Presentation Transcript

1. Minnesota Department of RevenuePresentation to North Star Chapter Appraisal Institute

   John Hagen, Director of Property Tax Division Tom Reineke, Complex Property Appraiser
2. Property Tax DivisionWhat we do Brief overview of what the Property Tax Division is Responsible for What we do:
3. Property Tax DivisionWhat we do General Guidance, Oversight and Education Issue bulletins memos and opinion letters to property tax administrators Develop and provide education to Assessors, Auditors and Treasurers Provide training for local and county boards of equalization Issue an annual summary of new property tax legislation
4. What we do Conduct Sales Ratio studies Process Certificates of Real Estate Value (CRVs) (eCRVs) Work to equalize property values throughout the state Conduct the State Board of Equalization where ratios for all properties are reviewed by taxing jurisdiction by classification and if necessary equalized
5. What we do Provide Research and Analysis of Proposed Property Tax legislation Licensing of Assessors Issue State Deeds for Tax Forfeited Lands
6. What we do Commercial Airlines($987,682,530) Railroads($1,428,184,570) Utility Companies ($10,869,956,500) Wind Energy Production Tax in lieu of Property Tax ($8,429,851 TAX)
7. What we do Administer Levy Limits Data and Information Management State General Tax Calculate Aid and Credit Payments
8. What we do Calculation and payment of state aids, including $ 205,497,178 in County Program Aid $ 10,000,000 in Town Aid $ 507,598,012 in Local Government Aid, and $ 147,388,486 in other aids, including Police and Fire Collection of $ 840,000,000 in State General Tax Administration and payment of state credits and other state payment programs

9. eCRV

10. eCRV CRVs are required by law (M.S.272.115) Sales over $1,000 2005 – 156,656 2012 – 96,120
11. eCRV Quick Facts Number First Quarter 2013 – 7552 accepted Second Quarter 2013 – 11,935 accepted Third Quarter 2013 – 19,266 accepted Since inception: *73,369 submitted in Full-Use counties Hennepin County – In 2012, more than 40% of sales used eCRV – fully electronic Ramsey Co - In September 2013, 74% of CRV’s were electronic. GovDelivery Subscriptions General eCRV Updates – 5,482 eCRV Download/Upload- 2,115 Fanny Mae/Freddy Mac and other major banks use it as preferred method
12. eCRVVersion 4.0- New Features Download Help features available outside App Accommodates long legal descriptions Add comments for the submitter if county un-accepts an eCRV (See the GovDelivery Bulletin to see all updates and fixes)
13. eCRV: What is coming? VERSION 4.5 New fields – Gross Building Area, Special Assessments, Agricultural Breakdown… Tool to view all eCRVs that have been submitted but not yet accepted (also unaccepted) County can choose to use Deed Tax estimator More user friendly – easier to reset passwords, multiple line indicators… Split sales indicator Search by PID VERSION 5 Upload Attachments Better Public Search – Search all versions Your suggestions
14. eCRV: What to expect? October 1, 2014 sunset paper CRV’s. All counties will need to be prepared and knowledgeable of how to use eCRV before then The sooner paper goes away, the easier everything will get. Special accommodations need to be made when we are using both. Don’t wait until the last minute!
15. eCRV: Sign me up Please! Call us: 651-556-eCRV Email ecrv.support@state.mn.us http://www.revenue.state.mn.us/CRV/Pages/eCRV.aspx

16. Complex Property Appraiser

17. Department of Revenue’s Complex Property Appraiser The complex property appraiser position exists to provide expert assistance to taxing jurisdictions with the assessment of their complex or unusual properties. Genesis of the Complex Property Appraiser Purpose: To better achieve uniformity and accuracy in the assessment process the complex property appraiser develops and implements standards, policies, and protocols for the Property Tax Compliance work group and assessors statewide so that the most complex property types (income producing, special use) are assessed in compliance with state law, Department policies and directives, and appraisal and assessment practices.
18. Department of Revenue’s Complex Property Appraiser Some of the assistance provided: Expert technical knowledge regarding assessment, valuation and classification Assistance with the assessment of very complex property types (i.e. income producing – commercial or apartment; industrial special use; agricultural – animal confinement or conservation lands, etc.) Oversight and guidance to county, city, and local assessors in all aspects of the classification and valuation of real and personal property for property tax purposes
19. Complex Property Appraiser Continued Some of the property types our complex property appraiser has worked on include: Ethanol Production Facilities Golf Courses Hotels / Motels Nursing Homes Billboard and Cell Tower Site Valuation Conservation Easement Lands
20. Complex Property Appraiser Continued DOR’s Complex Property Appraiser: Tom Reineke

