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HomeMy WebLinkAbout1979 06-04 CCP Board of Equalization BOARD OF EQUALIZATION. AGENDA City of Brooklyn Center June 4, 1979 7:30 p.m. 1. Call to Orden 2. Roll Call 3. Purpose of Board of Equalization 4. Procedural Review of Property Taxation 5. City Assessor's Report 6. Public Inquiry Regarding Local Assessments 7. Adjournment M & C No. 79 -13 May 21, 1979 FROM THE OFFICE OF THE CITY MANAGER CITY OF BROOKLYN CENTER Subject: 1979 Board of Equalization To The Honorable Mayor and City Council: — ----As-you know, each year the City Council is required our Charter to sit as the Board of Equalization, to review the work done by the City Assessor. As stated in M.S. 274.01, the duty of the Board of Equalization is, "To examine and see that all taxable property in the City has been properly placed upon.the tax list and duly valued by the Assessor." M.S. 274.01 continues, "on application of any person feeling aggrieved, the Board shall review the assessment and correct it as shall appear just." Simply put, the purpose of the Board of Equalization is not to review the amount or level of a person's property tax, but to review the assessed value of taxable property in the City as determined by the Assessor. The Local Assessor, as mandated by State Law, is responsible for establishing values of property, while elected officials of cities, counties and school districts set the level of taxation. There is a formal route of appeals of the Assessor's value on a property, starting with the local Board of Equalization. The next step is the County, then the State Board of Equalization, and finally the State Tax Court. Any claims of an unfair assess- ment should be supported by evidence and submitted to the hearing body. __During__the_ -1978 Board of Equalization we only had one individual- appear to question his value. we did, however, have one official appearance by letter. State law requires that a taxpayer appear before each level of the appeals process before he may go on to the next level. An individual may not be prepared to present evidence at this time, but wish to have his protest read into the record to keep his avenues of appeal open. No Board action is required for these official appearances. Procedurally the Board has several options upon hearing a complaint by a taxpayer. If evidence is available and presented by both sides, you may either dismiss the case and take no action, or you may adjust the valuation to equalize it with similar, properties. M & C No. 79 -13 Page 2 1979- Board -of -- Equalize If evidence is not available from both sides, I would recommend you refer the matter to staff for review and a report back at a continued meeting, which will be necessary if you request this action. If the complaint does not fall within the jurisdiction of the Board, you may request an administrative effort to solve the individual's problem, or we may provide an explanation to satisfy the person on the spot. Much of the quality of an assessment can be found in the develop- ment of statistics which measure certain tendencies in the assessment. You will find attached a report on the quality of assessment, which will hopefully provide you with concrete data upon which to judge the assessment. Respectfully Submitted, Peter M. Koole City Assessor Approve Ci y 4kanageir 1979 Report on Quality of Assessment Since the valuation of property for real estate tax purposes involves the predicting of sales prices on homes that have not sold through the study of homes that have sold, we naturally get into the field of 'statistics. Statistics not only provide the assessor with data he needs to make rational decisions as to what course to take for the next assessment, they also provide` the data necessary for the review of the assessor's work by the Local and County Boards and the State Department of .Revenue. I will provide you with a great deal of statistical: information that may appear just a bit confusing, but don't worry, the most commonly used statistical