A Taxing Process

by Sheila Helmberger

In less than a month area residents will be digging out their checkbooks or counting on their escrow accounts to pay for the first half of their property taxes. This year, like others, county assessors' offices are hearing appeals from residents who received their bills in the mail and thought, "This can't be right." But it probably is. Real estate markets took a monumental hit this past year and people want to know why this year's tax bills don't reflect that.

Crow Wing County Assessor Martyn S. Schmidt and Cass County Assessor Steve Kuha explain a little bit about the process and how the numbers that show up in our mailboxes are calculated.

Schmidt and Kuha said a property's assessment figure takes into account many things. For one, how the property is being used, whether it's residential or business, the square footage of the structures, land value - giving it a per acre, site, or lot value, and then a good look at the history of sales in a given area. "We do a mass appraisal," Schmidt said, "The county looks at sales of similar properties and takes the median number. If there are 21 similar sales, then sale number 11 becomes the benchmark. "We are really historians of what's happening in today's market and that's what will be used to determine tomorrow's market value," Schmidt said.



It's important to remember that this year's figure may not reflect current activity in the market of a given area. "Fast changes in the local market will not be reflected on a present or even potentially next year's tax statement," said Schmidt, "And it is possible to have an estimated home market value remain the same or even increase even though the local markets have declined." This can be confusing sometimes to residents. "The county's estimated market value typically lags a year or 18 months behind the present market," said Schmidt. It's also important to remember that a property's market value and its' listing price on the real estate market are two different things.

Kuha and Schmidt say physical assessments of each property in a county are not done every year. While their assessment figures are due by law on Jan. 2 of each year an actual assessment is done about every five years. What sort of changes to a property will affect the value? "Anything that physically changes a property," said Kuha. "Things like re-roofing or re-siding won't change the figure," he said, "but building a garage, a fire on a property, things like that, will."

Kuha said the national news may misrepresent our local area as far as real estate sales. Cass County has been fortunate. "We haven't seen the decline in property values that they have in other parts of the country. We can look at a six year history of sales for example, before the rapid market decline, in 2005 there were a little over 1500 property sales in the county with an average selling price of $181,000. In 2008 there were 651 property sales in Cass County with the median selling price of $204,000. So, even though the number of transactions have gone down, our market values have really remained steady. About half of the properties in Cass County are lake shore and the market value has stayed, really, somewhat steady in those."



So where does all that money go? The dollars collected from property taxes is used to fund several things. Part of it will go toward funding local units of government said Kuha, funding for city and township budgets, road and bridge improvements. Often a portion of the taxes goes to the school districts, regional developments, fire protection and water shed areas.


The House and Senate are currently working on legislation that may bring some relief in the future to property taxpayers. But the proposals are still being rewritten and it's difficult to forecast if they will be passed and what the final versions will look like. One homestead credit is currently being offered to homeowners, however. You must own and live in their property being used for the credit. It must be applied for at the county offices and there are financial guidelines. The credit is a $304 one for a property valued at about $76,000, but the amount is reduced as the property value increases and there are limits on the property tax refund that the owner may apply for.



This year both Crow Wing and Cass offices have seen appeals on tax bills but that's not out of the ordinary. "We always do have some phone calls and people attending the meetings but it's probably a little more active this year than the past several years. We do encourage people to come to our office so they get a little better understanding of how it works. If a resident wants to question their value and they have reasons to feel the value is incorrect they should come see us. But it's not enough to just say, 'I think that's not right.'"



The Crow Wing County and Cass Count Assessor's offices both welcomes questions regarding tax assessments and hearings are scheduled and listed on valuation notices with the dates and times set aside for appealing. Contact the Crow Wing County Assessor's office at 218-824-1010 or the Cass County Assessor's office at 218-547-7298.