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