04-07-14 Council Packet - Laserfiche WebLink

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Anoka County City of Lino Lakes Sales Studies According to State Law, it is the assessor's job to appraise all real property at market value for property tax purposes. As a method of checks and balances, the Department of Revenue uses statistics and ratios relating to assessed market value and current sale prices to confirm that the law is upheld. Assessors use similar statistics and sales ratios to identify market trends in developing market values. A sales ratio is obtained by comparing the assessor's market value to the adjusted sales price of each property sold in an arms-length transaction within a fixed period. An "arms- length" transaction is one that is generated after a property has had sufficient time on the open market, between both an informed buyer and seller with no undue pressure on either party. The median or mid-point ratios are calculated and stratified by property classification. The only perfect assessment would have a 100% ratio for every sale. This is of course, impossible. Because we are not able to predict major events that may cause significant shifts in the market, the state allows a 15% margin of error. In previous years the Department of Revenue has adjusted the median ratio by the percentage of growth from the previous year's abstract value of the same class of property within the same jurisdiction. This adjusted median ratio had to fall between 90% and 105%. Any deviation would have warranted a state mandated jurisdiction-wide adjustment of at least 5%. Starting with assessment year 2012 the Department of Revenue changed the methodology they used to adjust sales to reflect the market values. Instead of using the historical or backward looking ratios to time adjust sales they are now applying a multiple regression analysis to the sales in the 21 month sales study for each jurisdiction. If their analysis shows a time trend with statistical significance they then adjust the sales within the 12 month sales ratio period forward to the next assessment year. In a sense they are using the derived time trend to forecast or predict what the value of the sales parcels and thus the market should be at the next assessment date. In Anoka County, we have the ability to stratify the ratios by style, age, quality of construction, size, land zone and value. This assists us in appraising all of our properties closer to our goal ratio. 16