Property taxes have gone up (in some Northside neighborhoods more than others)
By Kenzie O'Keefe | Editor
Shortly after Emily Laconic, 38, bought her first home home in Lind-Bohanon 11 years ago, its value plummeted.
In 2007 she purchased the foreclosure, which had been vacant for a few years, for $124,000. Less than two years later it was worth $72,000. “I’ve been upside down on my mortgage this whole time,” she said.
So when Laconic received her 2018 property valuation notice (for taxes payable in 2019) this March and saw that the City had assessed her property’s market value at $130,000 – 12% higher this year than last – her feelings were mixed. On the one hand, if the City valuation is correct, her home is now finally worth more than what she bought it for. On the other hand, her taxable market value increased by $15,260, and when she received her property tax bill for 2018 that same month, she saw an increase that worried her. She says she owes 17.3% – or about $800 – more than last year. “Other years it’s been a lot lower increase,” she said.
There are many intersecting factors that could explain Laconic's property tax increases and other experienced by Northsiders. The total amount of money the county needs to collect has gone up. There’s a high demand for affordable starter homes in Minneapolis, and the Northside has the most right now, leading to increased home values here. And the Northside’s slow but increasing bounce back from the foreclosure crisis means that home values here have increased at higher percentages this year than in other parts of the city.
YOUR HOME VALUE DETERMINES YOUR SHARE OF THE PROPERTY TAX PIE
The City has 14 residential appraisers who appraise residential homes like Laconic’s each year. They calculate values by looking at sales data for each neighborhood. By statute they have to physically view 20% of the City’s properties each year.
Laconic is skeptical that her house is worth as much as the City says it is, so she applied to appeal her valuation with the City Assesor’s Office by their April 13 deadline.
Patrick Todd, the City Assessor, encourages this course of action. “If you don’t tell us it’s wrong, we assume it’s right,” he said, noting that while the assessor’s office prides itself in accurate valuations, even a 1% margin of error can result in thousands of homes being valued incorrectly.
But Todd is careful to make clear that while your home value determines your share of the property tax levy (the total amount needed to be collected from taxpayers), it plays a limited role in determining the actual dollar amount you pay.
“If you have an issue with a tax bill,” he said, you have an issue with decision making by your elected officials who determine the city and county budgets that make up the tax levy. Property taxes support the city, county, and school district’s budgets. All three increased in 2018.
TAX BILLS ARE LIKELY INCREASING FOR NORTHSIDERS
Near North and Camden (the entire Northside) are the only two Minneapolis neighborhoods that haven’t seen their median home values return to their pre-recession assessments. They have the lowest median home values in the city, and they are just two of three neighborhoods where median values are below $200,000.
Relatively affordable home values in an increasingly squeezed housing market, particular for first time home-buyers, have increased demand for homes in North Minneapolis. Last year, Folwell and McKinley were two of the “hottest” housing markets in the Twin Cities, according to a study done by Zillow Inc.
According to Ken Rowe, a senior administrative manager for the County’s property tax division, supply and demand change from year to year, and values go up in desirable neighborhoods. The faster they go up in relation to overall increases in value across the city, the more likely they are to experience property tax increases.
Rowe says many North Minneapolis homeowners likely saw property tax increases because of this in 2018. “If there is an increase in value in my neighborhood that isn’t being experienced throughout the whole city, that causes my share to go up relative to everyone else and that’s why my taxes go up.”
In addition to increased demand for homes in a neighborhood, new builds worth more than the area median home value and renovations to existing homes that increase their value to more than the area median value can increase a neighborhood’s share of taxes they need to pay.
“The problem with gentrification is that people come in and start building bigger homes and making it more valuable and that drags [other residents’] values up. Absent any other changes, that will increase their share of the tax base which results in the same types of tax increases that you’re seeing now,” said Rowe.
Laconic worries that this is happening in her neighborhood. “What I’m really concerned about are those stupid houses on the Humboldt Greenway that are going for $299,000. None of our houses are worth that,” she said.
JUSTICE IS THE JOB OF THE LAWMAKERS
Both the city and county assessors who value properties, and the county’s property tax managers who determine what each person owes, are sensitive to the potential negative impacts of increasing home values and property taxes in neighborhoods, but they all say it is important not to consider these factors when doing their jobs.
Todd says that in order to focus on fairly valuing each property, appraisers need to avoid being biased by the emotional aspects of property value increases. “The less information we have about tax burden and homeownership burden, [the better],” he said. “We just want to make sure the value is right.”
“There is no justice built into [our] equation. It’s pure math,” said Rowe. “There’s nothing in the law that allows us to take a look at circumstances like need.”
Rowe says policy makers, not assessors or calculators like himself, are responsible for thinking about equity when it comes to taxation. He noted that levies are set by city, county, and school officials and the rules about how tax amounts are determined are set by the state legislature. “It’s not that we don’t care. This is the role we play,” he said.
When it comes to calculating property taxes, Rowe says equity can complicate the process: “The problem is that every time you try to make something more equitable, you generally lose transparency, and simplicity, and efficiency in how you collect those things. ...that can be frustrating to a lot of people, however, without doing that, if you had a perfectly simple system that was just 'take my market value and divide it by the levy and here’s what it is,' that’s where you lose the equity in the thing.”
RELIEF IS AVAILABLE
In 2017, Hennepin County piloted a program that connects people who are delinquent on their property taxes with a navigator who can help them avoid property forfeiture. Of the 53 people who were referred to the program that year, 33 were able to stay in their homes either by paying their taxes or working out a plan to pay them. 22 became active human services cases.
“That’s a huge percentage,” said Jan Duffie, who supervises the program for the county. “People are flying under the radar; they’re not getting the services they need because of a variety of mental health and financial and medical circumstances. …They’re paralyzed in whatever situation they’re sitting in.”
This success led to the program being established permanently. 80 property owners have enrolled in the program so far this year.
Duffie says navigators help property owners “get upstream” of challenges that prevent them from paying their taxes. “The navigator will talk to a person about their finances, their wellbeing. …They can have that conversation before tax forfeiture is involved.”
IF YOU EXPERIENCED MORE THAN A 12% INCREASE IN YOUR PROPERTY TAXES THIS YEAR: You are eligible for a property tax refund. Visit here for more information.