In boon for cities’ finances, property values are rebounding, but numbers are in flux depending on the neighborhood.
After plunging for years across the metro area, home values are finally beginning to climb again — a turnabout that could spell the end of an ugly cycle for the finances of local cities and counties.
In Hennepin County alone, 15 cities are seeing gains in the tax value of residential property for purposes of the budgets and taxes that will be set starting this month. That’s up from just two cities the previous year, with every sign that many others will join the upturn next year.
In Savage, City Administrator Barry Stock wrote his City Council a quick note recently when county officials sent word that the city’s tax capacity has risen by 5 percent.
It “finally puts an end to four years of consistent decline,” Stock wrote. Even if tax revenues rise this year, he added, Savage could end up with a “drop in our 2014 overall tax rate” — a sensitive subject amid a city election year.
A closer look at the data, however, shows that not everyone suffered equally during the recession’s plunge, and not everyone is recovering at the same pace.
Inner-ring suburbs such as Brooklyn Center and Robbinsdale had the floor drop out from under home values. Cities like Edina, said Hennepin County assessor Jim Atchison, “never really crashed.”
The timing of the rebound could produce a welcome break for taxpayers in cities like Brooklyn Center or West St. Paul: Since their home values didn’t spring back until just recently, they will get a discount on property taxes for another year.
“We are historians,” said Nancy Wojcik, Brooklyn Center’s assessor. “We follow the market, well behind it. In this city, you won’t see the recovery we’re having today on tax payments until 2015.”
Still, the turnaround there is palpable from data gathered by Realtors, which promises an easing of tax and budget tensions within the foreseeable future. In Brooklyn Center, the Realtors association reports, home values are up 40 percent so far this year.
And single-family homes are only part of the tax picture.
Apartment buildings are “red-hot,” said St. Louis Park assessor Cory Bultema. “Class A and B apartment buildings have really gone up a lot — so much so that I wonder if it’s running well past any sort of logic.”
$1 billion lost
The recovery, if it continues, will put an end to a slide the likes of which most experts say they’ve never seen.
Eden Prairie’s total market value, for example, slid by more than $1 billion, from $9.6 billion to $8.5 billion between 2010 and 2013 — with the result that its tax rate jumped from 28 percent to 34 percent.
“I’ve never seen values drop that way, and the pages and pages of foreclosures in the paper,” said Stephen Behrenbrinker, St. Cloud’s recently retired assessor and a leading statewide figure in his field. “With less funding from the state, with people demanding more services, it was a nasty cycle.”
The plunge in construction after 2007 also slashed municipal revenue from building permits, Behrenbrinker noted.
“A lot of cities live off that growth, and those fees,” he said. “You start laying people off, or there are no raises for several years — it’s very ugly for those units of government.”