measures, the sales ratio and the coefficient of dispersion are relatively simple. The sales ratio is what percent is the assessor's value of the actual sales price, and the coefficient is simply an index of how equalized is the assessment. As you may know, legislation exists that will penalize districts with poor assessment practices as measured through the coefficient of dispersion. At the time of this writing, changes will definitely be made in this law and the effective date and what the changes will be is not known at this time. The data for these statistics is derived from a computerized sales ratio study that we do twice each year. We have used 540 residential sales in this year's study, and I have included a sample page out of the study to give you some idea of the data on it. Glossary of Terms, Formulas 1. Average Deviation - Total of deviations from the median divided by the number of properties. 2. Coefficient of Dispersion - Average deviation divided by median assessment ratio x 100. 3. Coefficient of Variation Standard deviation divided by the mean assessment ratio x 100. 4. Index of Regression - Mean assessment ratio divided by the sales weighted aggregate ratio x 100. 5. Mean Assessment Ratio - Total of ratios divided by number of properties. 1979 Quality of Assessment Page 2 6. Median Assessment Ratio - Middle assessment ratio or the average of the two middle terms when the ratios are lined up from low to high. 7. Mode Assessment - ratio that appears most frequently. _ (Not used in our studies.) 8. Range - Difference between the high sales ratio and the low sales ratio. 9. Sales Weighted Aggregate Ratio - Total of assessment values divided by total of selling prices. 10. Standard Deviation - Square root of total of squared deviations from mean divided by number of properties. 11. Sample Sufficiency Gauge Square root of half the range divided by the number of properties. Quality of Assessment One of the important ways of describing the level of assessment or group of assessment sales ratios for an area is by the use of averages. Usually two averages are considered the mean and the median. The mean is another term for arithmetic average, and very simply is the 'sum of the assessment sales ratios for an area divided by the number of items. The fact that the mean, however, is easily affected by one extreme assessment sales ratio can lead to serious consequences.: The median, on the other hand, has the important feature that it is not so readily affected —.by -a--very -large or very small value. The median - is simply the- value of the middle assessment sales ratio (or the mean of the value of the two middle ratios) when the ratios are arranged in an increasing or decreasing order of magnitude. Although averages, or measures of central tendency, provide a simple numerical value which is descriptive of a group of indi- vidual assessment - sales ratios for an area, they tell us nothing about how the assessment -sales ratios are spread out or bunched in relation to the average. To give a much better picture of a distribution of assessment - sales ratios, a measure of variation, spread, or dispersion is needed. The variation, or dispersion, of a set of assessment - sales ratios is small if they are 1979 - Quality of Assessment Page 3 bunched closely around the mean or median, and it is large if they are spread over considerable distances away from the center. Given the same level of assessment in two different areas, the one with the lower dispersion would have more assessment uniformity between property owners. Three measures of dispersion or varia- bility are used: the range, the coefficient of dispersion and the coefficient of variation. The range is a quick and easy measure of variation, and is simply the difference between the minimum and maximum assessment - sales ratios. The range, however, is a poor measure of variability, or spread, since - - - -- it really accounts only for the two extreme ratios. Amore useful tool in the measurement of dispersion, or assess - ment uniformity within an area, is the coefficient of dispersion. The coefficient of dispersion, also known as the "index of assessment inequality ", is a measure of intra -area uniformity of assessment. The lower the coefficient of dispersion, the more uniform are the assessments. On the other hand, a high coeffi- cient of dispersion suggests -a lack of equality among individual- assessments. An index of 0 10 is considered excellent, 10 - 20 a reasonable and desirable attainment, 20 - 30 questionable, and up "cause for the gravest concern" • Coefficient of Dispersion Calculation - 1979 Average Deviation Median Assessment Ratio X 100: Or 8.0 X 100 - 8.43 94.9 The goal of uniformity in property tax administration demands inter -area, as well in intra -area, equality in assessment. The coefficient of variation is a measure of inter -area assessment uniformity, that is, it allows us to compare the equality of -- assessment between two or more taxing - districts. Although -this -- board is not concerned with this, the coefficient of variation is an important measure of assessment equality. As in the instance of the coefficient of dispersion, the lower the coeffi- cient of variation, the more uniform are the assessments. For interpretation purposes, the following guidelines have been established in evaluating an area's coefficient of variation and resultant quality of assessment. i 1979 Quality of Assessment Page 4 Coefficient of Variation Calculation - 1979 Coefficient of Variation Quality of Assessment 0 10.0 Excellent 10 -.1 - 15.0 Acceptable 15.1 Or Greater Questionable Standard Deviation Mean Assessment Ratio X 100: Or 10.1 X 100 11.2 95.3 A measure of intra -area regression, or degree lower- priced properties are over - assessed, is the index of regression. if the index is more than 100, the effect of the regression is that the lower- priced properties pay a disproportionately large share of the property taxes. The major reason for this inequality, of course, is greater difficulty in the assessment of higher- priced properties. Conversely, an index of less than 100 indicates a tendency toward the under - assessment, or lower assessment -- sales ratio, for relatively small or less valuable properties, and an unequal burden on taxpayers of higher - priced properties. index of Regression - 1979 Mean Assessment Ratio Sales W ei ghte d- Agg regate Ratio: Or 95.3 X 100 100.6 i, y - 1979 Quality of Assessment Page 5 • Worksheet 1979 4358.3 1. Average Deviation 540 8.0 2. Coefficient of Dispersion 94.9 X 100 = 8.43 - - - -- 10.7 3.. Coefficient of Variation 95.3 X 100 _ 11.2 95.3 4. Index of Regression 94.7 X 100 100.6 51,477. 5. Mean Assessment Ratio 540 = 95.3 6. Median Assessment Ratio - 94.9 7. Mode - 100.2 , 8. Range 141.1 Minus 68.4 - 72.7 24,089,400 9. Sales Weighted Aggregate Ratio 25,431,448 94.7 - 61,825.29 10. Standard Deviation 540 1140491278 = 10.7 _ 36.35 11. Sample Sufficiency Gauge 540 067315 .2594* * When the gauge is less than 1.00, the sample is considered sufficient to use for a sales ratio study. 4/ 12079 C I T Y 0 F ANALYSIS OF REAL ESTATE SALES /VALUES PAGE 20 __- -_ -- - -- LEGAL DESCRIPTION PLAT PARCEL - 20ALNG SALE DATE SALES PRICE LAN6`VA6UE - 6l.JG YALUE TOTAL VALUE RATIO NEIGHBORHOOD AGE LOCATION•• TYPE :. SCUARE FEET BECRUOMS BATHS BSMT FIREPLACE GARAGE LOT SIZE SALE TYPE f._ L55 -83- PALMER -LK-i 4Z742 24 R1 9.77 47900 8500 34100 42600 .889 2 22 RAMS 1020 3 ONE FULL DBL -O 75 -126 CONV - -- . -- -- ' - L8- B2 PALMER- LK -TER2 42742 �'- 47 R1 9'°77 _'-- 42900 _ 8500 33700 42200 e984 2 21 RAMB, 960 3 ONE FULL DBL•D 75 °120 CONY - -- - -- -- _ . - - - -._ -_ L2T- 82•PAIMER - LK °T2 42742 66 R1 4.78 48000 8500 -40200 _ 48700 1.015 2 21 RAMS 960 3 ONE FULL DBL-D 75 -151 CONY — L6 -83- PALMER- LK -TER2 - 42742 - 80 - -_ Ri _ 'f2�77 - ` 42300 ._.._._ -_ 8500 ' 37400 45900 1.085 - 2 21 RAMS 960 3 TWO FULL OBL -0 87 -140 ASSUME - 8500 33600 42100 . .968 2 21 RAMS 960 3 TWO FULL DBL -D 76 -129 co _ _ PAL MER- LK•T2 -- - 42742 - - -.. 94 ""- -RI___ 52900­­ .