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Ag values up about twenty percent

Mon, Jun 18th, 2012
Posted in All Agriculture

County Assessor Cynthia Blagsvedt gave an overview of property valuations across the county at the Fillmore County Board of Appeal and Equalization on June 12. One fact that stands out is that agricultural land has again seen a marked increase over the 2011 assessments.

All classes of tillable land increased by $1,000 per acre with A-tillable land increasing from $4,000 to $5,000 per acre. However, pasture land was down from $2,600 to $2,000 per acre.

The relative value growth for rural areas was evident in the fact that out of 49 newly constructed homes in the county, 45 were built in township areas with only four total in the cities.

Residential property values were readjusted downward in Chatfield, Harmony, Lanesboro, and Spring Valley because of sale valuations of 118 properties. The square foot rate for houses was reduced in all cities with the exception of Pilot Mound where it stayed constant. Loss market value of property causes levy rates to increase.

The total value of rural and agricultural properties in the county makes up 71 percent of the value of all property in the county. This represents an increase from 2011 when rural and agricultural properties made up 68 percent of the total county value. Residential value made up 24 percent of the total value in the county for 2012 which was down from 26 percent for 2011.

The total value of all county property is up nearly nine percent from 2011. Nearly 14 percent of that increase is rural and agricultural property. Residential value dropped about one and one half percent from 2011.

There were 335 building permits issued county wide in 2011. Over $12.4 million was spent on new construction in the townships including agricultural, commercial, and residential construction. About $3.6 million was spent on new construction within cities which included agricultural (bins), commercial, residential, and apartments or B & Bs.

Due to the state’s new Homestead Market Value Exclusion passed into law in 2011, net taxable market values were reduced on average of over 20 percent in the cities and over eight percent county wide. This has contributed to levy increases.

L & R Partners Appeal

Red Essig made his case before the Equalization Board that the total taxable property valuation is too high for his insurance business property.

Blagsvedt had detailed the rules and duties of the board in her report. It is required that property owners first appear before their local board of equalization, which Essig did. His business property is located in Spring Valley and he did receive a limited reduction in property value there. The taxable market value had been reduced from $238,400 to $233,300 for the 2012 assessment.

“Appeals must be based on facts.” Essig had an area real estate broker do an analysis with comparable properties, three in Spring Valley, one in Preston, and one in Chatfield. The broker estimated the market value of the property to be $165,000.

Essig said he had purchased the property in 2004 for $160,000. The main floor of the former bank building is used for the offices of the Essig Insurance Agency. The second floor is used for storage and the basement is not in use. The building is about 100 years old.

Essig noted improvements he had made since he and his wife acquired the building, which included replacing an old fuel oil furnace with a gas furnace. There had been a petroleum leak with the old fuel oil system. The Minnesota Pollution Control Agency (MPCA) determined the problem has been addressed and they have “closed the release site file,” which means no additional investigation or clean-up is required in the foreseeable future.

Essig noted there are 34 properties up and down the street where his building is located and 10 are vacant. He remarked, “Equalization is based on facts.” He just wanted to be treated equally based on facts.

Blagsvedt explained the process her office goes through to establish a market value. They use a computer-assisted mass appraisal. Sales determine the base square foot rate for each building in each taxing district. Features like brick, heating type and AC are applied to the value. Depreciation and condition is taken into account.

Appraiser Brian Hoff maintained that the broker’s market analysis was not a formal appraisal. He added that three of the comparables used were foreclosed properties which they can’t use as qualified sales.

Essig asked if the market value shouldn’t have something to do with what they could sell the property for. Hoff admitted they deal with past data. He described it as being at the tail end of a roller coaster. Their valuations go up or down after changes in market sales.

Commissioner Chuck Amunrud insisted that the fact that the MPCA letter is on file showing prior contamination should decrease the property value. Buyers may not want to deal with the potential liability. Hoff said they looked at the MPCA factor, but if a specific sale doesn’t say there is a stigma because of the pollution, he can’t take it into account.

The board lowered the total market value of the property to $200,000 with a unanimous vote.

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