Friday, November 19, 2010

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 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.


  1. This property tax situation is super annoying, not to mention expensive.

  2. LOL- Banks don't sell houses for less than they could have and the city doesn't establish a policy of urban renewal with economic development funds in prospering communities with high property values.

    With a little help from the global economy, Minneapolis is reaping the rewards of a bad community development policy that reinforces the construction of ghettos by ignoring all the warning signs - concentrated poverty, lax social intervention,lenient law enforcement, and negative expectations.

    Maybe if every other home wasn't owned by an absentee landlord this community would have better property values.

  3. market value = tax value. it is the simplest and the fairest. to use a "magic value" they can and might as well claim the "value" is $1m.

    it is like minimum wage. why stop at $7.50 or $10? why not make it $200,000 or $1m per hour? further more you cannot take to court a value based on a "magic" number to evaluate unfair taxation according to the constitution.

    oh, they want to clear the area for "better housing"... NP! change the "magic" value and raise the taxes so they cannot afford to pay them.... oh you defaulted on your taxes... To bad so sad, it is out house now.....

    WOW, what a simple way for urban development at a cheaper price than eminent domain!

    just like our driver lic id's in MN has to be some crazy "secrete" number that they change whenever someone figures out the code :( many states use a simple incrementing 9 digit number.

  4. Please get us the lawsuit documents when you can.

  5. While I was being somewhat flippant in my comments directed at the assessors, there are several other ways to determine value of a house:

    1. How much would it cost to build something comparable in today's market? The "Cost Approach" could also be calculated by using the land value minus the depreciated value of improvements.

    Here's how that shakes out in plain English: 123 Hypothetical Avenue North is a vacant lot worth $10,000. A new house is built there at a cost of $150,000, making the tax-assessed value $160,000. Fast forward 10 years, and property values have fluctuated highly due to a bubble and market collapse. The land is now worth $5,000, no major rehab has been done, and the depreciated value of the structure is $120,000, making the assessed amount $125,000.

    Typically, however, the Cost Approach is used only with new construction or when recent comparable sales are otherwise unavailable.

    2. The Income Capitalization Approach

    This is used primarily for commercial properties. And the plain English summary is that a property produces a certain level of income and there is a formula to calculate assessed value based on that. This is largely inapplicable to the case at hand, but if our assessors want to use this approach to tax the shit out of slumlords, well, be my guest.


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