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City Council Agenda Packet 04-25-2006 Special Board of Review . . . AGENDA SPECIAL MEETING - MONTICELLO CITY COUNCIL BOARD OF REVIEW Tuesday April 25, 2006 - 7 p.m. Mayor: Clint Herbst Council Members: Wayne Mayer, Tom Perrault, Glen Posusta and Brian Stumpf 1. Call to Order 2. Board of Review 3. Adjourn I a,uties of the local board , The local board is to detennine whether all of the taxable property in the town or city has been properly valued and classified. All property is to be valued at its market value, and all property is to be classified according to use. It is assumed that the assessor has properly valued and classified all the property in the jurisdiction. Thc burden of proof rests with the property owner who must present factual evidence to disprove the assessor's value or classitlcation. The complaints and objections of property owners appealing individual assessments for the current ycar should bc considercd very carefully by the board. An appeal may bc made in person, by letter, or through a representative ofthe owner. Written objections should be_ filed with the city or town clerk prior to the meeting of the Local Board of Appcal and Equalization and must be presented to the board for consideration while it is in session. The board must hear all complaints and examine all letters. Such assessments must be reviewed in detail, _~d the board has the authority to make corrections as it WIeems to be just. Thc board may recess from day to day until all cases have been heard. The board should look for property or inlprovements that are not on the tax rolls. When property or improvements arc missing from the tax rolls, an unfair burden falls upon the owners of all property that has been assessed. If the board finds any property or improvements that are not on the tax rolls, the board should place it on the assessment list along with its market value, and correct the assessment so that each tract or lot of real property and each article, parcel or class of personal property is entered on the assessment list at its market value. Changes within 10 days of local board meeting Since the Notice of Valuation and Classification must be mailed to taxpayers at lea>;t 10 days prior to the meeting of the Local Board of Appeal and Equalization, the assessor should not make changes to the valuation or classification of a property within that I O-day window without bringing the change to the local board for action. After receiving the notice, the property owner can Acontact the assessor to discuss questions or concerns. ~he assessor can make changes to the valuation or cla<;sification without bringing the change to the local board if a new notice is mailed to the property owner at least 10 days prior to the local board meeting. Oftentimes, the assessor will continue to review properties within 10 days of the local board meeting. However, if the assessor makes a change, that change should be brought to the local board for action. Tfthe property owner agrees with the change, he/she does not need to personally appeal to the board. Instead, the assessor should present such changes to be voted on by the board. What the board can do Reduce the value of a property. The local board may reduce the value of a property if the facts show that the property is assessed at a value that is higher than its market value. All property is to be valued at its market value. It is assumed that the assessor has properly valued the property. The burden of proof rests with the property owner who must present factual evidence to disprove the assessor's value. Increase the value of a property. The local board may increa..<;e the value of a property if the facts show that the property is assessed at a value that is lower than its market value. The board also must base the decision to increase the market value on tacts. All property is to be valued at its market value. It is assumed that the assessor has properly valued the property. The board must rely on factual evidence to disprove the assessor's value. Before the board raises thc market value of a propcrty, it must notify the owner. The law doesn't prescribe any particular form of notice, except that the person whose property is to be increased in assessment must be notified of the intent of the board to make the increase. The owner must be notifIed either in writing or orally. He/she should be given a time to appear before the local board. After the hearing, the local board should make any corrections that it deems just. Add properties to the assessment list. If the board finds that any real or personal property has not been entered onto the assessment list, the board shall place it on the assessment list along with its market value, and correct the assessment so that each tract and lot of real property and all personal property is entered on the assessment list at its market value. lEI Role of the local board in the assessment process . Add improvements to the assessment list In reviewing the individual assessments, the board may find instances where property is not listed at its market value because the value of a building or other improvement was not included when the market value of the property was estimated. These should be carefully reviewed by the board and placed on a tentative list of property values to be inerea<;ed. The board should then dctermine to what extent the valuation of such property should be increased. Before the board adds value for new or overlooked improvements, it must notify the owner. . Change the class(fication of a property. In Minnesota, property is classified according to its use on the assessment date (January 2 of each ycar). If the property is not currently being used, it is classified according to its most probable, highest and best use. Property owners do not get to choose or request how they want their property to be classified. It is the assessor's job to classify it according to its current use or its most probable, highest and best use. The board can change the cla<;sifieation of any property which in the board's opinion is not propcrly classified. Again, it is assumed that the assessor has classified the property correctly. The classification must be based on use, and in order for the board to changc the classification, the appellant must present evidence that the property is used in a manner consistent with the classification. For example, the assessor classified the property as residential. The owner seeks the agricultural classification. In order for thc board to change the classification to agricultural, the owner must prove that the property is used agricultumlIy and meets the statutory requirements of the agricultural class. What the board can't do . The local board can't consider prior year asse.