':fir RI .j'F:.
Y
f •::, 'i . Y?'ikt`k d'.
r'
i
LLL'K
r
I
r^
4521 dal.
s•, 3r",p„ 4' ' l' >, ,ycr' 'a.'445'. a c '! ;a X .: La . .
Y e. 5"
aF, ny'
vNq
F -ate• ' isza,,``jj 1!! i f+3 t'
r.
oil
da
Ag
k
t ' {a -a. `i k
t •
iC a 'S 7r a J, b g.V Sr ilA
Z:4 w r} t x `o r `4`uB 6•/' I $`
d F.' is
p
t,. }'L ger,rti r 1 di u F,.,1 "fix. ':fir RI .j'F:.
Y
f •::, 'i . Y?'ikt`k d'.
r'
i
DATE: April 10, 2007
TO: • Plymouth Local Board of Appeal & Equalization
FROM: Nancy Bye, City Assessor
SUBJECT: 2007 LOCAL BOARD OF APPEAL & EQUALIZATION
The following report includes statistical analysis and general information about the 2007
assessment for the Local Board of Appeal & Equalization. The Assessing Division uses this
infonnation to determine values for the annual January 2 assessment.
The purpose of the Local Board of Appeal & Equalization is to hear testimony from property
owners on their objections to the assessor's 2007 estimated market value or property
classification. Testimony may be provided in three ways:
In person;
J • In writing; or
By the property owner's representative.
Please keep in mind that under state law, the scope of the Board of Appeal & Equalization's
authority is limited. The board may only address market value and property classification
issues. It may not adjust taxes.
At the conclusion of the meeting, the Board of Appeal & Equalization will recess. It will
reconvene on April 24, 2007 at 5:30 p.m. The board will decide on all appeals at that time
based on staff reports and information submitted by property owners or their representatives.
We hope that the information in this report makes your job as a member of the Board of
Appeal & Equalization easier. As you review it, please feel free to contact me with any
questions or comments you may have before the board convenes.
Background: Historical Perspective
At the end of April, I will retire after 27 years working for the City of Plymouth. With the
departure of long-tenn employees, organizations can lose their historical perspective. In an
effort to retain some of Plymouth's history, I am including the following information to
record how Plymouth has changed over my tenure with the City.
In 1979, Plymouth was quite rural. The rolling landscape adjacent to Rockford Road/Co.
Rd. 9 was dotted with numerous fauns — it included very few residential properties.
The current City Center area was then called "downtown." It consisted of City Hall, which
was built in 1978, and vacant farm land. At that time, Plymouth's major new residential
subdivisions included Ferndale North, located south of Co. Rd. 6 on Ferndale Road, and the
Mission Hills Park, which was south of Rockford Road and west of Zachary Lane. The
Prudential Insurance Office Building on Bass Lake Road and the Holiday Inn (now the
Comfort Inn) were also under construction in 1979.
During the past 27 years, Plymouth has seen tremendous growth and change which are
reflected in the numbers below.
Category 1979 2007
Estimated Market Value 767,772,600 10,113,750,400
Number of Parcels 11,066 25,165
Population 29,850 72,000
Number of Homestead Properties 7,487 20,864
Average Residential Market Value 68,000 380,100
Noteworthy changes in property values occurred in 1979 and 1980. The increase in all
residential valuations for the 1979 assessment was 20% with another 15% increase in 1980.
Commercial/industrial properties valuations increased between 10% to 15% in both 1979
and 1980.
2
Limited market value was in existence until the 1980 assessment when it was declared
unconstitutional and repealed by the Legislature. The Legislature reinstated it for the 1993
assessment.
Nancy Bye
Extension #5351
E-mail NBye@ci.plpnouth.mn.us
3
TABLE OF CONTENTS
DESCRIPTION PAGE#
LOCAL BOARD OF APPEAL & EQUALIZATION AUTHORITY 1
2007 BOARD OF APPEAL & EQUALIZATION SUMMARY 2
INTRODUCTION TO THE 2007 ASSESSMENT 4
INTRODUCTION TO PLYMOUTH ASSESSING DIVISION 9
2007 ASSESSMENT STATISTICS 10
2007 SALES RATIO STUDY 14
DISTRIBUTION OF MARKET VALUE 15
SINGLE FAMILY HOUSING BREAKDOWN 16
2007 ASSESSMENT SALES STATISTICS 17
RESIDENTIAL VALUE DISTRIBUTION 18
APPEAL PROCESS 19
LAKESHORE STUDY 20
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, Hewitt and Black
have attended that training session.
