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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. 1 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 2 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. 21