Challenges to home valuations surge in Minneapolis

The number of homeowners in Minneapolis challenging the city over the estimated value of their properties has surged for a second consecutive year, overwhelming assessors as they work to finish a backlog of appeals, officials said.

The city received 1,766 appeals of property assessments this year, according to a report presented to the City Council on Wednesday. That is a 26% increase from last year and more than double the number of appeals in 2017.

Officials attribute the hike to a steady increase in the sales prices of residential properties over the past decade. Properties in the city have sold quickly and usually at their original listing price, according to a Star Tribune analysis earlier this year.

People sharing information about appeals on Nextdoor.com and other social media has also been a factor, they said.

"For that number to go up would not be a reflection of the overall quality of the assessment, but the fact that we're actually reaching people," City Assessor Patrick Todd said. "I see that as a positive thing."

Still, the workload has strained the assessor's office.

City appraisers have run up more than $30,000 in overtime since March working extra hours and weekends inspecting properties, said Rebecca Malmquist, the city's director of assessments. Hundreds of appeals are still left to process, and the office is now a month behind visiting homes for next year's valuations. The office employs about 20 appraisers, with four positions unfilled, she said.

One of the biggest changes to the office will be the adoption of a new computer system for classifying and analyzing assessments. Known as Computer Assisted Mass Appraisal, or CAMA, the software would lead to more accurate assessments and provide homeowners more details of how that valuation was reached, potentially reducing the number of appeals. The city is expecting to roll out the system in the coming years.

City Council Member Linea Palmisano, whose southwest district is where many of appeals originate, said she was concerned by the increased workload for the assessor's office.

"I know they're doing the best job that they can, but there's a lot of work to do here," she said. "I think [CAMA] is going to help. It's not going to eliminate the need for additional resources here."

Property owners were notified of the estimated market value for their properties in the spring. This year, the greatest year-to-year changes were in north Minneapolis, where some neighborhoods saw a 20% jump or higher in their property values.

The appeals represent about 1.4% of the 125,000 property assessment notices. Most of these appeals came from central and southwest Minneapolis; the fewest came from north Minneapolis.

"In some of these areas, finally having equity in your house is a good thing," Todd said. "It might go up 10 or 11 or 15 percent, but you're not underwater anymore."

As for the large number of appeals in southwest Minneapolis, where estimated values barely changed, Palmisano said homeowners there could still be feeling the effects of jumps from previous years.

"It was a market adjustment," Palmisano said. "It still hurts and it's going to hurt for a while."

The assessor's office made reductions in the estimated market value for 697 of the properties that contested their assessments.