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 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 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 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 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.
2007 BOARD OF APPEAL & EQUALIZATION SUMMARY
Some properties in the City of Plymouth saw changes in their estimated market value. The
value changes range from basically no change to general citywide increases to substantial
increases due to locational market activity. The market this last year has been slower. We
have been use to a sellers market for the last few years with inflated prices and houses
selling not only at a rapid pace but over their list price. Houses are now on the market for a
longer period of time and are selling for list price or below. Average percentage changes in
valuation are as follows:
Property Type
Residential
Residential Lakeshore
Condominiums
Towi-llomes
Apartments
Commercial/Industrial
Value Percent Chance froi
2006 to 2007
2.3%
13:0%
23%
0%
14.2%
18.4%
Value Percent Chante
from 2005 to 2006
7.8 %
4.1 %
4.2 %
5.2 %
3.0 %
7.2 %
Value Percent Chance
from 2004 to 2005
6.5 %
17.0 %
5.0 %
5.0 %
0 %
5.5 %
Exceptions to the above market value changes would include. new construction, quintile
areas, reappraisals, and/or other market adjustments.
The condominium and townhouse market has slowed down and the market is saturated with
inventory for sale. It has become a highly competitive market. The buyers have more to
choose from and inventory is remaining on the market for longer periods of time. Vacant land
sales continue to indicate 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 $120,000 an acre. Land inside the MUSA with no utilities is valued at $160,000
an acre. Land inside the MUSA with utilities is valued at $200,000 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 on their ability to develop in the
near future.
On March 12, 2007 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"'. The City of Plymouth
continued to have a high quantity of building permits for new construction and remodeling
projects. This does not, include the 5,033 quintile parcels that had to be reviewed and re-
appraised.
The Legislature in its 1993 session passed a law imposing a linnit on how much an assessor's
estimate of market value is permitted to increase fiom one year to the next for taxation.
i Under the law, assessors are required to continue to estimate the market value of all
2
properties. However, the law requires the use of a limited market value for purposes of
determining property tax bills. Approximately 855 of the 25,165 parcels in the City qualify
for a limited value. These properties are taxed on their limited market value, not their
estimated value. $55,575,700 of estimated market value is not being taxed due to the limited
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 2007 represents many hours of staff research and time.
We feel confident the 2007 assessment is fair and well equalized throughout the City of
Plymouth.
Respectfully submitted
Assessing Department Staff
3
INTRODUCTION TO THE 2007 ASSESSMENT
The 2007 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. Minnesota 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 property by
itself, and at such suin 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 teens 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 2007 Assessment (not the 2007 taxes) reflects an increase of 7.10% overall valuation
increase over the 2006 assessment (including new construction, quartile adjustments, and/or
market adjustments). This can be demonstrated as follows:
2006 TOTAL CITY VALUE
2007 TOTAL CITY VALUE
RELIMINARY)
2007
PERCENTAGES
9,440,899,000 10,113,750,400
Total Value Increase: 672,851,400 7.10%
Value of New Construction: 81,989,000 0.80%
Appreciation of Existing Property: 590,862,400 6.30%
19
CITY OF PLYMOUTH PERCENTAGE
VALUE GROWTH
14.00%
12.000/ 11.00%
9.30%
40% 8.65%
8.01
r 7.10%
02 2003 2004 2005 2006
Year
5
0
a
2007 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 2006 and represent over 6,500 parcels, excluding 3,553 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. 57% 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 2007 assessmentwas 92.1 %.
