HomeMy WebLinkAboutCity Council Packet 04-05-2005 BOEAgenda
City of Plymouth
Board of Appeal and Equalization
Tuesday, April 5, 2005
7:00 p.m.
Council Chambers
1. Call to Order
2. City Assessor's Report
3. Public Comments
4. Adjourn and conduct Quarterly Update with City Manager
DATE: April 5, 2005
TO: Plymouth Board of Appeal & Equalization
FROM: Nancy Bye, City Assessor 4
SUBJECT: 2005 LOCAL BOARD OF APPEAL & EQUALIZATION
The statistical analysis and general information regarding the 2005 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 2005 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 2005 estimated market value or classification questions.
At the conclusion of the meeting the Board of .Appeal & Equalization will recess, and will
reconvene on April 19, 2005 at 7:00 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
TABLE OF CONTENTS
DESCRIPTION PAGE#
LOCAL BOARD OF APPEAL & EQUALIZATION AUTHORITY 1
2005 BOARD OF APPEAL & EQUALIZATION SUMMARY 2
INTRODUCTION TO THE 2005 ASSESSMENT 4
INTRODUCTION TO PLYMOUTH ASSESSING DIVISION 10
2005 ASSESSMENT STATISTICS 11
2005 SALES RATIO STUDY 15
DISTRIBUTION OF MARKET VALUE 16
SINGLE FAMILY HOUSING BREAKDOWN 17
2005 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 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 make 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/hex property except the tax. The board is
required to review the matter and make any corrections that it deems just.
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2005 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 Type
Residential
Residential Lakeshore
Condominiums
Townhomes
Apartments
Commercial/Industrial
Value Percent Change,
From 2004 to 2005
6.5 %
17.0 %
5%
5%
0%
5.5%
Value Percent Change Value Percent Change
From 2003 to 2004 From 2002-2003
9% 8%
11 % 8 %
6% 10%
7% 8%
3% 5%
2% 4 %
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 to be a rapidly appreciating market.
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 $100,000 an acre. Land inside the MUSA with no utilities is valued
at $130,000 an acre. Land inside the MUSA with utilities is valued at $150,000 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.
The base commercial/industrial valuation in 2005 closely resembles the valuation on
January 1, 2001. Changes in the total valuation are a result of new construction and the
increase in valuations this year.
On March 7, 2005 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 4,830 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
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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 3,205 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. $91,530,800 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 2007.
The assessment just completed for 2005 represents many hours of staff research and time.
We feel confident the 2005 assessment is fair and well equalized throughout the City of
Plymouth.
Respectfully submitted
Assessing Department Staff
3
INTRODUCTION TO THE 2005 ASSESSMENT
The 2005 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 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 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 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 2005 Assessment (not the 2005 taxes) reflects an increase of 8.0% overall valuation
increase over the 2004 assessment (including; new construction, quartile adjustments,
and/or market adjustments). This can be demonstrated as follows:
2004 TOTAL CITY VALUE
2005 TOTAL CITY VALUE
PRELIMINARY)
2005
PERCENTAGES
8,053,677,500 8,698,683,300
Total Value Increase: 645,005,800 8.00%
Value of New Construction: 132,298,200 1.64%
Appreciation of Existing Property: 512,707,600 6.36%
0
CITY OF PLYMOUTH PERCENTAGE
VALUE GROWTH
1998 1999 2000 2001 2002 2003 2004 2005
2005 RESIDENTIAL PROPERTY VALUES
Total Estimated Market Values According to Assessor Records
city of
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.
MN
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
500,001 - $700,000
Over $700,000
2005 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 2004 and represent over 4,830 parcels, excluding 2,671 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. 63% 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 2005 assessment was 89.5%.
Hennepin County determines this ratio. They compare the January 2, 2004 estimated market
values to sales occurring from October 1, 2003 through September 30, 2004. The average
residential increase for the January 2, 2005 assessment was 6.5%. This was determined by
comparing the January 2, 2005 estimated market values to the same sales, thus establishing
the 2005 estimated market values at a median sales ratio of 95.1 and a mean ratio of 95.1
with a coefficient of dispersion of 6.3. 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 2004 median sale price of existing housing; stock in the City was $356,200; 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 17%. The median sale
price of existing lakeshore property in 2004 was $620,500.
