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Home My WebLink About03 27 2017 County Assessment PresentationPROPERTY TAX OVERVIEW AND DISCUSSION Prior Lake City Council Workshop 3/27/2017 Cindy Geis, Property and Customer Services Director Michael Thompson, County Assessor 3 2 1 Property Taxation Property Assessment Prior Lake Market Agenda 3 2 1 Property Taxation Agenda Said to be the Most Complex Property Tax System in the Country •Average Classifications per US State is 5 •MN Has about 55 (depending how you interpret) •Next Most is South Dakota at 14 City, County, School, Etc. BASIC FORMULA Assessor Auditor Why might the taxpayer become confused….? Local BoardSales Study Timeline for Property Taxes Payable in 2018 Estimated 2018 Tax Notice November Value Date Jan 2, 2017 1st Half Tax Due May 15th * 2nd Half Tax Due October15th April-May Exact dates Appear on the Valuation Notice State sales study Oct ‘15 -Sep ‘16 2017 Tax Statements & 2017 Value Notices (For Taxes 2018) 2018 Tax Statements & 2018 Value Notices (For Taxes 2019) County Board of Equalization In June M A R C H M A R C H M A R C H Basic Process Overview –Taxes 2018 1. Assessor sets Values and Classifications 2. City, County, School, Etc. set their levies 3. Calculate Local Tax Rates, Credits, etc. January 2, 2017 End of 2017Preliminary in 2017, Final 2018 Four House Town Scenarios The following slides are intended to show general concepts that could impact an individual property’s overall taxes. The entire system is extremely complex and is influenced by a number of additional factors that can not be properly explained in a short overview presentation. WARNING! A Four House Town Overall Levy/Budget Impact Assume that the various entities and taxing districts (City, County, School, etc.) require a total of $4,000 to operate EMV = $100,000 TAXES = $1,000 LEVIES/ BUDGETS ARE CUT BY ½ ($2000.00) EMV = $100,000 TAXES = $1,000 EMV = $100,000 TAXES = $1,000 EMV = $100,000 TAXES = $1,000 25% 25%25% 25% EMV = $100,000 TAXES =$500 EMV = $100,000 TAXES =$500 EMV = $100,000 TAXES =$500 EMV = $100,000 TAXES =$500 25% 25%25% 25% $2,000 A Four House Town Overall Value Impact Assume that the various entities and taxing districts (City, County, School, etc.) require a total of $4,000 to operate EMV = $100,000 TAXES = $1,000 VALUES ARE CUT BY ½ EMV = $100,000 TAXES = $1,000 EMV = $100,000 TAXES = $1,000 EMV = $100,000 TAXES = $1,000 25% 25%25% 25% EMV = $50,000 TAXES = $1,000 EMV = $50,000 TAXES = $1,000 EMV = $50,000 TAXES = $1,000 EMV = $50,000 TAXES = $1,000 25% 25%25% 25% A Four House Town Individual Value Impact (appealed property example) Assume that the various entities and taxing districts (City, County, School, etc.) require a total of $4,000 to operate EMV = $100,000 TAXES = $1,000 Individual Value Reduced $25,000 EMV = $100,000 TAXES = $1,000 EMV = $100,000 TAXES = $1,000 EMV = $100,000 TAXES = $1,000 25% 25%25% 25% EMV = $75,000 TAXES =$800 EMV = $100,000 TAXES =$1,067 EMV = $100,000 TAXES =$1,067 EMV = $100,000 TAXES =$1,067 27% 27%27% 20% A Four House Town Market Value Appreciation Rate Assume that the various entities and taxing districts (City, County, School, etc.) require a total of $4,000 to operate EMV = $200,000 TAXES = $1,600 Markets change at different pace EMV = $100,000 TAXES = $800 EMV = $100,000 TAXES = $800 EMV = $100,000 TAXES = $800 20% 20%20% 40% EMV = $240,000 TAXES =$1,711 EMV = $107,000 TAXES = $763 EMV = $107,000 TAXES =$763 EMV = $107,000 TAXES =$763 19% 19% 19% 43% 20 % 7% 7% 7% A Four House Town Market Value Appreciation Rate If the required funding is constant at $4,000, the % increase to estimated value does not equate to % increase to tax bill. No additional revenues are collected if budgets/levies are unchanged, who will pay what portion has shifted. EMV = $240,000 TAXES =$1,711 EMV = $107,000 TAXES = $763 EMV = $107,000 TAXES =$763 EMV = $107,000 TAXES = $763 19% 19% 19% 43% 20 % 7%7% 7% 7% 4 . 6 % 4 . 6 % 4 . 