Despite slumping housing prices in pretty much every neighborhood of the Twin Cities, the assessed home value on homeowners' property tax statements aren't decreasing at the same rate and, quite commonly, are actually increasing.
So what gives? Is this just government greed? Or is there a legitimate reason for the increases? The answer, as usual, lies somewhere between the two.
From an MPR story from this morning:
"Assessors are working with a bit of a lag here," said Gordon Folkman.
Folkman directs the property tax division for the state's Revenue Department. He said the information that assessors used to determine home values for next year was actually collected in 2006 and 2007, before this year's economic meltdown.
Good, old-fashioned, inefficiency is partly to blame. Woefully outdated information from 2006 and 2007 is still being used to find comparable sales for assessment purposes, despite the fact that the housing market has shifted downward dramatically since then. Whether this questionable choice is due to a pre-mediated strategy or something less sinister like a simple lack of up-to-date sales information is unknown, at least to this author.
Regardless, the approach is showing much higher assessed values than actual market value, in some cases, and people ain't happy:
"I'm going to get really pissed in about 10 seconds if someone doesn't explain this to me."
Christopher Rocco of St. Paul is big enough to be a bodyguard. He's standing an inch from the county assessor, arguing that the valuation for his townhouse is too high.
According to the county, the value of Rocco's home is $120,000. But he says that can't be right. Seven of the 21 units in his complex are in foreclosure. "They're selling for $20,000 apiece. So if they're trying to tell me that they're going to tax me on a $120,000 home when everyone's property values is $20,000, I'm not going to stand for that."
This raises another question: do city or county assessors consider bargain-priced foreclosures, which are sometimes in distressed physical condition, to be useful comparative sales? In other words, will the $20,000 sales in Mr. Rocco's building be considered "market value" eventually? There doesn't seem to be a uniform policy on this question amongst the region's patchwork of assessors. With some areas seeing more than half their sales mediated by a lender through a foreclosure or short sale, one would have to think they can't be ignored for much longer.