Metro area homeowners are about to find out that government's opinion of their home's value has more to do with history than today's reality.

Despite a swift and steep downturn in the region's housing market, some homeowners are receiving property assessments that show only slight declines in their home values for tax purposes.

"This is ridiculous," said Randy Kirihara, of Bloomington, who recently discovered that the taxable value of his home has been shaved by a mere 1 percent compared with last year, even as the market tanks. "I was looking forward to a substantial drop."

Reflecting the collapse of the housing market, all seven metro counties say their assessed residential values will decline; the drop ranges from about 2 percent to 10 percent, depending on the county.

But those declines seem rosy when compared with what's happening to sale prices. The median sale price of a metro-area house has fallen by 33 percent since September 2007, the beginning of the period counties used to calculate houses' taxable value, according to the Minneapolis Area Association of Realtors.

Most counties in the metro area have yet to send out their assessment forms. But in the counties that have, property owners are reporting surprise, dismay and anger.

"We bought our house in January for $155,000," said Kate Gens of south Minneapolis. "The taxable value at that moment was $214,000. And now they're saying it's still as high as $189,000? Ridiculous."

The main reason for the disconnect, assessors say, is a factor nobody complained about over the many years of rising values: The deliberateness of the process, coupled with the need for as large a sampling of sales as possible to estimate values, causes a six- to 18-month lag between tax assessments and the churnings of the real-time market.

"We're always looking at history," said Angela Johnson, the assessor in Carver County. "We're a year behind on everything." That means the sharpest plunge in values in years has taken place during a period that isn't yet being factored in.

The property values being set now will be used to determine a home's 2010 taxes. Tax rates won't be set until the end of the year, but homeowners whose assessed value strikes them as too high can see what's coming: Their taxes will be based on a number that seems out of whack.

Minneapolis expects so many appeals this year that it moved up its mailing date for tax statements by four weeks to give homeowners and assessors more time to work on them before the deadline. In Scott County, where statements haven't even been issued, 22 people turned up at one city council meeting when the assessor came to give a report.

Some assessors say they are trying to do as much as they can to help. Scott County's auditor, Cindy Geis, says she and her staff have shaved the ratio of market value to taxable value down as close as they can get to the minimum. And Anoka County's assessor, Mike Sutherland, says he has given, in some cases, a slight break to the more recent developments.

"Anyone in our business would have to be under a rock," he said, to miss what's happening in the real world. He knows of a townhouse in another county, once worth $190,000, that sold for $60,000. "So when we set townhouse rates, we took a little more off because we knew that was a weak point."

But senior officials in the Minnesota Department of Revenue caution against tweaking the conventional procedures, saying it can be unfair to others who aren't being treated the same way. Lloyd McCormick, the revenue official who works with counties, calls it "a dangerous game to play."

The state doesn't shy away from enforcing the rules. When the Department of Revenue determined that some of the Minneapolis values for 2008 were unintentionally set below the prescribed ratio, they had them bumped back up about 3 percent, said Patrick Todd, city assessor.

"It was a difference of opinion, but because we report to the Department of Revenue, they have the final say," Todd said, noting that the rules keep the formulas fair.

Geis, however, believes that those in charge of the system need to think about changing procedures now that circumstances are so drastically different. "We have not seen anything like this since the '40s," she said. "We need to think outside the box."

'Things don't always go up'

To be sure, home values didn't just start dropping, and assessors are reducing many peoples' values accordingly. Anoka County reports that this year's official valuations represent the first overall decline in residential values in recent memory. "Most of my appraisers under age 40 have no idea," Sutherland said. "They have never seen anything like this. Things don't always go up."

One important ingredient in the disconnect, some officials say, is that the average person is reading the headlines but is not aware of the subtleties of the real estate market. Carver County, for instance, is benefitting from new high-speed freeway access, and new building activity remains comparatively robust by the standards of some areas, so values are holding up. Residential values will only go down by 2 percent on average.

Other parts of the metro area will see much steeper drops and more variation from one community to the next. The more typical overall figure for counties is a drop in the range of 5 to 10 percent for homes. That's the situation in Dakota County, where after double-digit percentage increases earlier this decade, residential values dropped an average of 8 percent this year.

"We've never seen the market fall like this before," said Bill Peterson, the county assessor, who has 30 years of experience.

In Dakota County, as in many other spots, townhouse and condominium values dropped faster than those of single-family homes, in part because so many stand vacant, hit harder by foreclosures or never purchased after the real estate bubble popped.

But even with the lesser values, Peterson said he expects unusually high turnout once the county starts holding "open book" meetings on Monday to give people a chance to discuss their appraisals. The phones have already been ringing.

"There are people that are calling to say 'You've not reduced them enough,'" Peterson said. "We've also had people call concerned that the values are dropping as much as they are."

In Washington County, as in most counties, statements to residents will go in the mail later this month. And, as elsewhere, there will be opportunities to contest valuations at public meetings and by phone.

But Kevin Corbid, director of property records and taxpayer service, cautioned against assuming that what happens to values happens to next year's tax bill.

"The value by itself doesn't mean a thing," Corbid said. "The actual tax bill and how it changes from one year to the next is more reliant on the budget decisions of the county, the city, the school district and whether your value changes differently than most properties."

The whole sequence leaves many homeowners confused, upset and suspicious.

"I doubt I could sell this place for $228,000 right now," said Amy Fastenau, who lives on Lyndale Avenue in south Minneapolis. "There used to be huge difference in our favor; now it's the opposite. It seems like they have to find some way to charge more for taxes. It seems sneaky."

David Peterson • 952-882-9023 dapeterson@startribune.com Katie Humphrey • 952-882-9056 katie.humphrey@startribune.com