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Cook County Commissioners learned a lot from Assessor Bob Thompson, who presented the 2021 assessment and early projections for the 2022 assessments.
Thompson appeared before commissioners on November 23.
Significant sales in the real estate market have resulted in less inventory of homes and cabins across the county, no surprise there, but the volume of sales was shocking.
There has been “roughly an 84 percent increase in the number of sales over the 2020 study period,” noted Thompson.
From October 1, 2019, to September 2020, there were 325 sales versus 597 sales over the same time in 2021. Thompson said this was likely the highest percentage increase in the entire state.
The median increase of a cabin or home in Cook County doubled from $168,000 in 2020 to $334,877 in 2021, a 99.3 percent increase, while the average price of a cabin or home is up 43.5 percent ($273,619 in 2020 to $392,650 in 2021).
Why property taxes?
Property taxes are composed of local and state property taxes. Local property taxes fund local services and programs like public schools, fire and police protection, libraries, streets and more. State property taxes pay for school districts, towns, cities and counties, plus other special taxing districts.
Some properties are classified as seasonal-cabin or commercial industrial or agricultural and are subjected to state property taxes.
2022
Thompson reported, “The initial run of the 2021 sales ratio study indicated that vacant land in the west end townships was selling below the assessed value.” However, he explained in some instances, there was “an ununiform assessment.”
To fix valuations, Thompson and his staff made a table with color coded zones which highlight more valuable properties (per acre) over less valuable acres. One example he gave was land sold near Lutsen Ski Hill for $236,000. The county had assessed that land at $70,000. With the new zones, the appraisal of lands will be more straightforward.
The findings in the west end resulted in value reductions required to meet compliance with the Department of Revenue Sales ratio, which states “median ration must be between 90-105 percent of assessed value.
“Compounding with reduced taxable market values, substantial changes to classifications of short-term rental properties also resulted in reduced tax capacities,” Thompson said. For example, properties classified commercial and then switched to residential dropped from two percent to 1.2 percent, resulting in less tax capacity, he added.
However, many jurisdictions’ fiscal disparity contribution ratios were increased, in some cases to 100 percent. This was due to commercial growth in the 2020 assessment figures resulting from commercial classifications on short-term rental properties.
“After reducing the land table per rate, sales ratio numbers (in Cook County) were complying with Department of Revenue guidelines,” Thompson said. However, after the county filed its assessments with the state, he was told Cook County was one of the few counties in Minnesota that had no state board recommendations last year.
With the increase in sales, Thompson’s office has been busy. He said openings in his department during “the busiest year of property sales in at least a decade and working the most developed quintile area of the Assessor’s five-year cycle, have caused a backlog of work yet to be completed.”
Two people were hired to fill the gap. In June, Andrew Beavers was brought on as an appraiser, and Kyle Monson is a trainee appraiser hired in October.
Because of the backlog in work, Thompson requested a contract up to $5,000 to hire appraisal work of new construction for property inspections. Commissioners passed a motion unanimously in support of his request.
“Entering 2021, the Assessor’s Office was in the process of training two appraisers; both positions have turned over since, and each was vacant for two months,” noted Thompson.
Thompson said Hovland, Greater Grand Marais, Grand Marais, and the West End had been reassessed following the quintile schedule. Next year the goal is to get the Gunflint Trail properties done.
How are rates set?
Thompson gave a thumbnail explanation.
The legislature sets class rates, says who is eligible for exemptions, exclusions, etc., and determines the processes and rules for property assessment and taxation.
The county assessor determines valuations and classifications, while the auditor calculates tax rates to ensure the amount needed to operate the county is collected. These evaluations and calculations determine how each portion of the financial pie is created and sliced later.
The auditor calculates tax rates to ensure the amount needed is collected. Individual tax bills are calculated based on previously set values and classifications.
City, county, school, etc., levies and budgets determine how large or small the pie (services provided and level of service) will be.
Board chair David Mills complemented Thompson and his staff for their work and the process Thompson used to describe what has been done so far.
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