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HomeMy WebLinkAboutCity Council Packet 05-10-1988 BOErel2 Yo PLYMOUTR BOARD OF REVIEW TUESDAY MAY 10TH 7:30 PM Writ ] CITY OF PLYMOUTH 3400 PLYNDUTH BOULEVARD, PLYMOUTH, MINNESOTA 55447 DATE: May 5, 1988 TO: Plymouth Board of Review ' FROM: Scott L. Hovet, City Assessor 1 SUBJECT: 1988 BOARD OF REVIEW Transmitted herewith for your review is a report on the 1988 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. 1988 BOARD OF REVIEW 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 T W Percent Chanes Residential Homestead (Varied neighborhoods) +5% to 15% Residential Non -Homestead (Apartments) +10% Residential Lakeshore +10% Commercial & Industrial +8% to 11% Exceptions to the above market value changes would include new construction, quartile areas, reappraisals, and/or other market adjustments. On April 28, 1988 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 20 and 40 phone calls per hour 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 September lst through the end of February because of the large volume increase in new building permits that were issued during the calendar year of 1987. This does not include the 4,250 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 1988 assessment is a direct result of this computerization. The assessment just completed for 1988 represents a good many hours of staff research and time. I feel confident that the 1988 assessment is fair and well equalized through the city. Respectfully submitted, Scott L. Hovet, CAE City Assessor and Staff SH/je I • : i:1 1'JI The 1988 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 deteMininq 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 m!fty 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 1988 Assessment (not the 1988 taxes) reflects an approximate average increase of 7% valuation over 1987 (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 gathered property data onto a computer field sheet or the Telxon unit which, in turn, was entered and calculated by the computer system. Adjustment have been made in land values, depending on the area of the city. Those areas of the city that equal 25% of all existing properties have been physically reviewed during 1987 and represent over 4,200 parcels, excluding 1,685 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 1988 ASSESSMIIU (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 15% in valuation. These areas represent over 5,000 parcels. There were 75 co mlercial/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 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, 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. 1988 ASSESSMENT STATISTICS Total City Parcel Count ... 01-02-87) ........................ 16,100 Total City Parcel Count ... 01-02-88) ...................••••• 16,980 Parcel Count Per Appraiser 1988..Assessment................. 4,245 Parcel Count Per Appraiser 1987..Assessment................. 4,600 Assessor's Industry Standard ................................ 2,500 1988 Total Estimated Market Value.. (Preliminary)....... 2,289,300,000. 1987 Total Estimated Market Value ....................... 11940,021,000. 1987 to 1988 Total City Valuation Growth .................... 1986 to 1987 Total City Valuation Growth .................... 1987 Total Building Permits ................................. 1986 Total Building Permits ................................. 1987 Metropolitan Area Average Home Sale Price .............. 1987 Plymouth's Average Horne Sale Price ..................... 1988 Total Number of Homesteads ............................. 1987 Total Number of Homesteads ............................. 1988 "Mean" Sales Ratio (Assessment Level) .................. 1987 "Mean" Sales Ratio (Assessment Level) .................. 1988 Coefficient of Dispersion (Assessment Accuracy)........ 1987 Coefficient of Dispersion (Assessment Accuracy)........ 1987 Total Number of Sales .................................. 1986 Total Number of Sales .................................. 18.01% 16.51% 1,685 1,841 95,000. (Est. ) 135,000. 12,724 12,308 92.7% 92.1% 7.720% 7.904% 1,150 1,768 ASSESSING STAFF NAME CLASSIFICATION DUTIES PERFORMED Scott Hovet, CAE ASSESSOR Adminstration Appraisal Review Tax Court Defense Comm/Ind. Appraisal Sue Mauderer, RES APPRAISER Computer Coordinator Residential Appraiser Condominiums Green Acres Coodinator Mike Carroll, CMA APPRAISER Townhouse Appraisal Rural Appraisal Residential Appraisal Vacant Land Nancy Bye, CMA APPRAISER Residential Appraisal Mobile Homes/Sales 113CC" Coordinator Tax Increment Finance Dick Toy, CMA Janice Olsson Janet Evenson APPRAISER Residential Appraisal Sales Ratio Studies PC Applications ASSESSMENT Sales Ratio Studies TECHNICIAN Abatements Appraisal Preparation DATA PROCESSING CLERK/TYPIST CAE: Certified Assessment Evaluator Homesteads Property Divisions Clerk/Typist Data Entry Highest professional designation awarded by the International Association of Assessing Officers RES: Residential Evaluation Specialist Designation awarded by the International Association of Assessing Officers CMA: Certified Minnesota Assessor Awarded by the State Board of Assessors LOCAL BOARD OF REVIEW AUTHORITY Minnesota Statues 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 property 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 assessments. 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. all o • 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 1988 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. 