\~..ments. The Local Board of Appeal and Equalization doesn't have the authority in any year to reopen former assessments on which taxes are due and payable. The board considers only the assessments that are in process in the current year. Occasionally, a property owner may appear with a tax statement and protest the taxes or assessment of the previous year. The board should explain tactfully that it does not have the authority to consider such matters. After taxes have been extended, adjustments can be made only by the process of application for abatement or by legal action. I The local board can't order percentage increases or decreases for an entire class of property. The authority ofthe local board extends over the individual , a<;sessments of real and personal property. The board can't increase or decrease by percentage all of the assessments in the district of a given class of property. Changes in the aggregate assessments by classes are made by the County Board of Appeal and Equalization. The local board can't reduce the aggregate assessment by more than 1 percent Although the Local Board of Appeal and Equalization has the authority to increasc or reduce individual assessments, the total of such adjustments must not reduce the aggregate assessment of the jurisdiction by more than I percent. The "aggregate assessment" is the total EMV that the local board has the authority to change, i.e. the total EMV of assessments within the jurisdiction excluding state assessed property. For example, if the total EMV of a jurisdiction is $2,000,000, the board cannot reduce the total EMV of the jurisdiction by more than $20,000. This means the EMV after board actions must be at least $1,980,000. lfthe total amount ofadjustments made by the local board does lower the aggregate assessment by more than 1 percent, none of the adjustments will be allowed. This linlitation docsn't apply, however, to the correction of clerical errors or to the removal of duplicate assessments. Clerical errors are limited to errors made by someone performing a clerical function during the course of the actual assessment. Examples of clerical errors arc crrors such as transposing numbers or mathematical errors. Errors that occur when making estimations during the inspection and appraisal process Gudgment errors) are not considered to he clerical errors. Assessor's EMV + Total board EMV increases - Total board EMV reductions EMV after board actions The local board can't exempt property. The Local Board of Appeal and Equalization does not have the authority to gmnt an exemption or to order property removed from the tax rolls. The local board can't make changes benefiting a property owner who refuses entry by the assessor. The board may not make an individual market value adjustment or classitlcation change that would benefit the property in cases where the owner or other person having control over the property will not permit the assessor to inspect the property and the interior of any buildings or structures. Role of the local board in the assessment process lEI . . . Duties: Local and County Boards Local Board of Appeal and Equalization + County Board of Appe.al and Equalization Ensures individual assessments within the jurisdiction are properly valued and classified. + Ensures equalization among individual assessments, between classes and from jurisdiction tojurisdiction. + What can local and/or county boards do? a Increase or decrease value of individual property. a Add properties to the assessment list. a Add improvements to the assessment list. Increase or decrease value an enti~~pr()Pf3rty~lass. gg~<a!"lgl:lJhl:l.gICl~~.ifl~~~i9n_gf.<a...prC?peTty,.. .. ,/ Yes ,/ Yes ,/ Yes No ,/ Yes ,/ Yes No ,/ Yes ,/ Yes ,/ Yes Whatlocal and county boards cannot do: a Cannot change prior year assessments. a Cannotreduce aggregate assessment by more than 1 percent. a Cannot exempt property. o Cannot make change benefiting owner who refuses entry by assessor. * *Minnesota Statutes. Section 274.01, subdivision 1, paragraph b states that the local board may not make an individual market value adjustment or cla~s!fication change that would benefit the property in ca~es where the owner or other person having control over the property will not pennit the m~\'essor to in~pect the property and the interior of any buildings or structures. The county board is not statutori(v precluded from making a change ba~ed on the property owner's n.ifusal to allow the asse~sor access to view the property. However, simply because the statute does not explicit(vpreclude the county board from making such a change, it is strongly recommended that the county board not grant any reduction in value until the property owner has allowed the assessor access to view the property. It seems obviou~ thatfor an a~se!