Thursday, October 21, 2010

Property Tax Reductions of $10 million and $5 million

$10 million and $5 million reductions for Property Tax Appeals.

Case #1 is land in the 7 county metro for residential development. The negotiated settlement was reduced from an Assessed Value for Pay 09 of $26.5 million to $16.6 million, a 37% reduction. For Pay 10 it was reduced from $20.7 million to $10.8 million, a 48% reduction.

In addition to the value reductions, the land was reclassified from Non Homestead Residential to Agriculture, as its been actively farmed. This brought the effective tax rate down from 1.3% to .9%. The estimated property tax savings over the 2 years is $220,000.

It was easy to understand how the assessor overvalued the property. A new road was built through the middle of the land, land locking portions. There was a variety of different zoning classifications. It was a messy valuation.

Case #2 is development ready land in the 7 County Metro. For Pay 2009 the assessed value was reduced from $10 million to $4.9 million for a 51% reduction. There was a 46% reduction for Pay 10 and and 25% reduction for Pay 2011.

The dart must have hit the wrong spot on the wall for the assessor to have these values. I can't figure out another explanation. I presented a comparable sale from an adjacent community. I told the assessor if we went to court I would make NO adjustments to this value that was a fraction of their valuation. It was similar in size, topography, neighborhood values, demographics and both parcels had approved plats. The sale was not a foreclosure. It was from one builder developer to another builder developer. Unrelated parties.

“Well,” the assessor, replied. “The buyer was really motivated. We would have to do a “motivation adjustment”.

“What”, I asked, “is a 'motivation adjustment'?”

“Let's just get this settled this morning so we don't have to worry about it.” Estimated tax savings to the developer over the 3 years: $182,000.

Would you would like to learn more winning at tax appeals? I'll be participating in a round table discussion at the Sensible Land Use Coalition

lunch meeting on Wednesday, October 27th, 11:15 – 1:00 at the Doubletree

Park Place in St. Louis Park. Register for the program at


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