Taking a Peek at Assessment Statutes

Post by the Hawthorne Hawkman, image from the Miscellany 101 blog.

As the Minneapolis property tax lawsuit moves forward, people have wondered what our state statute has to say about assessed values.  The question has been raised here and on the Minneapolis Issues Forum, although no definitive answer has been given.  Well, here is what our state law has to say:

Minnesota Statute 273.11 (sub 1) begins:  "Except as provided in this section or section 273.17, subdivision 1, all property shall be valued at its market value."

Okay, so what is "market value?"

"Subd. 8.  Market value.  'Market value' means the usual selling price at the place where the property to which the term is applied shall be at the time of assessment; being the price which could be obtained at a private sale or an auction sale, if it is determined by the assessor that the price from the auction sale represents an arm's-length transaction.  The price obtained at a forced sale shall not be considered."  (emphasis mine)

What isn't yet clear from statute or other cases, is what exactly constitutes a "forced sale."  I would contend that a forced sale is a sheriff's sale or other court- or lender-ordered sale in which the entity selling may not have sold at the time, price, or other terms unless compelled to do so.  Post-foreclosure, a bank may be highly motivated to sell, just as an owner who has to relocate due to a new job might be, but the transaction is an arm's-length transaction at that time, and I do not see it as "forced."

We'll see if either the assessment policy, state law, or any ruling from this lawsuit interprets "forced sales" in the same way.  If so, it would seem that the lawsuit has merit.  And if it does, then it could seriously change the financial landscape for Minneapolis.  Even for someone who just wants to see fairness applied in tax policies, that's a daunting proposition.  That's because the map in a previous post encompasses 7,767 single-family parcels, and the total amount of over-assessed values is...

Weighing the Merits of the Minneapolis Property Tax Lawsuit

Post by the Hawthorne Hawkman, image from Texas Property Tax Consultants.

Yesterday we wondered if the price was right for assessed values in north Minneapolis and Phillips.  For anyone who hadn't already guessed, in each example listed in that post, the properties in the affected areas had the lower sales price but the higher assessed value and higher taxes as a result.

This blog was fortunate enough to be able to post the lawsuit documents before anyone else did, and today we get to break down what they contain.  These are only my impressions after reading through, so others are encouraged to offer their thoughts on this matter as well.  But mark my words, this could be huge.  We're talking potentially in the tens of billions of dollars in assessed values for single-family homes citywide.  Out of those tens of billions, it's not yet clear how much assessed values are incorrect (assuming the suit is found to have some degree of merit, obviously).  But then you start to think about multifamily, commercial, and industrial on top of THAT, and the financial implications are staggering.

The lawsuit that could rock the foundations of those finances starts with...

The Price is Right? North Minneapolis Assessed Values

Post by the Hawthorne Hawkman.  Contributed image.

Unless you've been living under a rock (assessed value:  $75,900) in north Minneapolis you're at least familiar in passing with the lawsuit alleging unfair assessment and taxation practices in the Camden community and the Phillips neighborhood.  This blog posted the court documents online, and I've had a chance to review them.  In this post, we'll break down the map above.

What's hard to see without clicking on the map to enlarge it is exactly how some of the nicest parts of the city are getting a more than fair ride.  While it's true that Jimmy Carter called Hawthorne the nicest neighborhood [he's] ever worked in, that unfortunately doesn't retroactively raise house values across north Minneapolis.  So the blue dots represent households paying taxes at about 60-90% of their recent selling price.  Green dots are at 90-110%, the range allowable by law.  Yellow is 111-150%, orange is 151-200%, red is 201-300%, and maroon dots signify those who are paying taxes based on a valuation over 300% of a recent sale.

In a delicious bit of irony, one of the assessors named in the lawsuit has even contested the valuation of one of his own properties.  But let's take a look at a few other comparisons, such as...

NXNS Exclusive! North Minneapolis Property Tax Lawsuit Docs!

Post by the Hawthorne Hawkman, image from the Redfin blog.

EDITORIAL NOTE:  The copy originally posted was missing several pages, most notably the end of Defendant Llangari's claims and the beginning of Defendant Kral's claims.  This was likely due to a scanner pulling two pages through at a time.  The link has been corrected, and the full document is now available.

Ask and you shall receive.  In a previous post, I said I hoped to post the lawsuit documents that claim north Minneapolis properties are being assessed unfairly and therefore taxed at a higher rate than they should be.  Within several hours, I was sent the document I was looking for, along with some other goodies.  The other items and a summary of the complaint are coming soon.  But for anyone who wants to review the lawsuit document...

Click here for a copy.  More will follow.

Property Taxes in NoMi Reach Boiling Point

Post by the Hawthorne Hawkman, photo from Wikimedia Commons.

There has been buzz over the past several months in NoMi that we are paying more than our fair share in property taxes (Ed Kohler of The Deets brought the issue up in late September, an email made its way around some neighborhood listservs, which led to a post on JNS about a potential lawsuit).  As property tax assessments have been arriving in the mail, the Minneapolis Issues Forum has had many postings on what this means, and even the Irving Inquisition dedicated a jerk du jour designation to this.  Well today Steve Brandt at the Strib broke the story of a lawsuit being filed that specifically makes that allegation.  (I hope to post as much of the lawsuit documents as possible here for NXNS readers.)

If these claims are found to have merit, they have the potential to shake the very foundations of not just city and neighborhood finances (that's obvious), but also perceptions of north Minneapolis.  How often to fellow NoMi residents hear the refrain that the rest of the city pays for all the services that north uses up?  Well, what if it's actually the opposite?  Could it be possible that the poorest of all parts of the city are paying our way, or even propping up other parts of town?  Allegedly, many in NoMi are paying a rate based on a value estimate as high as 300% of the most recent purchase price.

In some ways, I do feel bad for the city.  After all, it's not like they're swimming in money.  And with the threat of even more LGA cuts looming, things won't be getting better anytime soon.  The money's got to come from somewhere.

But even before I can rationalize a counter-argument that's not sympathetic at all, various city and state employees do a fine job of getting rid of my sympathy on their own.  I'm especially incensed at the state assessors, who refute the notion that the recent sales are accurate indicators of market value.  Essentially, their argument as described in the Strib, is this:  Since a lot of banks sold houses for perhaps less than they could have, that means that assessors can use a dollar amount other than sales prices as a way to determine market value.  Like what?  Really, what else besides recent sales is used to determine value?

Perhaps the state assessors John Hagen and Lloyd McCormick could explain to me why my Mark McGwire and Barry Bonds baseball cards aren't selling for squat on eBay.  True, the steroids scandals have made it clear that their statistical achievements were fraudulently inflated.  But I keep on thinking there's got to be a good way to calculate the market value of those cards...you know, some way OTHER than how much somebody might be willing to pay me for them.  Because that doesn't get me much money AT ALL.