>~wr to make afair and knowledgeable value estimate, he/she mustfirst be allowed to view the entire property. Until such acCe5~S is granted, the county board should not grant a value reduction. Recommendations for local board members Become familiar with sales information prior to local board meeting Most local board members aren't necessarily aware of current trends in the real estate market or trained in the field of appraisal. Therefore, advance preparation is essential to making informed, fair decisions on the appeals heard by the local board. The COlUlty assessor (or the local or city assessor in some instances) should provide information on the real estate market in advance of the local board meeting. If this information isn't provided, the local board should request that the assessor provide the information at least one week prior to the meeting so board members have time to review it. Role of the local board in the assessment process I _ following are examples of the type of data that the ....essor may provide for the local board to usewhen determining if an adjustment is necessary. This is not an all-encompassing list, and depcndin~ on the jurisdiction, it mayor may not be necessary for every board to have all the items on the list. The local board should work with the assessor to determine the specific information to be supplied to the local board. . Information on sales within the district that occurred in the previous year. . Valuation tables ofland types. . Copy of the values from the mini-abstract for the district (current year and prior year). . Printout of parcel listings for the district with the values. . Review of the current statutory classifications and the corresponding class rates. . Review of value changes by property type in the district. The local board should also be prepared to request additional background information and to ask ..questions of the assessor in order to assist with the WJoard's deliberations. As a local board member, you should review the information provided by the assessor. If you have any questions about the materials, please be sure to contact the assessor. Being knowledgeable about the real estate market is the key to making infoffiled and fair decisions. Avoid conflicts of interest No board member shall participate in the discussions or vote on any matters relating to property in which he or she has a conflict of interest. A conflict of interest exists where a member: . has a fmancial interest in the property; . is a director, trustee, officer, employee or agent of any business or institution directly involved with the property; or . is related by blood or marriage to an individual having an ownership or financial interest in the property. Board members are afforded the same rights as the general public when it comes to the appeal process. However, when a local board member is appealing the value or classification of his /her property, as a general rule, the local board should not make any changes to the valuation or classification. The local board should vote "no change," and the appeal should be recorded so that the board member can appeal to the County Board of Appeal and Equalization. This will eliminate any appearance of the board having a conflict of interest or the appearance of giving preferential treatment. Duties of the clerk . The town or city clerk plays an important role in the Local Board of Appeal and Equalization process. The following is a brieflist of the duties of the clerk pertaining to the local board meeting: . The clerk should work with the county assessor to establish the meeting date(s) for the local board. . The clerk should coordinate with the board to ensure that a quorum will be present at the meeting. . The clerk must publ ish and post notice of the meeting at least 10 days prior to the date of the meeting (Minnesota Statutes, Section 274.01, subdivision 1). . The clerk should have a sign-in sheet for all appellants. . The clerk should take minutes ofthe meeting as part of the town or city record. . The clerk should return all necessary records to the county assessor in a timely manner. In some jurisdictions, various duties of the clerk may be performed by the city or county assessor or the assessor's staff. In these instances, it is recommended that the clerk be aware of and monitor the duties to ensure that all duties are performed. Role of the local board in the assessment process m '- I Local board meeting procedures that foster fair and impartial assessment reviews and other best practices recommendations Each local board meeting is conducted differently. While there aren't any statutory guidelines for conducting the meeting, this chapter will outline meeting procedures that foster fair and impartial assessment reviews. Meeting procedures Also included in this chapter are best practices recommendations for local boards. We acknowledge that some cities or townships may have bylaws or rules of procedures that may preclude some of these recommendations. Keep in mind that these are recommended procedures for the local boards, and it is not intended to contradict such rules or bylaws. It is up to each board to determine which procedures are most appropriate for its Local Board of Appeal and Equalization meeting. The board should run the meeting 8he board should take charge of the meeting. It is not .e assessor's meeting. The local board is intended to be a fair and impartial review of the assessment. The assessor should realize that the appeal decisions arc not in hislher hands. The board's decisions are between the board and the appellant. The assessor is not on trial for hislher work. The board should not critique the assessor's performance or blame the assessor for increasing values (or taxes). Assessors should try not to become too personally involved with the decisions and remember that they have already done their best job. It is now the task of the local board to review the facts and make decisions as it deems just. Establish ground rules for the meeting Before hearing any appeals, the board chair should outline the growld rules for the meeting. The ground rules set the tone tor the meeting. The specific ground rules may vary for each local board but should include: . Purpose of the meeting; . Remind property owners that only appeals for the current year valuation or classification can be made - taxes or prior years' assessments are not . wiiliin the jurisdiction of the board; . The order ofthe appellants (Will it be by appointment first, followed by walk-ins on a first- come basis? etc.); . The expectations of the appellant when presenting hislher appeal (The appeal must be substantiated by facts; where the appellant should stand or sit; the appellant should be prepared to answer questions posed by the board, etc.); . Time limits imposed (if any). . The procedure the board will follow t(.