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HomeMy WebLinkAboutCity Council Packet 04-15-2003 BOEAgenda City of Plymouth Board of Appeal and Equalization Tuesday, April 15, 2003 7:00 p.m. Council Chambers 1. Call to Order 2. City Assessor's Report 3. Public Comments 4. Adj ourn 2003 LOCAL BOARD OF APPEAL & EQUALIZATION CITY OF PLYMOUTH APRIL 15, 2003 MEMO CITY OF PLYMOUTH 3400 PLYMOUTH BOULEVARD, PLYMOUTH, MN 55447 DATE: April 15, 2003 TO: Plymouth Board of Review FROM: Nancy Bye, City Assessor SUBJECT: 2003 LOCAL BOARD OF APPEAL & EQUILAZATION The following report explains the statistical measurement and general information the assessing staff utilizes in determining 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 2003 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 2003 estimated market value or classification questions. At the conclusion of the meeting the Board of Appeal & Equalization will recess, and will reconvene on April 29, 2003 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 2003 BOARD OF APPEAL & EQUALIZATION SUMMARY 2 INTRODUCTION TO THE 2003 ASSESSMENT 4 INTRODUCTION TO PLYMOUTH ASSESSING DIVISION 9 2003 ASSESSMENT STATISTICS 10 2003 SALES RATIO STUDY 14 DISTRIBUTION OF MARKET VALUE 15 SINGLE FAMILY HOUSING BREAKDOWN 16 2003 ASSESSMENT SALES STATISTICS 17 RESIDENTIAL VALUE DISTRIBUTION 18 APPEAL PROCESS 21 LAKESHORE STUDY 22 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 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 percentage all of the assessments in the district of a given class of property. The County Board of Equalization makes changes in aggregate assessments by classes. 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 clerical errors or to the removal of duplicate assessments. 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/her property except the tax. The board is required to review the matter and make any corrections that it deems just. A new piece of legislation was added in the 1999 legislative session and affects the Local Board of Appeal & Equalization. Effective May 26, 1999 for taxes payable in 2000 and thereafter: Chapter 243, Article 5, Section 24 Allows property owners to refuse to allow an assessor to inspect their property. The refusal must be verbal or in writing. The assessor may then estimate a property's value by making assumptions believed appropriate concerning the property's finish and condition. If the assessor is refused entry, the local board of review may not adjust the market value or classification in a way that would benefit the property. 1 2003 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 8% 8% 10% 8% 5% 4% Exceptions to the above market value changes would include new construction, quartile 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. On March 18, 2003 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". The City of Plymouth continued to have a high quantity of building permits for new construction and remodeling projects. This does not include the 5,400 quartile 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 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 14,458 of the 24,005 parcels in the City qualify for a limited value. These properties are taxed on their limited market value, not their estimated value. $303,669,700 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. With the ongoing conversion of our computerized system for property appraisal, certain workloads shifted. A computerized mass appraisal system requires extensive time verifying the accuracy of the converted data as well as sketching to scale each property into the new system. Our computerization of the assessing function of Plymouth continues to be one of the most progressive and sophisticated systems that exists in the State of 2 Minnesota. The excellence and quality of the 2003 assessment is a direct result of this computerization. The assessment just completed for 2003 represents many hours of staff research and time. We feel confident the 2003 assessment is fair and well equalized throughout the City