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2010 Property Valuation Update Marvin Anderson City Assessor April 5, 2010
What is Estimated Market Value • A snapshot of the value of a property as of January 2, of each year. • Main items that attribute to value • Size of building Style of building • Quality and condition of building • Other factors that attribute to value • Lower level finish Extra bathrooms • Fireplaces Porches, patios, decks • Location
The Assessor Sets Value By • Comparing properties to similar properties which have sold • Following the trends of the sales on different properties to make sure they are equalized • Style • Size • Age
Who is involved in the Process? • State • Legislature sets the rules of the property tax system. • Local Taxing Jurisdictions • Sets budgets • Assessor • Sets value, which calculates the Distribution of the tax you pay.
Ratio Studies What Defines Market Value? Market Value is the most probable price expressed in terms of money that a property would bring if exposed for sale in the open market in an arm’s length transaction between a willing seller and a willing buyer, both of whom are knowledgeable concerning all the issues to which it is adapted and for which it is capable of being used.
What is a Ratio Study? Estimated Market Value/Sale Price Sales That Occur During Set Time Period Measure Median Ratio
Ratio Studies2010 Assessment • Rejected Sales • Sales to avoid foreclosure – Short Sales • Can be used if deemed open market • Sales involving legal action – divorces, bankruptcies, foreclosures • Can be used if deemed open market • Deed in Lieu of Foreclosure • Sheriff’s Sale • Bank sales
Sales Comparable Time Line • 2009 Assessment Value • Sale period October 1, 2007 to September 30, 2008 • 2010 Assessment Value • Sale period October 1, 2008 to September 30, 2009 This time period for ratio studies is set by State Statute and is used throughout the State.
Assessment Timeline Oct 1st 2006 Sept 30 2007 Oct 1st 2007 Sept 30 2008 Oct 1st 2008 Sept 30 2009 Oct 1st 2009 Sept 30 20010 January 2nd 2008 January 2nd 2009 January 2nd 2010 Assessment Date
Ratio Studies • Monitored by the Department of Revenue. • Ratio median must meet acceptable levels. • 90 percent to 105 percent. • Hennepin County set target percentage at 95 percent
Ratio Studies Department of Revenue will take corrective action if ratio is not in acceptable range. Percent change to all properties. While this corrects equalization across jurisdictional lines, it does the opposite with a jurisdiction by increasing inequity.
Median Residential Sale Price Change for 2008 - 2009 Includes all sales Source: Regional Multiple Listing Service
Median Residential Sale Price Change for 2008 - 2009 Traditional sales only Source: Regional Multiple Listing Service
Final 2009 Valuation Changes Source: Brooklyn Park Assessor’s Office
Residential Value History Source: Brooklyn Park Assessor’s Office
Brooklyn Park Market Value History Source: Brooklyn Park Assessor’s Office
The Tax Equation From the perspective of the individual taxpayer: Tax = Value X Rate From the perspective of the Tax Authority: Tax Revenue = Tax Base X Rate
True or False? An increase in theincome tax base will result in higherincome tax revenue for the taxing authority. True
True or False? An increase in thesales tax base will result in highersales tax revenue for the taxing authority. True
True or False? An increase in the property tax base will result in higherproperty tax revenue for the taxing authority. False
The Sales or Income Tax Equation Tax Revenue = Rate X Tax Base Government levies a Rate defined in statute Market activity determines Tax Base Result is Tax Revenue
The Property Tax Equation Rate = Tax Revenue / Tax Base Government levies Tax Revenue by Resolution Market activity determines Tax Base Result is the Rate
Brooklyn ParkEstimated Market Value Taxes Payable 2010-Preliminary 2011 Preliminary 2010 $5,468,972,700 Final 2009 $6,086,199,900
Brooklyn ParkNet Tax CapacityTaxes Payable 2010-Preliminary 2011 Final 2009 $73,292,004 Preliminary 2010 $66,392,405
Informational Meeting April 13 City Hall Council Chambers 7:00 pm
City of Brooklyn Park • Valuation notices mailed March 25 • Please call Assessor’s Office with any questions • Board of Appeal and Equalization to be held April 19, 2010 7:00 pm in the Council Chambers