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HomeMy WebLinkAboutCity Council Packet 06-02-1987 BOEA- so r CITY OF PLYMOUTR 1987 BOARD OF REVIEW TUESDAY JUNE 2ND 7:30 PM rr CITY OF PLYMOUTH 3400 PLYMOUTH BLVD., PLYMOUTH, MINNESOTA 55447 TELEPHONE (612) 559-2800 DATE: May 27, 1987 TO: Plymouth Board of Review FROM: Scott L. Hovetit oCyAssessor SUBJECT 1987 BOARD OF REVIEW Transmitted herewith for your review is a report on the 1987 assessment. The report introduces you to what has been done, statistical measurement of our work and general information which will, hopefully, make your task as a Board of Review member easier and more enjoyable. I invite you to read through the information and then feel free to ask questions and give your comments on the methods used, the values and the results obtained. r 1987 BOARD OF REVM SUMMARY This past year, again, there were some changes in estimated market values of all properties located in Plymouth. These value changes range from reductions in some condominium valuations to substantial increases in large commercial and industrial properties. Typical valuation changes are as follows: Property Type Percent Change Residential Homestead 5% - +8.5% Residential Non -Homestead (Apartments) 5% - +6.5% Commercial & Industrial 3.5% - +15% Exceptions to the above market value changes would include new construction, quartile areas, reappraisals, and/or other market adjustments. On Friday, May 22, 1987 estimated market value notices were mailed to all Plymouth property owners. We have noticed a dramatic increase in phone call activity received by the division since this mailing. We are experiencing between 200 and 300 phone calls per day within the division. It should be pointed out that state law provides that the assessment shall be an annual assessment with all property in the taxing jurisdiction be revalued to its market value every January 2nd. The annual assessment this past year put a real burden on our staff. Mandatory overtime was required this year from October 1st through the end of March because of the large volume increase in new building permits that were issued during the calendar year of 1986. This does not include the 4,200 quartile parcels that had to be reviewed. With additional improvements to our Telxon unit and to our computer system for property appraisal, certain workloads were increased. Also, other work areas were needed for proofing valuations being returned from the computer, correcting coding of field data entry information, and interpretation of various printed reports were a major part of our workload. Our computerization of the assessing function in Plymouth is, perhaps, the most progressive and sophisticated that exists in the State of Minnesota. The excellence and quality of the 1987 assessment is a direct result of this computerization. The assessment just completed for 1987 represents a good many hours of staff research and time. I feel confident that the 1987 assessment is fair and well equalized throughout the city. Respectfully submitted, Scott L. Hovet, CAE City Assessor and Staff SH/je INTRODUCTION TO THE 1987 ASSESSMENT The 1987 Assessment affects all the property owners of Plymouth. As required by current state law, the Assessor is required to reassess all property every 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 not may be valued at market value. This obviously 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 Review. Market value has been defined many different ways. Simply stated, it is "the highest price estimated in terms of money 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 1987 Assessment (not the 1987 taxes) reflects an approximate average increase of 6.5% valuation over 1986 (excluding new construction, quartile adjustments, and/or market adjustments). This process was aided a great deal by the use of our city computer system. During this past year, our staff has field sheet or the Telxon unit which, the computer system. Adjustments have the area of the city. gathered property data onto a computer in turn, was entered and calculated by been made in land values, depending on Those areas of the city that equal 25% of all existing properties have been physically reviewed during 1986 and represent over 4,000 parcels, excluding 1,841 building permits. This is commonly referred to as the "quartile". In the areas of reinspection, new items that previously were not on our records were added, or where applicable, deleted. This year, again, a preliminary sales study was analyzed, prior to placing a final value on each property inspected. INTRODUCTION TO THE 1987 ASSESSMENT (cont.) In accordance with the results of this sales study, certain areas of the city, certain styles of houses and certain