of Plymouth. Respectfully submitted Assessing Department Staff 3 INTRODUCTION TO THE 2003 ASSESSMENT The 2003 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 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 y 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 2003 Assessment (not the 2003 taxes) reflects an increase of 8.4% overall valuation over the 2002 assessment (including new construction, quartile adjustments, and/or market adjustments). This can be demonstrated as follows: 2002 TOTAL CITY VALUE 2003 TOTAL CITY VALUE PRELIMINARY) 2003 PERCENTAGES 6,844,155,600 7,420,648,500 Total Value Increase: 576,492,900 8.4% Value of New Construction: 182,233,100 2.7% Appreciation of Existing Property: 394,259,800 5.7% 4 TOTAL PERCENT OF VALUE GROWTH IN THE CITY OF PLYMOUTH 1996 1997 1998 1999 2000 2001 2002 2003 2003 RESIDENTIAL PROPERTY VALUES Total Estimated Market Values According to Assessor Records r1) city ofibPlymouth, MN This represents a compilation of information and N data from city, county, state and other sources that has not been field verified. Infonnation should be field WE verified and compared with origianl source documents. S X71 MARKET VALUE RANGES 100,000 and under 100,001 to $200,000 200,001 to $ 300,000 300,001 to $400,000 400,001 t0 $500,000 500,001 to $700,000 Over $700,000 2003 ASSESSMENT INTRODUCTION During this past year, our staff has concentrated on collecting data on field property 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 25% of all existing properties have been physically reviewed during 2002 and represent over 5,400 parcels, excluding 2,453 building permits. This is commonly referred to as the "Quartile". In the areas of re -inspection, new items that previously were not on our records were added, or where applicable, deleted. 60% 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 2003 assessment was 88.6%. Hennepin County determines this ratio. They compare the January 2, 2002 estimated market values to sales occurring from October 1, 2001 through September 30, 2002. The average residential increase for the January 2, 2003 assessment was 8%. This was determined by comparing the January 2, 2003 estimated market values to the same sales, thus establishing the 2003 estimated market values at a median sales ratio of 95.3 and a mean ratio of 95.3 with a coefficient of dispersion of 6.8. 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 again in the double digits. The average 2002 mean sale price of existing housing stock in the City was $294,500, this 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 8%. The average sale price of existing lakeshore property in 2002 was $453,600. 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 8%. The increase to condominiums was approximately 10%. The sale activity of condominiums and townhouses remained brisk in 2002. The average sale price of condominiums was 149,200. The average townhouse sale price was $201,500. 7 Commercial and industrial property values peaked on most property types back in 2001. As of the 2003 assessment period, most of the industrial values other than maybe the smaller owner -occupied properties, indicated declines due to the increasing supply and lack -luster demand. Larger, single user, vacant buildings and or multi - tenant buildings with large vacancies are especially affected by the downturn in the marketplace. Commercial values such as office and office showroom properties showed the most decline of any of the product types. Again, smaller single user office buildings still appear to have market demand. The larger single and or multi -tenant buildings with vacancies problems have experienced the greatest negative market value trends. Retail properties are about the only properties that have maintained values without much change. As an overall value trend, Plymouth experienced a -4% aggregate value loss on all of the commercial and industrial properties. Each property value change varied depending upon individual circumstances and factors that relate back to the marketplace. The overall apartment assessment for 2003 increased 5% from 2002. Many luxury apartment valuations were flat due to the rise in vacancies and the increased supply of this class of apartments. Most increases in valuation were on the duplexes and smaller, older complexes. The sales of complexes in this submarket is still reasonable. 