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%. The increase to condominiums was
approximately 5% coincidentally. The sale activity of condominiums and townhouses
remained brisk in 2004. The median sale price of condominiums was $170,600. The median
townhouse sale price was $236,800.
7
Commercial and industrial values increased by about 5.5 % on an aggregate growth
from 2004 to 2005. Included in this change are the different property types that
changed either greater than or less than the average.
Investor demand for the commercial and retail properties was very strong during this
past assessment cycle. Also strong were any, of the owner -occupied type properties
including industrial, commercial and retail. These typically were the smaller sized
properties ranging in size from 40,000 square feet or less. Although, there was a
100,000 square foot industrial that also went to an owner -user. Most were due to the
owner -users wanting to experience appreciation and also have the tax benefits of
ownership. Prices on these sales continually showed market appreciation. Another
reason for these buyers coming into the market are the continued stabilization of lower
interest rates which made it more affordable to own rather than rent.
Smaller owner -user office condos are still holding strong and actually supported larger
than typical value increases. Sales from 2004 on existing office condos along
Fernbrook Lane for example required increasing market values by 15% from 2004 to
2005. Even investors are taking confidence in the market buying for example 505
Waterford, a class A office building known to go 42% vacant this spring which sold for
over $100 per square foot. Typically, no investor would touch this property until it had
a higher occupancy, say 90% or greater.
1031 sale exchanges are still very active and most likely will continue to fuel the
transfer of ownership not only in the Plymouth market , but metro wide. This type of
transaction can create pressure on buyers and sellers to move more quickly that typical
market timing and sometimes create higher than market deals. Our office reviews all
sales that occur in Plymouth in order to insure that we do not benchmark non -market
sales as our basis to arrive value trends on each property type.
In conclusion, most of the commercial and industrial property values are starting to
experience some recovery. It is possible that appreciation should continue into 2005
unless some national disaster occurs. Only question will be: At what rate?
The overall apartment assessment remains unchanged from the 2004 to the 2005
assessment. The apartment market is showing signs of improvement. The average vacancy
rate in 2004 is slightly less than in 2003. The pace of new apartment construction is
slowing, and that should help the apartment market rebound. Concessions remain abundant
and home buying remains a factor as renters continue to leave the apartment market to
purchase homes.
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
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.
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 inform you and make your job as
a member of the Board of Appeal & Equalization a more productive one.
Plymouth Assessing Department
City Assessor
Nancy D. Bye CAE
Senior Appraiser Commercial Appraiser
Jan Olsson RES Earl Zent CAE
Appraiser Appraiser Appraiser
Mike VanderLinden Cindy .Bowman CMA Paan Kingsbury CMA
CMA
Part-time
Appraiser
Andrew Ecker
Assessment
Technician
Laurie Lokken
10
Accounting
Clerk
Barbara Yurick
2004 ASSESSMENT STATISTICS
Total City Parcel Count (01-02-04) 24,354
Total City Parcel Count (01-02-05) 24,661
Parcel Count Per Appraiser 2004 Assessment 4,110
Assessor' s Industry Standard per Appraiser 3,000
2004 Total Estimated Market Value $8,053,677,500
2005 Total Estimated Market Value (Preliminary) $8,698,683,300
2003 to 2004 Total City Valuation Growth + 9.30%
2004 to 2005 Total City Valuation Growth + 8.00%
2003 Total Building Permits 2,304
2004 Total Building Permits 2,671
2002 Plymouth' s Median Home Sale Price $294,500
2003 Plymouth' s Median Home Sale Price $323,900
2004 Plymouth' s Median Home Sale Price $356,200
Does not include townhouses or condos)
2004 " Median" Sales Ratio (Assessment Levels) 96.5%
2005 " Median" Sales Ratio (Assessment Lever) 95.1%
2004 Hennepin County Area Median Sales Ratio 95.8%
2004 Coefficient of Dispersion (Assessment Accuracy) 5.9%
2005 Coefficient of Dispersion (Assessment Accuracy) 6.3%
2003 Approximate Number of Sales (including new construction) 2,391
2004 Approximate Number of Sales (including new construction) 2,247
11
2005 LIMITED MARKET VALUE
City of "
Plymouth, MN
W
S
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.
91,530,800 NOT TAXED
3205 PARCELS
2005 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 2005 sales study recently completed by our staff and Hennepin County places our
overall median ratio at 95.1 %. The target range set for the 2005 is 95 % by Hennepin
County. The overall Hennepin County ratio is, 95.8.
