04/20/1998 Council Minutes - Laserfiche WebLink

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CITY COUNCIL BOARD OF REVIEW APRIL 20, 1998 year when all numbers are in, the County performs a sales ratio study. Mr. Thurston, the County Assessor looks at what has happened to property values in comparison to the assessed ratios. He compares the actual sales to the assessed values, how much difference there is, how much is attributed to new construction costs increases and how much is attributed to appreciation or inflation. He then makes a judgment as to how much he will increase structure values in the entire county. This is done on a mass basis and in general, for the past five (5) years, there has been a 3% increase on structures only. Most real- estate appraisers agree that 3% is a very good number to use in the midwest. Mr. Smith noted that when he returns to a particular property in the regular four (4) year rotation, his review of the value of the structures will not change unless there has been new construction or some other substantial change. Mr. Smith explained land values are another issue. He adjusts land values according to what is happening with the actual land sales in the area. This is done on an annual bases. Occasionally landowners may see a decrease in their land value. This happens when there has not been enough land sales to justify an increase or the sales indicated that land values have actually dropped from the previous estimates. Mr. Smith noted state standards require the assessor's appraisals be within 90 and 105 percent of actual market value. This year he was at 94.4% and this has been very close to the past years. Council Member Lyden asked how does the upward trend in land values impact property classified as Green Acres or agricultural and the tax to those owners. Mr. Smith explained. in 1996, he visited every parcel classified agriculture in the City. He removed approximately 35 properties from the agriculture classification and changed them to residential because they did not qualify under the State criteria for the Green Acres program or the agriculture classification. In some cases, there was a big impact to the tax payer and in some cases it did not make much of a difference. Although property values increased in areas where there were Green Acres or agricultural properties, values used for these classifications stayed fairly stable at $900.00 per acre for Green Acres or agricultural as opposed the market value of $3,200.00. If the Green Acres or agricultural properties happened to be in the MUSA, an additional MUSA value was added. However, the property owners still only paid taxes on the Green Acres or agricultural properties value. As these properties become valuable and the adjustments are made accordingly, those "behind the scenes" values will increase. The Green Acre and agricultural values increase at a much slower rate. There is an advantage to hold onto the Green Acres or agricultural properties. These properties still must meet the criteria for Green Acres or agricultural properties and must reapply every year for the program. Mr. Smith explained the criteria for participation in the Green Acres or agricultural program is set by the State. The owner must be able to document income of at least $300.00 plus $10.00 per tillable acre with a minimum of 10 acres. The City cannot impact the criteria, however, at some point the State will increase these minimums and tighten the criteria because it is becoming an issue of fairness. Since these two (2) tax class rates are significantly less than residential homestead rates. Council Member Lyden said he is of the opinion that property tax rate increases for Green Acres or agricultural properties forces people off of their land. He also noted the inability of the legislature to freeze property taxes for PAGE 2