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 in the market place. The assessors/appraisers do not create value; they only measure 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, 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. E:3 Plymouth Assessing Department City Assessor Nancy D. Bye CAE Senior Appraiser Commercial Appraiser Jan Olsson RES Earl Zent CAE Appraiser Appraiser Appraiser Mike Henderson CMA Cindy Bowman CMA Paul Kingsbury CMA Part-time Appraiser Adrienne Garcia Assessment Technician Laurie Lokken 0 Accounting Clerk Barbara Yurick 2003 ASSESSMENT STATISTICS Total City Parcel Count (01-02-02) 22,863 Total City Parcel Count (01-02-03) 24,005 Parcel Count Per Appraiser 2003 Assessment 6,251 Assessor' s Industry Standard per Appraiser 5,000 2002 Total Estimated Market Value $6,857,378,300 2003 Total Estimated Market Value (Preliminary) $7,420,648,500 2001 to 2002 Total City Valuation Growth + 11% 2002 to 2003 Total City Valuation Growth + 8.4% 2001 Total Building Permits 2,250 2002 Total Building Permits 2,453 2000 Plymouth' s Average Home Sale Price $243,300 2001 Plymouth' s Average Home Sale Price $284,000 2002 Plymouth' s Average Home Sale Price $294,500 Does not include townhouses or condos) 2002 " Median" Sales Ratio (Assessment Level) 95.8% 2003 " Median" Sales Ratio (Assessment Level) 95.3% The target ratio set by Hennepin County 95.5% 2003 Hennepin County Median Sales Ratio 95.9% 2002 Coefficient of Dispersion (Assessment Accuracy) 5.5% 2003 Coefficient of Dispersion (Assessment Accuracy) 6.8% 2001 Approximate Number of Sales (including new construction) 1,800 2002 Approximate Number of Sales (including new construction) 2,033 10 2002 RESIDENTIAL SALE Market Value Ranges r City ofrib 100,000 and under 100,001 to $200,000 Plymouth, MN 200,001 to $300,000 300,001 to $400,000 400,001 to $500,000 This represents a compilation of information and N data from city, county, state and other sources that has 500,001 to $700,000 not been field verified. Information should be field W E verified and compared with origianl source documents. Over $700,000 S G'a 2003 LIMITED MARKET VALUE F0 City of Plymouth, MN N This represents a compilation of information and data from city, county, state and other sources that has WE not been field verified. Information should be field verged and compared with origianl source documents. g M City of Plymouth, MN 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. 1,076,000 NOT TAXED 160 PARCELS W+E S 1 2 J 2003 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. In Plymouth, this type of correction was received on Industrial properties for the 1998 assessment (-5% to building value). Fortunately this has never been done to residential properties. The 2003 sales study recently completed by our staff and Hennepin County places our overall median ratio at 95.3 %. 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 6.8%. 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 100.430. This shows our ability to treat higher priced homes as equally as the lower priced homes. 100 is consideredep rfect. 14 Distribution of Esti mated Market Value by Property Type 2003 Residential Commercial/Industrial Apartments TOTAL EMV M 6% f+% ESTIMATED MARKET VALUE Percentage 2003 74% $5,482,579,600 20% $1,463,256,500 6% $474,812,400 7,420,648,500 15 2002 4,947,454,600 1,493,863,200 402,837,800 6,844,155,600 MEMO CITY OF PLYMOUTH 3400 PLYMOUTH BOULEVARD, PLYMOUTH, MN 55447 DATE: March 3, 2003 TO: Assessing Staff FROM: Nancy Bye, City Assessor SUBJECT: SINGLE FAMILY LIVING UNIT COUNT BREAKDOWN TOTAL CITY) 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, 2003. 