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 6.3 %. 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 100.542. This shows our ability to treat higher
priced homes as equally as the lower priced homes. 100 is consideredep rfect.
15
Distribution of 2005 Estimated Market Value by Property Type
6%
18 q
76%
ESTIMATED MARKET VALUE
Percentage 2005
Residential 76% 6,647,117,000
Commercial/Industrial 18% 1,534,209,300
Apartments 6% 517,357,000
TOTAL EMV 8,698,683,300
16
2004
6,118,528,300
1,427,147,200
508,002,000
8,053,677,500
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.
2004 ASMT 2005 ASMT
TYPE OF DWELLING OF UNITS OF UNITS
Apartment Units 7,081 7,059
Single Family Homes 15,422 15,920
Duplex 80 80
Condominiums 2,639 2,764
Townhomes 3,019 3,029
Permalease 38 37
Mobile Homes 62 61
Farm Houses 17 15
Seasonal Res. (Cabins) 6 6
Co -Op Units 210 210
TOTAL LIVING UNITS: 28,574 29,181
2005 Assessment represents an increase of 607 living units over January 2, 2004.
Total number of homesteads (1/2/05) 20,746
17
DATE: February 18, 2005
TO: Nancy Bye, City Assessor
FROM: Jan Olsson, Senior Appraiser
SUBJECT: ASSESSMENT - HENNEPIN COUNTY STUDY
SALES STATISTICS
OVERALL SALES RATIO
2005 Estimated Market Values were used on all sales)
STYLE OF SALES AVG. SALE PRICE MEAN RATIO
Ramblers 132 294,500 0.940
Splits 233 288,000 0.941
Two Stories 291 443,000 0.959
Rambler - Cluster
Homes 11 400,000 0.965
Splits - Cluster
Homes 15 323,500 0.956
Two Stories - Cluster
Homes 8 334,700 0.960
Condominiums 286 170,600 0.957
Townhomes 166 236,800 0.956
TOTAL 1,142
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) 2,247
Average Sale Price of Single Family Homes $356,200
cc: Appraisal Staff
PLYMOUTH RESIDENTIAL PROPERTY VALUE
DISTRIBUTION 2004
VALUE PERCENT OF HOMES
Under $100,000 00.80 173
100,001 to $200,000 20.09 4,313
200,001 to $300,000 37.52 8,055
300,001 to $400,000 23.15 4,969
401,000 to $500,000 10.50 2,254
500,001 to $700,000 06.68 1,434
Over $700,000 01.26 271
TOTAL 100% 21,469
UNDER $100,001 $200,001 $300,001 $400,001
100,000 TO TO TO TO
200,000 $300,000 $400,000 $500,000
VALUE
19
500,001 OVER
TO $700,000
700,000
MARKET VALUE APPEAL PROCESS
NOTICE OF MARKET VALUE
ABATEMENT I'ROCESS
DISCUSS WITH ASSESSOR' S OFFICE I I (ADMINISTRATIVE
REVIEW)
LOCAL BOARD OF APPEAL & E,QUALIZATION
DENY APPEAL
COUNTY BOARD
OF EQUALIZATION
CHANGE
VALUE
APPROVE APPEAL
DENY APPEAL
STATE TAX COURT
20
2005 RESIDENTIAL LAKE SHORE SALES STUDY
2004 SALES)
NUMBER NAME 1 YEAR AVERAGE AVERAGE
OF OF OF LOT SALE
PARCELS LAKE SALES VALUE PRICE
116 Bass 7 225,000 TO 682,571
505,800
37 Gleason 1 210,000 TO 455,000
645,000
48 Hadley 2 210,000 TO 524,950
675,000
33 Lost 4 200,000 TO 410,412
249,900
139 Medicine 4 300,000 TO 424,000
500,000
43 Mooney 3 210,000 TO 848,300
893,100
53 Parkers 0 220,000 TO 0
300,000
8 Pike 0 200,000 TO 0
234,400
59 Schmidt 2 220,000 TO 467,450
300,000
536 23
Parcels Sales
Hennepin County Sales Study of all Residential Lake Shore Sales in Plymouth for the 200
Assessment included:
TOTAL SALES: 18 MF;DIAN RATIO: 81.7 Preliminary Ratio
AFTER ADJUSTMENTS MEDIAN RATIO: 95.2
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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