6 % A Four House Town Value Exclusion or Exemption Example Assume that the various entities and taxing districts (City, County, School, etc.) require a total of $4,000 to operate EMV = $100,000 TMV = $100,000 TAXES = $1,000 Value is Removed from Tax Base EMV = $100,000 TMV = $100,000 TAXES = $1,000 EMV = $100,000 TMV = $100,000 TAXES = $1,000 EMV = $100,000 TMV = $100,000 TAXES = $1,000 25% 25%25% 25% EMV = $100,000 TMV = $0 TAXES = $0 EMV = $100,000 TMV = $100,000 TAXES =$1,333 EMV = $100,000 TMV = $100,000 TAXES =$1,333 EMV = $100,000 TMV = $100,000 TAXES =$1,333 33% 33%33% Four House Town Takeaways 1. Valuations and classifications determine each portion of a pie, to be created and sliced later 2. Levies/budgets determine how large or small the pie will be (services provided, and level of service) 3. Tax rates are calculated to ensure amount needed is collected, individual tax bills are calculated based on previously set values and classifications. Assessor City, County, School, etc.Auditor Legislature •Sets class rates •Says who is eligible for exemptions, exclusions, etc. •Determines processes and rules for property assessment/taxation Jurisdiction School Tax District Scott Median Hstd Tax Estimate Belle Plaine City 716 1501 $255,200 $4,157 Jordan City 717 1702 $255,200 $3,849 Jordan City 717 1701 $255,200 $3,847 New Prague City 721 1901 $255,200 $3,812 Savage City 720 2110 $255,200 $3,718 Savage City 720 2109 $255,200 $3,652 Elko New Market 194 1804 $255,200 $3,561 Elko New Market 194 1802 $255,200 $3,539 Savage City 719 2107 $255,200 $3,498 Elko New Market 721 1803 $255,200 $3,490 Elko New Market 721 1801 $255,200 $3,470 Shakopee City 720 2208 $255,200 $3,459 Savage City 719 2106 $255,200 $3,447 Savage City 191 2102 $255,200 $3,446 Savage City 191 2104 $255,200 $3,446 Savage City 719 2108 $255,200 $3,432 Savage City 191 2101 $255,200 $3,430 Shakopee City 720 2206 $255,200 $3,409 Prior Lake City 720 2007 $255,200 $3,405 Shakopee City 720 2204 $255,200 $3,393 Prior Lake City 720 2011 $255,200 $3,355 Prior Lake City 720 2010 $255,200 $3,355 Shakopee City 191 2203 $255,200 $3,187 Prior Lake City 719 2013 $255,200 $3,186 Prior Lake City 719 2014 $255,200 $3,186 Prior Lake City 719 2001 $255,200 $3,186 Shakopee City 191 2201 $255,200 $3,171 Savage City 271 2105 $255,200 $3,143 Prior Lake City 719 2003 $255,200 $3,135 Prior Lake City 719 2002 $255,200 $3,135 2017 Tax Bill Estimate on the Median Value Scott County Home (Homestead Rate) MN DOR 82% 18% 33% 27% 38% MN DOR 52% 20% 28% 35% 10% 27% 28% Takeaways: •Estimated market values are determined by the assessor, based on recent sales,impacting who pays what portion of the overall property tax burden. •Classification categories and classification rates are set by elected officials in the state legislature,impacting who pays what portion of the overall property tax burden. •Elected officials and voters from the city, county, school, etc. determine the amount of money needed to operate. 3 2 1 Property Assessment Agenda Mass Appraisal “Fee” Appraisal •Appraise 57,000 parcels each year. •12 Licensed assessors on staff equates to roughly 4,750 parcels per. Typical “fee” appraiser completes appraisals of 150-300 properties each year. Macro Micro Computer Assisted Mass Appraisal (CAMA) Software Produce an individual appraisal report, 6-8 hours Mass Appraisal •Appraise 57,000 parcels each year. •12 Licensed assessors on staff equates to roughly 4,750 parcels per. Macro Computer Assisted Mass Appraisal (CAMA) Software ➢Fee appraisers are valuing the property at a different point in time than the assessor. (appraisal date) ➢Mass appraisal focuses on specified time periods of sales ➢Fee appraisers may consider distressed sales or listings that would not enter in to a Department of Revenue study. What does the Assessor do? 1. Quintile Property Review •Reviews 20% of the properties each year (revalues all property each year) •Looks for changes and verifies property information such as measurements and condition. 2. Permit Review •Visits property where permits were issued •Did changes to the property impact the property valuation? 3. Sales Validation •All sales are screened and analyzed 4. Analyze and Adjust Property Values •Reviews sales and market data to ensure appropriate value adjustments each year 5. Review Appeals •Works with property owners and Boards of Review to ensure accuracy of assessment through appeals processes In summary…the Assessor Values and Classifies Property What does the Assessor look for? Is our existing information accurate? •Have alterations occurred, with or without a building permit? •Maybe it didn’t require a permit •Is the current county data accurate? •Have we been inside the home before, did the previous appraiser make a mistake, etc. Valuation consideration examples: •Location •Above grade finished square footage •Below grade finished square footage •Year Built •Style •Features/Amenities •Garage stalls •Fireplaces •Bathrooms •“Grade” •Condition In summary… anything that might impact value. What goes in to “Grade” of a home? Quality, design, desirability. We can look to the general language in the UAD as a base to work from with regard to quality component. Mass Appraisal A sale is compared to the assessed value January 2016 Assessment $95,000 March 2016 Sale $100,000 Direct, “going-in” Ratio 95% What is the “acceptable range” for assessment level? 