Hennepin County determines this ratio. They compare the January 2, 2006 estimated market
values to sales occurring from October 1, 2005 through September 30, 2006. The average
residential increase for the January 2, 2007 assessment was 2.3%. This was determined by
comparing the January 2, 2007 estimated market values to the same sales, thus establishing
the 2007 estimated market values at a median sales ratio of 95.5 and a mean ratio of 95.7
with a coefficient of dispersion of 5.8. 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 2006 median sale price of existing housing stock (off the lake) in the City was $380,100;
this price does not include townhouses or condos. This is extracted from the Hennepin
County Ratio Study of all an -ns -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 13%. The median sale
price of existing lakeshore property in 2006 was $622,500.
i 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 majority of townhomes received no increase to value. The increase to condominiums
was approximately 2.3% The median sale price of condominiums was $185,600. The
median townhouse sale price was $262,700.
Overall commercial and industrial values increased by approximately 18%. Strong regional
job growth, combined with ongoing improvement in the fundamentals of the commercial
office market in particular, resulted in very solid performance for the Twin Cities
commercial real estate markets. Specifically, the aggregate growth in the market values
office' and industrial properties increased approximately 20%, while the retail and lodging
sectors increased approximately 15%. While property specific changes may have occurred,
little change was demonstrated in the restaurant, bank, and daycare sectors.
7
Smaller owner -user office condos are continue to hold strong because interest rates have
remained low. 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 occupancy costs and the viability of someday reselling
office condos are legitimate. The key issue for office condominium ownership is to make
the decision based on the viability of the condo as a good home for ones business.
Speculative office development is returning to the market on a limited basis. As expected,
developers are moving cautiously toward launching new projects in the face of rising
construction and land costs. Costs have risen significantly since the last major period of new
development in the late 1990s. Some estimate that the cost of new commercial office and
industrial buildings is 25% higher than 10 years ago. Rental rates will need to reflect these
added costs, and developers are expected to tread lightly until there is assurance that the
market is ready to accept these higher costs.
There was considerable improvement in the apartment market in 2006. The number of
vacancies dropped, fewer concessions are being given and the rents have increased. In 2006,
institutional and local buyers were purchasing the newer, higher bracket apartments.
Stoneleigh @ the Reserve apartment complex sold in October for $48,750,000/$135,000 a
unit and the Jefferson @ Plyinouth apartment complex on Bass Lake Road sold in December
of 2006 for $39,250,000/$130,400 a unit. With the increase in valuations on the Class "A"
apartment complexes, the 2007 apartment assessment increased 14% from the 2006
assessment.
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 coimnunication
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.
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 information that hopefully will inforin you.and make your job as
a member of the Board of Appeal & Equalization a more productive one.
N.
lymouth Assessing Department
City Assessor
Nancy D. Bye CAE,
SAMA
Senior Appraiser Commercial Appraiser
Jan Olsson RES, AMA fl Janene Hebert SAMA
Appraiser
Mike VanderLinden
CMA
Part-time
Appraiser
Jake Pidde
Appraiser
Cindy Bowman CMA
Appraiser
Paul Kingsbury CMA
Assessment
Technician
Peggy Schulman
9
2007 ASSESSMENT STATISTICS
Total City Parcel Count (01-02-06). 24,752
Total City Parcel Count (01-02-07) 25,165
Parcel Count Per Appraiser 2007 Assessment 4,194
Assessor's Industry Standard per Appraiser 3,000
2006 Total Estimated Market Value 9,443,307,700
2007 Total Estimated Market Value (Preliminary) 10,113,750,400
2005 to 2006 Total City Valuation Growth 8.65%
2006 to 2007 Total City Valuation Growth 7.10%
2005 Total Building Permits 2,479
2006 Total Building Permits 3,553
2004 Plymouth's Median Home Sale Price 356,200
2005 Plymouth's Median Home Sale Price 367,900
2006 Plymouth's Median Home Sale Price 380,100
Does not include townhouses or condos)
2006 "Median" Sales Ratio (Assessment Level) 96.1%
2007 "Median" Sales Ratio (Assessment Level) 95.7%
2006 Coefficient of Dispersion (Assessment Accuracy) 5.8%
2007 Coefficient of Dispersion (Assessment Accuracy) 5.8%
2005 Approximate Number of Sales (including new construction) 2,312
2006 Approximate Number of Sales (including new construction) 1,847
10
i ,. ._
2007 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 Minnesota 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 100.621. This shows our ability to treat higher
priced homes as equally as the lower priced homes. 100 is consideredep rfect.