sizes of houses were adjusted in value, either lower or higher than the original value, to more properly reflect actual market values. Commercial, industrial, and multiple residential properties were increased approximately 5% to 25% in valuation. These areas represent over 400 parcels. There were 150 commercial/industrial/apartment properties physically inspected this year. The value we place on 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 assessor does not create value, he only measures its movements. Assessing property values equitably is partly science, partly judgement, 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, afterall, 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 Review, a more productive one. 1987 ASSESSM6RT STATISTICS Total City Parcel Count 1/2/87 ....................................... 16,980 Total City Parcel Count 1/2/86 ....................................... 16,100 Parcel Count Per Appraiser 1987 ...................................... 4,850 Parcel Count Per Appraiser 1986 ...................................... 4,600 Assessor's Industry Standard ......................................... 2,500 1987 Total Estimated Market Value..(Preliminary).............. $1,958,833,000 1986 Total Estimated Market Value ............................. $1,679,814,000 1986 to 1987 Total City Valuation Growth ............................. 16.61% 1985 to 1986 Total City Valuation Growth ............................. 10.86% 1986 Total Building Permits .......................................... 1,841 1985 Total Building Permits .......................................... 1,180 1986 Metropolitan Area Average Home Sale Price ................. $ 88,500 (Est.) 1986 Plymouth's Average Home Sale Price ........................ $ 121,900 1987 Total Number of Homesteads ...................................... 12,265 (Est.) 1986 Total Number of Homestead ....................................... 11,086 1987 "Mean" Sales Ratio (Assessment Level) ........................... 92.1% 1986 "Mean" Sales Ratio (Assessment Level) ........................... 91.8% 1987 Coefficient of Dispersion (Assessment Accuracy) ................. 7.904% 1986 Coefficient of Dispersion (Assessment Accuracy) ................. 7.575% 1986 Total Number of Sales ........................................... 1,768 1985 Total Number of Sales ........................................... 1,428 ASSESSING STAFF NAME CLASSIFICATION Scott Hovet, CAE ASSESSOR Mike Carroll, CMA APPRAISER Sue Mauderer, CMS APPRAISER Nancy Bye, CMA APPRAISER Dick Toy ASSESSMENT TECHNICIAN Janet Evenson DATA PROCESSING CLERK/TYPIST CAE: Certified Assessment Evaluator Highest professional designation awarded by the International Association of Assessing Officers CMS: Certified Minnesota Specialist CMA: Certified Minnesota Assessor DUTIES PERFORI4ED Administration Apppraisal Review Tax Court Defense Comm/Ind. Appraisal Townhouse Appraisal Rural Appraisal Residential Appraisal Vacant Land Residential Appraisal Condominiums Green Acres Coordinator Exempt Residential Appraisal Mobile Homes/Sales 3CC" Coordinator Tax Increment Finance Sales Ratio Studies Data Entry Abatements Appraisal Preparation Homesteads Property Divisions Clerk/Typist Data Entry LOCAL BOARD OF REVIEW AUTHORITY Minnesota Statutes Section 274.01 provides that the council of each city shall be or appoint a Board of Review. Assessments of property are made to provide the means for the measuring of the relative share of each taxpayer in the meeting of 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 accurately. Whenever any propoerty that should be assessed is omitted from the tax rolls, an unfair burden falls upon the owners of all property that have been assessed. If any property is undervalued in relation to the other property on the assessment record, the owners of the other property are called upon automatically to assume part of the tax burden that should be borne by the undervalued property. Fairness and justice in property taxation demands both completeness and equality in assessment. 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 percentage all of the assessments in the district of a given class of property. Changes in aggregate assessments by classes are made by the County Board of Equalization. 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 said aggregate. If the total of such adjustments 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 clerical errors or to the removal of duplicate asssessments. In reviewing the individual assessments, the board may find instances of undervaluation. 