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04-28-14 Council Packet
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04-28-14 Council Packet
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10/27/2014 12:33:14 PM
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10/20/2014 11:49:17 AM
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City Council
Council Document Type
Council Packet
Meeting Date
04/28/2014
Council Meeting Type
Regular
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Anoka County City of Lino Lakes <br />Sales Studies <br />According to State Law, it is the assessor's job to appraise all real property at market value <br />for property tax purposes. As a method of checks and balances, the Department of <br />Revenue uses statistics and ratios relating to assessed market value and current sale <br />prices to confirm that the law is upheld. Assessors use similar statistics and sales ratios to <br />identify market trends in developing market values. <br />A sales ratio is obtained by comparing the assessor's market value to the adjusted sales <br />price of each property sold in an arms - length transaction within a fixed period. An "arms - <br />length" transaction is one that is generated after a property has had sufficient time on the <br />open market, between both an informed buyer and seller with no undue pressure on either <br />party. The median or mid -point ratios are calculated and stratified by property <br />classification. <br />100% <br />The only perfect assessment would have a 100% ratio for every sale. This is of course, <br />impossible. Because we are not able to predict major events that may cause significant <br />shifts in the market, the state allows a 15% margin of error. <br />In previous years the Department of Revenue has adjusted the median ratio by the <br />percentage of growth from the previous year's abstract value of the same class of property <br />within the same jurisdiction. This adjusted median ratio had to fall between 90% and <br />105 %. Any deviation would have warranted a state mandated jurisdiction -wide <br />adjustment of at least 5 %. <br />Starting with assessment year 2012 the Department of Revenue changed the <br />methodology they used to adjust sales to reflect the market values. Instead of using the <br />historical or backward looking ratios to time adjust sales they are now applying a multiple <br />regression analysis to the sales in the 21 month sales study for each jurisdiction. If their <br />analysis shows a time trend with statistical significance they then adjust the sales within <br />the 12 month sales ratio period forward to the next assessment year. In a sense they are <br />using the derived time trend to forecast or predict what the value of the sales parcels and <br />thus the market should be at the next assessment date. <br />In Anoka County, we have the ability to stratify the ratios by style, age, quality of <br />construction, size, land zone and value. This assists us in appraising all of our properties <br />closer to our goal ratio. <br />16 <br />
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