__ 8500 35900 -- 44400 .839 2 21 RAMS 1100 3. TWO FULL 1 SGL - A 120- 80 FHA —. -_ L22- B3-PALMER -LK - T2 42742 96 - R1 ._ 9 -77 - 42000 8500 36000 44500 1.060 4' 2 21 RAMS 960 2 TWO FULL 0BL -A 80 -120 CONV L2T- 83•PALMER- LK•T2 — ti2742 101 R1 12 °77 46900 - 8500 34000 .906 2 21 RAMS 960 3 TWO FULL DBL-0 75•127 CASH -`� l.9 -81- PALMER - LK - T3 42742 117 R1 1277 53900 8500 42700 51200 .950 • 2 20 PARK RAMS. 1042 3 TWO FULL 1 DBL-A 75 -120 CONV - 115 - PALMER-LK -T3 ' 42742 119 R1 11 °77A - 44900 _ 8500 34200 42700 .951 ' 2 20 RAMS 1020 3 ONE FULL TU•1 75 -166 CONY ----- -- ____- ____- ____.__ _ - - YOTAL TNY�PI,AT 465200.00 — 85000•®0 3bf800.00 -- 446800.00 - - .960 e; i - L16.81- PALMER - 1 K•TER 42743 8 -'- ____R — _ -77 - 43900 8500 - -- 31100 " -____ 39600 _.902 2 21 RAMB 960 3 ONE FULL DBL -D 75.130 NOT SPEC L18 ^81 °PALMER ^LK - TER `42743 _ 10 - R1 - -- 5 -78 49000 _'_ - 8500 J 35600 - --- _ 44100 .900 ' ,i 2 21 RAMS 960 3 ONE FULL DBL °0 75 °130 CONV 117 -82• PALMER - TER - - 4 2743 _ 27 Rf` _T2 -TT —- 44000 -^_- - 8500 31600 .___ 40100 '-911 2 22 RAMB 960 3 ONE FULL DBl -D 70 -140 CORY - ~ L27 -B3- PALMER -LK - TER_ . 42743 57 R1 9 .77 43506 8500 35000 43500 4.000 2 22 RAMS 1181 3 ONE FULL SGL -A 75 -126 CONV v, L3.84^PALMER-LK -TER _42743 64 R1 - - ^ 5"78 - 53904 . - 8500 - 38900 - ~ &1400 •879 -- �! 2 22 RAMB 1020 3 ONE FULL 1 DSL -A 78 -154 GI ... _! L16.82- PALNER-IK - T3 12743 9T iil - 6 °78 58500 8500 42000 40500 -863 - 2 20 RAMB 1020 3 ONE FULL 2 OSL -A 54 -127 CONY Quality of Assessment 1979 SATES RATIO STUDY Aggregate Ratio - 94.7% Median Ratio - 94.9/ Coefficient of Dispersion = 8.91 Avg. S.P. = $47,095 Avg. A.V. $44,610 (540 Sales - 7700 = 7.0 1.) Style Ramblers SE -SF SL -Tri DBL 2 -ST TH # 369 51 33 25 4 7 51 SP 46,806 41,681 53,559 53,202 74,600 57,714 43,939 AV 44,056 39,201 54,800 49,536 75,050 51,585 41,905 R _94. 94.0 102.3 93.1 - 100.6 89.4 -- - 95-.4 u Location - Price Lake -River Hwy - Frwy Coml -Mul Park SP- Over$60,000 SP- -Under $35,000 # 7 24 6 10 21 26 SP 61,757 44,586 65,466 47,610 70,029 30,700 AV 56,571 45,504 65,733 44,320 64,080 31,242 'R 91.6 102.1 100.4 93.1 91.5 101.8 3 Yr.Avg. =3.77 . �e 0 -5 Yrs 6 -10 Yrs 11 - 15 Yrs 16 -20 Yrs 21 -30 Yrs 31 -40 Yrs Over 40 Yrs # 60 31 59 87 254 20 29 SP 47,476 50,635 50,95,7 49,089 46,264 40,863 40,253 AV 47,488 47,996 49,549 45,985 43,429 37,760 35,924 'R 100.0, 94.8 97.2 93.7 93.9 92.4 89.2 Neighborhood #1 #2 #3 #4 #5 #6 #7 �# 41 51 113 12 104 52 96 SP 45,966 48,038 47,560 66,458 46,893 49,470 43,960 AV 43,512 45,913 45,608 61,766 44,601 46,575 41,280 R 94.6 95.6 95.9 92.9 95.1 94.1 93.9 #8 #9 #10 # 39 19 13 SP 42,326 50,750 49,261 AN' 39,900 46,663 46,361 R 94.3 91.9 94.1 i Assessor's Valuation and Property Taxes Since 1970 i Plat 89396 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 Parcel 3000 $21,495 21,495 23,530 23,750 23,750 28,675 30,965 33,130 37,400 44,900 I .D. 34 119 21 $587.00 561.52 501.26 556.04 463.42 541.94 566.40, 685.70 661.02 610.84 14- • 0030 Plat 89371 Parcel .,6600 $36,795 36,795 37,800 38,060 38,060 44,970 51.165 53,720 57,400 62,100 34- 119- 21- $1,457.04 1,235,96 1,041.62 1,060.68 1,049.52 1,186.42 ` 1,215.36 1,433.92 1,677.52 1,328.64 32- )045 • The above properties were chosen to be representative samples of homes in Brooklyn Center, in two different price ranges. These properties have not been extensively changed physically although normal maintenance and depreciation are present in these average properties. The income- adjusted homestead credit (circuit breaker) has not been considered in this example. 1979 LEGISLATIVE CHANGES PAYABLE 1980 Old New 1978 1979 1979 Market Value 37,400 44,900 44,900 Limited Value 34,700 38,100 39,800 Assessed Value 9 1 899 9,420 Percentage 20/33 1/3 18/30 Homestead Tax $671.13 $473.96 1979 Mill Rite + 9.87/ 22.40/ (279) r old New 1978 1979 1979 Market Value 57,400 62,100 62,100 - Limited Value 56,100 61,700 61,700 Assessed Value •17,765 15,990 Percentage 20/33 1/3 18/30 Homestead Tax $1,462.69 $1,059.07 1979 Mill Rate + 10.08/ 20.28/ (279)