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 Review meetings assure a property owner an opportunity to contest the valuation that has been placed on his property or to contest or protest any other matter relating to the taxability of his property except the tax. The board is required to review the matter and make any corrections that it deems just. SALES RATIO STUDIES Terminology Sales Ratio: (Assessment level) The ratio derived by dividing a property's sale price into the Assessor's estimated market value. Sales Ratio Analysis: Study of the relationship between the Assessor's values, sales prices and the deviations resulting from differences between the two. The purpose of such an analysis is to determine the efficiency, equity, quality and fairness of assessing activities of a particular neighborhood or jurisdiction. Coefficient of Dispersion: (Assessment Accuracy) In statistics, the measure of absolute dispersion to an appropriate average. A measure of relative dispersion. Sometimes referred to as an "index of assessment inequality". Under 10% is in the excellent range. Price Related Differential: (Assessment Difference) A statistic used to measure the assessment differences that may exist between higher priced properties vs lower priced properties. 100 points is ideal. Within 10 points of 100 is considered excellent. The following page discusses the methodology and our 1987 Equalization Sales Ratio Study. We are fortunate in Plymouth to have a very active market with numerous sales to be able to measure our assessment accurately. 1987 SALES RATIO STUDY Equalizing is done in today's procedures through ratio studies. Said studies compare the Assessor's value with that same property's sale price. This comparison gives us ratio indicators that are recognized at the county level and the State Tax Commissioner's level. 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 State Tax Commissioner. These general corrections are essentially a "shotgun blast" type correction that affect the adequate value and inadequate value alike and, although they correct equalization across jurisdiction lines, they do just the opposite within a jurisdiction by increasing inequity. Fortunately, in Plymouth this type of correction has never been needed. The 1987 spring sales study recently completed by our staff and Hennepin County places our overall mean ratio at 92.1%. Hennepin County's mean ratio is 92.5% which puts Plymouth slightly below the average and dictates that jurisdictions at or above the mean carry a slight part of our load. We want to be the leader in most other areas, however, in equalization ratio studies we certainly don't want to be at or near the top. 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 7.904% and is one of the lowest in Hennepin County for a jurisdiction of our size. (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 spectrum. Our price related differential during 1986 has fluctuated between 98 and 102. This also shows our ability to treat higher priced homes as equally as the lower priced homes. It is currently at 101. (100 is considered perfect.) Ll CITY OF PLYMOUTH 3400 PLYMOUTH BLVD., PLYMOUTH, MINNESOTA 55447 TELEPHONE (612) 559-2800 MEMO DATE: June 2, 1987 TO: Scott Hovet, City Assessor FROM: Richard Toy, Assessment Technician SUBJECT 1986 Year End Sales Analysis OVERALL SALES RATIO 1987 Estimated Market Values were used on all sales) STYLE OF SALES MEAN RATIO Ramblers 289 902 Splits 600 916 Two Stories 504 931 1-1/4, 1-1/2, 1/3/4 Stories 23 881 Perma Lease 54 894 Condominiums 120 909 Townhouses 178 922 TOTAL 1768 917 cc: Sue Mike Nancy SALE PRICE/ SQ.FT 82.59/sq.ft. 91.13/sq.ft. 130.76/sq.ft. 84.35/sq.ft. 11 a DISTRIBUTION OF ESTIIiATED MARKET VALUE BY PROPERTY TYPE o C 1987 ESTIMATED MARKET VALUE Residential 65% _ $1,373,000,000. Commercial/Industrial 24% = 501,341,000. Exempt (NON TAXABLE) 7% = 153,487,000. All Other 3% = 63,369,000. Agricultural 1% = 21,123,000. TOTAL ESTIMATED MARKET VALUE $2,112,320,000. All other includes: Commons, Open Land, Seasonal -Residential, Title II Commercial Vacant Land Clerk's Notice to Post and Publish — HC 1163 ASSESSMENT NOTICE NOTICE IS HEREBY GIVEN, That the Board of Review of the City of Plymouth in Hennepin County, Minn., will meet at the office of the City Clerk, in said City at 7:30 o'clock -L.-M., M., on Tuesday , the 2nd (Second) day of June , 19 87 9 for the purpose of reviewing and correcting the assessment of said City for the year 1987. All persons considering themselves aggrieved by said assessment or who wish to complain that the property of another is assessed too low, are hereby notified to appear at said meeting and show cause for having such assessment corrected. No complaint that another person is assessed too low will be acted upon until the person so assessed, or his agent, shall have been notified of such complaint. Dated this 10 clay of a 1987. Clerk of the City of Plymouth