14
Distribution of 2007 Estimated Market Value by Property Type
ESTIMATED MARKET VALUE
2007
Percentage
Residential 74%
Commercial/Industrial 20%
Apartments 6%
TOTAL EMV
J
J
OR
7,244,123,600
1,665,849,100
533,335,000
9,443,307,700
2007
7,512,872,400
1,982,433,000
618,445,000
10,113,750,400
15
DATE: January 24, 2007
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, 2007.
2007 Assessment represents an increase of 353 living units over January 2, 2006.
Total number of homesteads (1/2/07) 20,864.
16
2006 ASMT 2007 ASMT
TYPE OF DWELLING OF UNITS OF UNITS
Apartment Units 7,059 7,190
Single Family Homes 15,690 15,737
Duplex 72 72
Condominiums 3,035 2,824
Towi-A-lomes 2,937 3,226
Pennalease 35 32
Mobile Homes 58 59
Farm Houses 13 12
Seasonal Res. (Cabins) 6 6
Co -Op Units 210 210
TOTAL LIVING UNITS: 29,115. 29,468
2007 Assessment represents an increase of 353 living units over January 2, 2006.
Total number of homesteads (1/2/07) 20,864.
16
MEMO
CITY OF PLYMOUTH
3400 PLYMOUTH BOULEVARD, PLYMOUTH, MN 55447
DATE: January 26, 2007
TO: Nancy Bye, City Assessor
FROM: Jan Olsson, Senior Appraiser
SUBJECT: ASSESSMENT - HENNEPIN COUNTY STUDY
SALES STATISTICS
OVERALL SALES RATIO
2007 Estimated Market Values were used on all sales)
STYLE OF SALES AVG. SALE PRICE MEAN RATIO
Ramblers 125 323,700 0.958
Splits 158 323,000 0.965
Two Stories 210 469,000 0.967
Rambler - Cluster
Homes 13 355,800 0.989
Splits - Cluster
Homes' 14 279,400 0.958
Two Stories - .Cluster
Homes 10 279,600 0.957
Condominiums 197 185,600 0.975
Townhomes 182 262,700 0.969
TOTAL 909
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) 1,847
Average Sale Price of Single Fancily Homes $380,100
cc: Appraisal Staff
17
PLYMOUTH RESIDENTIAL PROPERTY VALUE
DISTRIBUTION 2007
VALUE PERCENT OF HOMES
Under $100,000 0.51 111
100,001 to $200,000 14.56 3,192
200,001 to $300,000 34.35 7,524
300,001 to $400,000 25.43 5,570
401,000 to $500,000 13.12 2,875
500,001 to $700,000 9.38 2,055
Over $700,000 2.65 580
TOTAL 100% 21,907
2007 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
MARKET VALUE APPEAL PROCESS
NOTICE OF MARKET VALUE
DISCUSS WITH ASSESSOR'S OFFICE
LOCAL BOARD OF APPEAL & EQUALIZATION
DENY APPEAL
COUNTY BOARD
OF EQUALIZATION
CHANGE
VALUE
STATE TAX COURT
ABATEMENT PROCESS
ADMINISTRATIVE
REVIEW)
APPROVE APPEAL
DENY APPEAL
19
2007 RESIDENTIAL LAKE SHORE SALES STUDY
2006 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
0
2
1
2
5
1
0
0
2
13
Sales
225,000 TO
505,800
210,000 TO
645,000
210,000 TO
100,000,000+
200,000 TO
256,000
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
0
420,000
775,000
464,500
819,400
770,000
0
0
582,000
Hennepin County Sales Study of all Residential Lake Shore Sales in Plymouth for the 2007
Assessment included:
TOTAL SALES: 10 MEDIAN RATIO: 84.3% Preliminary Ratio
AFTER ADJUSTMENTS MEDIAN RATIO: 98.0
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 detennine if further adjustments were
necessary.
20