2002 ASMT 2003 ASMT TYPE OF DWELLING # OF UNITS # OF UNITS Apartment Units 5,766 6,879 Single Family Homes 15,178 15,292 Duplex 72 80 Condominiums 2,281 2,496 Townhomes 2,638 2,815 Permalease 42 42 Mobile Homes 62 62 Farm Houses 21 18 Seasonal Res. (Cabins) 7 7 Co -Op Units 210 210 TOTAL LIVING UNITS: 26,277 27,901 2002 Assessment represents an increase of 1624 living units over January 2, 2002. Total number of homesteads (1/2/03) 20,309 16 MEMO CITY OF PLYMOUTH 3400 PLYMOUTH BOULEVARD, PLYMOUTH, MN 55447 DATE: February 28, 2003 TO: Nancy Bye, City Assessor FROM: Jan Olsson, Senior Appraiser SUBJECT: ASSESSMENT HENNEPIN COUNTY STUDY SALES STATISTICS OVERALL SALES RATIO 2003 Estimated Market Values were used on all sales) STYLE OF SALES AVG. SALE PRICE MEAN RATIO Ramblers 118 253,000 963 Splits 195 249,200 943 Two Stories 342 355,800 962 Rambler - Cluster Homes 11 279,100 944 Splits - Cluster Homes 17 244,700 988 Two Stories - Cluster Homes 12 312,900 975 Condominiums 256 149,200 963 Townhomes 174 201,500 968 TOTAL 1,125 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) 2,033 Average Sale Price of Single Family Homes $294,500 cc: Appraisal Staff 17 50 -.i_ 45 40 35 30 r Z W 25 LUa 20 15 10 5 0 UNDER $100,001 $200,001 $300,0001 $400,001 $500,001 OVER 100,000 TO TO TO TO TO $700,000 200,000 $300,000 $400,000 $500,000 $700,000 VALUE I: Plymouth Residential Property Value Distribution 2001 VALUE PERCENT OF HOMES UNDER $100,000 6.02 1,127 100,001 TO $200,000 47.02 8,797 200,001 TO $300,000 31.77 5,944 300,0001 TO $400,000 10.41 1,947 400,001 TO $500,000 3.50 655 500,001 TO $700,000 1.12 209 OVER $700,000 0.16 29 TOTAL 100.00 18,708 DOES NOT INCLUDE MOBILE HOMES OR CO-OPS. 50 -.i_ 45 40 35 30 r Z W 25 LUa 20 15 10 5 0 UNDER $100,001 $200,001 $300,0001 $400,001 $500,001 OVER 100,000 TO TO TO TO TO $700,000 200,000 $300,000 $400,000 $500,000 $700,000 VALUE I: Plymouth Residential Property Value DOES NOT INCLUDE MOBILE HOMES OR CO-OPS. 40 35 30 25 i ZW 20 Wa 15 10 5 0 UNDER $100,001 $200,001 $300,0001 $400,001 $500,001 OVER 100,000 TO TO TO TO TO $700,000 200,000 $300,000 $400,000 $500,000 $700,000 VALUE 19 Distribution 2002 VALUE PERCENT OF HOMES UNDER $100,000 2.57 490 100,001 TO $200,000 39.90 7,615 200,001 TO $300,000 35.71 6,814 300,0001 TO $400,000 14.59 2,784 400,001 TO $500,000 5.08 969 500,001 TO $700,000 1.91 366 OVER $700,000 0.24 46 TOTAL 100.00 19,084 DOES NOT INCLUDE MOBILE HOMES OR CO-OPS. 40 35 30 25 i ZW 20 Wa 15 10 5 0 UNDER $100,001 $200,001 $300,0001 $400,001 $500,001 OVER 100,000 TO TO TO TO TO $700,000 200,000 $300,000 $400,000 $500,000 $700,000 VALUE 19 Plymouth Residential Property Value Distribution 2003 VALUE PERCENT UNDER $100,000 2.20 100,001 TO $200,000 31.70 200,001 TO $300,000 37.50 300,0001 TO $400,000 17.65 400,001 TO $500,000 6.85 500,001 TO $700,000 3.30 OVER $700,000 0.80 TOTAL 100.00 DOES NOT INCLUDE MOBILE HOMES OR CO-OPS 40 - 35 - 30 --- 25-- z 25-- z LU 20 -- w M OF HOMES 455 6,546 7,744 3,646 1414 682 165 20,652 UNDER $100,001 $200,001 $300,0001 $400,001 $500,001 OVER 100,000 TO TO TO TO TO $700,000 200,000 $300,000 $400,000 $500,000 $700,000 VALUE MARKET VALUE APPEAL PROCESS NOTICE OF MARKET VALUE ABATEMENT PROCESS DISCUSS WITH ASSESSOR' S OFFICE I I (ADMINISTRATIVE REVIEW) LOCAL BOARD OF APPEAL & EQUALIZATION DENY APPEAL COUNTY BOARD OF EQUALIZATION CHANGE VALUE APPROVE APPEAL DENY APPEAL STATE TAX COURT 21 2003 RESIDENTIAL LAKE SHORE SALES STUDY 2002 SALES) NUMBER NAME 1 YEAR AVERAGE AVERAGE OF OF OF LOT SALE PARCELS LAKE SALES VALUE PRICE 116 Bass 6 160,000 TO 616,650 300,000 37 Gleason 4 100,000 TO 500,480 295,000 48 Hadley 4 145,000 TO 471,250 400,000 33 Lost 1 110,000 TO 225,000 160,000 139 Medicine 0 135,000 TO 0 300,000 43 Mooney 5 172,000 TO 791,495 360,000 53 Parkers 1 115,000 TO 445,000 220,000 8 Pike 1 100,000 TO 655,000 126,000 59 Schmidt 4 165,000 TO 540,905 240,000 536 26 Parcels Sales Hennepin County Sales Study of all Residential Lake Shore Sales in Plymouth for the 2003 Assessment included: TOTAL SALES: 15 MEAN RATIO: 91.2 Preliminary Ratio AFTER ADJUSTMENTS MEAN RATIO: 97.4 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. 22