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 1988 spring sales study recently completed by our staff and Hennepin County places our overall mean ratio at 92.7%. Hennepin County's mean ratio is 92.8% which puts Plymouth slightly above 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 7.720 % 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 1987 has fluctuated between 97 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.) MEMO CITY OF PLYMOUTH 3400 PLYMOUTH BOULEVARD, PLYNDU H, MINNESOTA 55447 DATE: April 29, 1988 TO: Scott Hovet, City Assessor FROM: Janice Olsson, Assessment Technician SUBJECT: 1987 YEAR-END SALES ANALYSIS (EXISTING HOMES) cc: Sue Mike Dick Nancy OVERALL , SALES RATIO 1988 Estimated Market Values were used on all sales) SALE PRICE/ S OF SALES MEAN RATIO SO_ FT_ Ramblers 159 981 $ 81.94 Splits 195 914 96.16 Two Stories 144 968 130.67 1-1/4, 1-1/2, 1-3/4 Stories 14 902 92.66 Perma Lease 8 1.033 Condominiums 64 943 Townhouses 185 898 TOTAL 769 948 cc: Sue Mike Dick Nancy 1) 1988 BOARD OF REVIEW CITY OF PLYM DU [i MAY 10, 1988 - 7:30 P.M. AVE Value Increases: Residential 5 - 10% Lakeshore 10% or less Commercial 10% Industrial 10% Apartments 10% 2) Approximately 1100 houses sold in Plymouth last year. 3) 8 1988 Mid -Year Homesteads show as Non -Homestead on value notice. Notice is effective as of 01-02-88. Mid -Year Homestead is effective 06-01-88. 4) Scott: Conu ercial-Industrial-Apartments W Chippewa Trails Bass Lake Estates Fox Run Bass Lake Heights Hadley Hills Bass Lake Woods Heritage Estates Creekwood Hills Heritage West Deerwood Estates Mission Trails Harrison Hills 2nd Palmer Creek Jamestown Pinecrest Lake Park Heights Steeplechase Oakwood Shores Swan Lake Schmidt Lake Hills Westwood Ridge Windridge at Bass Lk. Zachary Hills Golf Courses Blind & Disabled Green Acres Condominiums Lakeshore Mobile Hcmes MIKE DICK Amhurst Cedar Ridge Camelot Deerwood Glen Chelsea Woods Glen Echo Ponds Cron Humphrey Estates Elmhurst Quail Ridge Kingsview Hts. Wild Wings Kingswood Farms Woodlands Oakdale Parkers Lake Farm Silverthorne Timberton Tyrell Farms Patio Homes Townhouses 1988 ASSESSMENT AREAS WITH PE%ERrAGE CHANGES TO VALUE Percentage 1988 Ratio 2 -Year Stud CONDOMINIUMS Creek Place Condos -15% to Building 1.00 Willow Grove Condos +10% to Building .999 TAKESHORE Total values limited to 10% Increase Bass Lake +15% to Land Medicine Lake +15% to Land Schmidt Lake +15% to Land Lost Lake +15% to Land Mooney Lake 15% to Land GREEN ACRES (Agricultural) Taxable" land values remained unchanged on a county -wide basis to reflect leveling market values in the state's farm economy. GOLF COURSES (Open Space Recreation) Land values remained unchanged on a county -wide basis reflective of current values of golf course properties. COMMF',RCIAT..IIND LSTRIAL,ApA_ r Values increased approximately 10% to reflect current market conditions. RESIDENTI T Total values increased approximately 5-10%. Creekwood Heights 1st reduced to '87 values Mapledell -5% to building values Fazendin Park Addition -5% to building values Beacon Heights - Sec. 35 -5% to building values South 1/2 Section 35 Gleanloch Addition Hidden Lake Hadley Hills 20% to building values values same as 187 3-10-88 SMM N' .5.'M..: Name of 2 -Year Study 1 -Year Study Average Increase to Lakes Sales Ratio Sales Ratio Lot Value Land Value* Bass 14 867 8 858 55,800 150 Gleason 7 911 1 705 28,000 0- Hadley 9 957 4 906 45,200 0- Lost 4 878 1 888 37,100 150 Medicine 8 887 1 868 60,100 15% Mooney 6 896 2 1.034 51,800 150 Mud No Sales Parkers 5 914 3 875 37,600 0- Pike No Sales Pomerleau No Sales Schmidt 9 909 2 880 52,500 150 Land value increases as noted are included in ratios and lot values. MEMO CITY OF PLYMOUTH 3400 PLYNIJLTM BOULEVARD, PLYND[m, MINNESOTA 55447 DATE: April 27, 1988 TO: James G. Willis, City Manager\ FROM: Scott L. Hovet, City Assessor SUBJECT: 1988 VALUATION NOTICES The assessing staff is in the final stages of completing the 1988 assessment. valuation notices will be mailed to all Plymouth property owners beginning on April 29th, 1988. These market values are the basis for the taxes payable in 1989. Based upon approximately 1,100 residential sales transactions in Plymouth, most areas of the City had their market values increased between 5% and 10% for 1988. The typical value increase throughout the City was approximately 7% to 8%. This is fairly typical in comparison to the municipalities similar to us in the Metro area. The land portion of the total market value for all lakeshore property in Plymouth was increased by 15%. With the buildings adjusted accordingly, lakeshore values increased approximately 8% overall. Cam ercial, Industrial, and Apartment values on the average were increased approximately 9%. Due to the increase in property taxes this year, compounded by the fact that our taxpayers will receive their increased value notices beginning the week of May 2nd, 1988, it is anticipated that my staff may receive more than the average number of property taxpayer inquiries. I am expecting between 1,200 to 1,500 calls over the next 2 weeks. (Approximately 20 to 30 calls per hour.) SLH/je cc: Dale Hahn, Finance Director Assessing Staff y *06. 0• • I•4.y 21 • 41.a BY PROPERTY Residential 65% Coimiercial/Industrial 24% Exempt (NON TAXABLE) 7% All Other 3% Agricultural 1% TOTAL ESTIMATED MARKET VALUE 1,587,820,000. 586,272,000. 153,487,000. 73,284,000. 41,937,000. 2,442,800,000. All other includes: Commons, Open Land, Seasonal -Residential, Title II Commerical Vacant Land