Coffee & CREam: Property Tax Primer Very Informative

March 6, 2017 at 10:42 am

Minnesota’s property appraisal system is fact-driven, data-driven, and transparent, according to a panel of experts from the State of Minnesota, Hennepin County, and the City of Bloomington.

Early in March, Jon Klockziem, Director of the Minnesota Department of Revenue, Jim Atchison, Hennepin County Assessor and Matt Gersermehl, Bloomington City Assessor discussed with a room full of commercial real estate professionals the processes and nuances associated with residential, multi-tenant, commercial and industrial property value assessments. The gathering was part of NAIOP Minnesota’s Public Policy Coffee and CREam event series and was moderated by Todd Hanson, of Cushman & Wakefield Northmarq.

One of the largest misperceptions about property valuation, according to the panel, was that the appraisal process determines the amount of taxes that the state, county or municipality will receive.

“The (tax) levy is what the levy is. If your valuation goes up, everyone else’s tax burden will go down, but the city won’t get any more money,” said Gersermehl.

Of course, data and information drive all of the property value determinations, whether for a smaller sector such as industrial properties or for mass appraisals like those with residential properties. The more data and the more facts that are available, the greater the accuracy in valuation. While the general goal of property assessors is to achieve a 90 to 105 percent level of accuracy, the panel noted that sufficient information is always the biggest challenge to overcome.

For commercial properties, assessors gain information from a number of sources including, rent rolls, income and expense statements, comparable sales that are made available through property sales or appeals actions, and personal visits. The panel reported the majority of commercial evaluations concern small, privately held businesses valued at less than $2 million. Less than 20 percent involve large commercial facilities. Because transitions for larger commercial office or industrial buildings occur far less frequently than residential sales, appraisals become more involved. The results from that difficulty can become the grounds for appeals.

There are three stages for making any appeals. First, property owners and managers may approach the local board of appeals to discuss valuations. The County Board of Appeals is the next step in the process to challenging a property assessment. The final step in the appeal proceedings would be to file an action in property tax court. When filing an action, owners will likely need to provide information concerning rent rolls, income and expenses and any other information that could influence a final ruling.

At the end of the day, the panelists agreed that the appraisal process strives for uniformity and adherence to statute, no more and no less. If appraisers can obtain more information in advance, they believe they can do their job more accurately.

Entry filed under: Public Policy | Government Affairs.

Commercial Real Estate’s Positive Impact in Minnesota NAIOP recognizes Jim Hoopes as Volunteer of the Year

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