21. Land Use Rights

22. Real Estate & Real Property Real Estate: An identified parcel or tract of land, including improvements, if any. Real Property: The interests, benefits, and rights inherent in the ownership of real estate. The Right to Sell an Interest The Right to Lease an Interest The Right to Occupy the Property The Right to Mortgage an Interest The Right to Give an Interest Away Source: The Appraisal of Real Estate, 13th Ed.
23. Valuing the Entire Bundle of Rights: What Rights are Taxable? The actual structure and foundation of billboards and cellular antennas are considered equipment and are not taxable real estate per M.S. 272.03 subdivision 1(c) (i). The interpretation of this statute is also supported by the tax court decision KDAL, Inc. vs. St. Louis County, 1976 The taxable component is the land use rights that allow these fixtures to be placed on the site. These land rights can be found in one of the four (4) types: Fee Owner Easement License Personal Property Account
24. 4 Types of Land Use Rights 1.Fee Owner– Handled in the normal valuation of the property, it is considered an additional tenant or lease. 2. Easement–These easements can be perpetual or for a specified period of time. *A real property identification number or PID is assigned to a legally defined and recorded easement. This helps identify the easement and the value of the easement interest is taxable. M.S 272.03, subdivision 1 (a) For the purposes of taxation, included in the definition of “real property”, are not only the land, all buildings, structures, and improvements, but also included are “all rights and privileges belonging to or appertaining to t e land”, this would include easements. There is no provision in the exemption statutes, exempting easements from taxation, thus easements are taxable.
25. 4 Types of Land Use Rights 3. License – Similar to a lease. This is not an easement, thus no separate PID is assigned. 4. Personal Property Account – On publicly owned parcels that are exempt from taxation, such as a school, or other government use, a for profit, private use may exist and this use is taxable. The value and corresponding taxes should be tracked via a personal property account so if the taxes were to become delinquent, the entity using the property would be the responsible party. Statutorily exempt property cannot be forfeited.
26. Background Prior to Mid 1970’s Billboard Structures & Foundations were Taxable Mid 1970’s MN Legislature took action and exempted Billboard Structures & Foundations Supported by: Skoglund Communications Inc. vs. County of St. Louis, 1978 Land Use Rights Remained Taxable Late 1980’s & Early 1990’s Cell Phone Markets See Major Growth Demand for Network Expansion Began Thousands of Tower/Antenna Locations Added Mid 2000’s Digital Billboard Technology Created Digital Billboards Installed State, County, City Moratoriums Enacted Provided Time To Develop Regulations
27. Where’s the Taxable Value? Value is in the Land
28. Assessment Process Since land rights are taxable, what does the assessor do? Classification-Assessor classifies according to current use Land rights leases for billboards and cell towers are considered commercial uses Valuation-According to highest and best use Assessors should not be concerned with the income a sign or tower generates (business value) unless a portion is attributable to the property owner (overage rent). Assessors value the land with the income to the property owner for the land rights. Income is capitalized using direct capitalization or a gross income multiplier.
29. Challenges for the Department of Revenue with regard to Land Rights Consistent and uniform application Providing valuation guidance in the absence of available data Uncertainties on what happens with PID created for easements in the event of tax forfeiture Arguments related to minimum income/value
30. Challenges for the Department of Revenue with regard to Land Rights Consistent and uniform application Providing valuation guidance in the absence of available data Uncertainties on what happens with PID created for easements in the event of tax forfeiture Arguments related to minimum income/value
31. Sales Verification The primary responsibility of the assessor is estimating the market value of each property within the jurisdiction. The integrity of the property tax is dependent on the accuracy of these estimates of market value. This is accomplished by analyzing market data to determine the price that the property being appraised would probably bring in the marketplace on the date of appraisal. It is important that the sales used to analyze the market are sales that meet the definition of market value and that have been adjusted for any monies (including financing) not attributable to the real estate. Accuracy is dependent upon proper verification of sales terms and adjustment of sales data accordingly. To ensure that proper sales verification is taking place throughout the state, our Property Tax Compliance section will be providing the assessment community with the tools and training necessary for proper verification of real estate sales. We will then be monitoring the implementation of the verification practices to ensure that proper sales verification is taking place statewide. It is our goal to improve the accuracy of the sales data collected throughout the state.

32. Questions