90 To 105% Mass Appraisal Not at individual sale level Median is measured at the city level for each property type, residential property is further segmented into lakeshore and non-lakeshore groupings. Hypothetical median ratio is 84% Town “X” Residential Assessed Sale Ratio $85,000 $110,000 77% $97,500 $120,000 81% $107,500 $130,000 83% $100,000 $120,000 83% $87,500 $105,000 83% $105,000 $125,000 84% $110,000 $120,000 92% $92,500 $94,000 98% $102,500 $100,000 103% $95,000 $90,000 106% $90,000 $85,000 106% Basic Concept:Market conditions usually change over time. 201720152016 January 2nd, 2017 1/2/2017 Assessment $100,000 Actual Sale $100,000 Time Adjusted Sale Price $107,000 Time-Adjusted Ratio 93.5% Example: +1% per Month Appreciating Market June 1st, 2016 sale at $100,000 $107,000 Market Condition Changes or “Time Trends” How is Trend Determined? A separate 21-month study For 1/2/2017 assessment, review sales between 1/1/2015 and 9/30/2016, compare those sales to the 1/2/2015 value. DOR Sales Ratio Criteria Specifies Process Apply the Trend to Sales Assessed Sale Ratio $85,000 $110,000 77% $97,500 $120,000 81% $107,500 $130,000 83% $100,000 $120,000 83% $87,500 $105,000 83% $105,000 $125,000 84% $110,000 $120,000 92% $92,500 $94,000 98% $102,500 $100,000 103% $95,000 $90,000 106% $90,000 $85,000 106% In this hypothetical where the market was appreciating at 1% per month, what was an 84%“direct” median ratio, is now a 79%“time-adjusted” median ratio. This is an important step to complete, otherwise we are comparing assessment values as of a fixed date, to sale prices on various dates. Assessed Sale Ratio Sale Date Months to Adjust for Adjustment (appreciation) Adjusted Sale Price Adjusted Ratio $85,000 $110,000 77%Feb-16 11 $12,724 $122,724 69% $107,500 $130,000 83%Oct-15 15 $20,926 $150,926 71% $97,500 $120,000 81%Mar-16 10 $12,555 $132,555 74% $110,000 $120,000 92%Oct-15 15 $19,316 $139,316 79% $100,000 $120,000 83%Aug-16 5 $6,121 $126,121 79% $87,500 $105,000 83%Aug-16 5 $5,356 $110,356 79% $105,000 $125,000 84%Sep-16 4 $5,076 $130,076 81% $102,500 $100,000 103%Nov-15 14 $14,947 $114,947 89% $92,500 $94,000 98%Sep-16 4 $3,817 $97,817 95% $95,000 $90,000 106%Mar-16 10 $9,416 $99,416 96% $90,000 $85,000 106%Jul-16 6 $5,229 $90,229 100% Appeals Tax Court Can skip all previous steps By April 30 of year taxes are due Open Book semi-formal at assessor office LBAE Local Board of Appeal and Equalization Informal talk to the appraiser CBAE SPECIAL Board of Appeal and Equalization Wednesday, May 3, 2017 2:00-7:00 p.m. Scott County Courthouse Wednesday, June 14, 2017 By Appointment Only Scott County Courthouse Appeals •You can’t appeal percentage of increase. •Focus on the end result, if the new value is not accurate, then you have grounds for an appeal. •Process takes on more of a “fee appraisal” approach •Review your property information for accuracy •Compare your property to similar recently sold properties •Your opportunity to provide information 3 2 1 Prior Lake Market Agenda What forces are affecting values? ➢Foreclosure filings are down ➢Supply of homes for sale is low ➢Interest rates are low Value Changes by Class Category for Prior Lake Net % CHG 11.3% 15.8% -0.5% 0.8% 0.0% 9.4% -4.6% 7.8% Prior Lake –“On Water” Three Year History City-Twp Name Property Water Status Median ratio Aggregate ratio Mean ratio Coeff. of dispersion * Price related differential * Price related bias * # Sales with Extremes Sales with time trends Prior Lake Seasonal Recreational Residential/Residential Aggregation-On Water W 74.35 75.4 76.1 13.17 1.01 50 50 1/2/2015 Assessment Average Value Increase is 3% Final Median Ratio is 95.3% 1/2/2016 Assessment Average Value Increase is 0% Final Median Ratio is 94.9% 1/2/2017 Assessment Preliminary “time-adjusted” Median Ratio is 74.4% Average Value Increase is 20.6% Projected Final Median Ratio is 92.1% Segment 2013 2014 2015 2016 2017 2013-2017 City Residential 2%5%7%2%10%26% Lakeshore Only 0%-1%3%0%21%23% Non-Lakeshore 3%7%9%2%7%27% Average Value Changes Lakeshore and Non-Lakeshore Segment Sales Direct Median City Residential 170 95.5 Lakeshore Only 15 95.1% Non-Lakeshore 155 95.6% What has occurred since the last sale study period? Thank You! Questions or Comments