Housing values for property-tax purposes are tumbling across the Twin Cities area -- dramatically, in some cases.
Property-tax values plunge, raising alarms
Tax relief might be on the horizon, but homeowners can't bank on it. Local officials, meanwhile, are sweating over budgets.
In Ramsey County, declines are being reported for median-value homes in every one of its communities, and in every one of St. Paul's 17 neighborhoods, according to assessment notices sent to owners of single-family homes this month.
In Dakota County, assessor Bill Peterson said that he is witness to history: a drop in county residential value for the first time "in my 30 years here."
Along with the notices -- the first of many moving parts that determine individual property-tax bills for 2009 -- has come hope for relief among tax-weary homeowners. Early signs point to commercial and industrial properties taking on a greater share of the tax burden in 2009, but experts say there are no guarantees.
Elected and appointed officials also are bracing for new budgeting pressures.
"It's a whole different situation," Carver County Commissioner Tom Workman said.
In Washington County, a slowdown in residential construction means fewer new homes being added to the tax rolls in 2008, leaving existing properties to pick up more of the impact of any upcoming levy increases, said Kevin Corbid, the county's director of property records and taxpayer services.
Officials responsible for balancing budgets are sweating.
"There's no need to panic at this point, but I'm concerned about it, let's put it that way," said Carver County Administrator Dave Hemze. "Many of our services are more necessary when economic times are bad: The social services safety net, workforce programs to help people find jobs, and the justice side, the court system, sheriffs -- those costs go up in tough times."
Workman, a fiscal hawk, is delighted: "When you're out of money, you finally have to make some hard decisions," he said. "This cow is done being milked."
As for homeowners, many have wondered: How can my values fall yet taxes rise?
Said Dick Sivanich, tax accounting supervisor for Ramsey County, The property tax "is probably the least understood thing that someone has in their expense portfolio."
This month, all across the state, notices hit mailboxes informing property owners how much they will be paying in property taxes in 2008 and where their market values currently stand -- a first hint at how vulnerable they could be to tax increases in 2009.
In the Dayton's Bluff neighborhood of St. Paul, where homeowners take pride in restoring Victorian homes yet are wrestling with foreclosures, the median value of single-family residential homes dropped 17.3 percent, according to Ramsey County assessor Stephen Baker. Factored into such declines, he wrote, are targeted reductions made in areas with high foreclosure activity.
Kathy Misener, who moved to a 11/2-story home on Conway Street, attracted by Dayton Bluff's proximity to downtown St. Paul, has seen her property lose about one-quarter of its market value in the past year -- from $157,000 in 2007 to $116,800 in 2008.
Her son, Jason Misener, who has a broker's license, said he's confident she could get $140,000 if she were to sell, so the assessor's action poses no great alarm. But her tax bill for 2008 shows a 17 percent increase, he added, and to that he's said: "What's the deal?"
The 2008 tax bills are the result of values set a year ago, and tax-levy decisions made last fall. In addition, the Miseners, like many other metro-area homeowners, have seen 2008 bills rise due to a phaseout of a state law protecting them from big increases in the past.
But asked about their prospects of a tax decrease next year, Sivanich said the stars seem aligned for Kathy Misener. The reasons why are testimony to the complexities of the system:
1. Her 25 percent value drop outpaces the market-value reductions that most other city homeowners are seeing.
2. St. Paul is in line to receive more money from a metro-wide pool of funds -- revenues that can be applied against the city's 2009 levy needs.
3. Her value reduction will increase the amount that she'll get in homestead credit.
But a decrease? Jason Misener, eyeing his mom's 2008 bill, says: "It's hard to fathom."
Values down
People with more modest market-value declines, trying to gauge the potential for tax decreases, must keep in mind that it is not the values of their properties alone that matter, says Mark Haveman of the Minnesota Taxpayers Association, but how their values changed relative to the changes elsewhere in the community.
There also is the issue of local government spending, to be determined later this year.
City-by-city figures provided to the Star Tribune by most of the metro-area counties show housing market values falling across Ramsey County and in virtually every Hennepin County community, as well as in the larger cities of Dakota and Washington counties, where Stillwater, Cottage Grove and Woodbury came closest to holding their values.
Minneapolis' residential values are expected to drop at least 3 to 5 percent citywide, before new construction. St. Paul dropped 7.8 percent.
In Anoka County, median values rose 0.2 percent in Blaine and dropped 1.1 percent in Coon Rapids, its two largest cities.
Average values -- at least on paper -- still were rising slightly in Scott County.
In Hennepin County, Rogers is one of the few communities seeing median-value growth -- a 1.8 percent increase. But at least one homeowner, Terri Taylor, isn't convinced. Her home, built two years ago, probably would fetch 15 percent to 20 percent less money today, she said. With home prices "in the toilet," she added, she finds her tax bill "outrageous."
On the commercial and industrial side, total values are up about 5 percent in Ramsey County and 6.4 percent in Anoka County, and that overall values are relatively stable in Washington County.
At the National Association of Industrial and Office Properties, Kaye Rakow, public policy director for its Minnesota chapter, said that she sees the slumping residential market and the commercial gains, and knows a tax shift is coming.
"The taxing jurisdictions are not going to raise less money," she said recently.
But Rakow offers no protest: "It's a market-driven result," she said of the impending shift. "We recognize it. That's just the way it is."
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