Property values may be dropping, but not tax bills

If you think the drop in the value of your Scott County home will bring relief at tax time, you may be disappointed.

Gigantic differences in what's happening to property values across the county are expected to result in property tax increases -- even for some homeowners whose property is worth markedly less than what it used to be.

And that's true even if the county doesn't increase its spending.

That fact has startled even the county's senior managers. And they are taking pains to get the word out early in hopes of preparing folks for what's coming.

"It was a 'Wow!' for us," said Gary Shelton, the county's newly appointed top administrator.

That won't necessarily be the case in Dakota County. There, development patterns are very different and city-to-city differences in property values have not been as dramatic.

To be sure, many property owners in Scott County should see breaks on their taxes, as they finally begin to be "credited," so to speak, for the huge drop-offs in home values after the housing bubble burst.

County officials are bracing for a backlash -- and appealing to other taxing entities such as school districts and cities to keep a tight rein on their own budgets.

"I'm a taxpayer," Shelton said, "and I'd feel terrible, if my value went down -- and it did go down -- [and] if the combined impact of the county increasing its levy, and the school district and the city increasing their levy, would be that I wound up with my value down, but my taxes up by 800 bucks. That would be a shocking thing to me.

"But even if everyone does a zero, and no one increases anything, a certain percentage of taxpayers will see a tax increase. And that's something people are not expecting."

There will be a push to cut, and the county does expect to cut. The question will be how much. That discussion gets started in earnest on Tuesday, at the next county board meeting.

Shelton is prepared to resist the predictable call to slice into what some consider niceties, such as parks and libraries.

If there's a push to cut below the zero-levy point, it would come from board members such as Tom Wolf, newly elected last fall on a fiscal-hawk platform.

"The main thing is, we're going to have a zero-percent levy increase," Wolf said Friday. "That's a big thing in my book. We can't tax people any more right now. They're getting hit from all sides. And we'd look like shining stars if we could lower taxes -- or at least the levy."

One expected solution, to delay road projects, doesn't impress Wolf any more than it did his predecessor, Bob Vogel. "Roads are the one thing almost every county resident uses every day," he said. "It's that first basic backbone structure; yet they keep getting put on the back burner."

Values vary greatly

Scott County has an unusual property-value scene. Shakopee's values are holding up fairly well, as are Chaska's and Chanhassen's across the river in Carver County -- perhaps because they are just minutes from major job concentrations on the Interstate 494 strip. Prior Lake has scads of pricey lakeshore lots, which are holding their value as well -- and bringing furious tax appeals from many property owners.

The McComb Group, a consulting firm, reported recently that Scott County cities are both close to the top and the bottom among the entire metro area in what's happened to home prices over the past three years.

Even excluding foreclosed properties, the firm reported, Rice County and the Scott County tier closest to it -- from Elko New Market across to Belle Plaine -- has seen major losses in value, from 16 to 20 percent. At the same time, provided foreclosures are excluded, as county tax assessors also seek to do, Shakopee and Prior Lake are actually up a tad.

Strangely enough, the most similar areas to Scott County are the two central cities, both of which have certain neighborhoods near the top and the bottom of the three-year trends. Poor inner-city Minneapolis neighborhoods such as North (-36 percent) and Phillips (-27 percent) are among the region's hardest hit, but Calhoun-Isles (+9 percent) and downtown (+6 percent) are two of the five hottest real-estate success stories during that time.

"The Twin Cities is not one housing market," founder James McComb concluded, "but a composite of 100 mini-markets," with vast differences among them.