>r making decisions (Will the board hear all appeals before making any decisions? Will the board send a letter to appellants to inform them ofthe decision? etc.); The Board Chair should give the assessor the opportwlity to present a brief overview ofthe property tax process and a recap of the current assessment. Appellants should then present their appeals. If the assessor has had a chance to review the property prior to the meeting, the assessor can present facts and information to the board to support the valuation or classification or recommend that the board make a change. If the assessor has not had a chance to review the property prior to the meeting, the assessor can present such information to the local board at the reconvene meeting. II Local board meeting procedures that foster fair and impartial assessment reviews and other best practices recommendations . . . All proceedings must be public The local board meeting is subject to the open meeting law. The open meeting law reqUITes that meetings of governmental bodies generally must be open to the public. Therefore, all local board proceedings must be public. Board members should not leave the meeting to the assessors while thcy talk about other business. Board members should not confer with each other, the assessor or appellants regarding appeals in question outside the local board meeting(s). Make appellants feel comfortable Presenting an appeal to the Local Board of Appeal and Equalization can be intimidating for appellants. The goal of the board should be to make the appellant feel comfortable, not intimidated. To makc the appellant more comfortable when prcsenting an appeal to the local board, it is recommended that the appellant sit (or stand) in front of the board and present directly to the board rather than having the appellant speak and address all present in the audience. This not only allows the appellant to be more comfortable, but also decreases the potential that an angry "mob" will form at the meeting. Dealing with angry or difficult property owners The following are some tips that may be helpful when dealing with an angry or difficult property owner: · Always treat the property owner with respect. · Listen to the property owner. · Speak calmly and keep your body language calm. · Encourage the property owner to discuss his/her concerns. · Don't get defensive. · Keep things on a positive level. · A void blaming statements ("You. . . "). · Keep the conversation focused on the issue, not personalities ("The assessor doesn't like me," etc). · Clarify the problem. · Acknowledge the property owner's concerns. · Show empathy for the property owner. · Agree, at least in part, with what the property owner has to say ("I agree with what you're saying, but... "). · Emphasize collaboration ("Let's see if we can find a solution to this problem."). · Let the property owner know that you will be reviewing the facts of the case. · End the property owner's presentation by acknowledging in a tactful manner that you've heard what he/she has to say and will consider the matter. If things get too heated, it may be a good idea to suggest a short break so the parties can calm down. Don't let things get out of hand before informing the authorities. If the board is anticipating any problems, it may be a good idea to inform local law enforcement of the meeting in advance. Don't take threats or someone talking about violence lightly. Safety should be your main concern. If you feel threatened, call the authorities. Oftentimes, property owners are frustrated by the process because they are unsure about how to appeal to the local board. To reduce their frustration, it is recommended that the local board let them know what they will need to do to substantiate their appcal (,ee ''Handouts.for property owners" section in the Appendixfor information local boards may supply to property owner:;). The Notice of Valuation and Classification will direct property owners to the Minnesota Department of Revenue website (http://www.taxes.state.rnn.us) for information on the appeal process and how to substantiate appeals. Many counties also have information on their websites such as how to appeal, property information, frequently asked questions, etc. If your county website does have information relating to assessment or property taxes, it is a good idea to become familiar with this information so you can refer property owners to it. Hearing appeals The board chair should call the appellant. The board must be attentive when the appeals are being presented. Take the time to listen to the person presenting the appeal, but don't let the appellant dominate the meeting. After an appellant has presented his/her case, the chair should ask the assessor to explain how the value and/or classification was determined. To keep things moving and to conduct a fair meeting, any time limits imposed on an appellant should also be imposed on the assessor. The board should ask questions of the appellant and the assessor if more information is needed. lEI Local board meeting procedures that foster fair and impartial assessment reviews and other best practices recommendations I eepending on the procedure that the board is following, the chair should either: · Have the board make a deciswn on the appeal; or · Inform thc appellant that his/her concern will be taken into consideration and let the appellant know when a decision will be made, as well as how he/she will be informed ofthe board's decision. Review process not value-reduction process The appeal process is a review process and not just a value~reduction process. The Local Board of Appeal and Equalization is an important step in maintaining an equitable property tax system. It is vital that the board members take this responsibility seriously. Any value changes - increases or decreases - must be justified as value changes have the effect of shifting the tax burden. The board must avoid reducing the value of all individuals who appeal to the board, as that would be unfair to the property owners who have not appealed. The board should not give reductions to people just for "showing up." It is assumed that the assessor has ~operly valued and classified all property in the ..,msdiction. Thc burdcn of proof rests with the property owner who must prcsent factual evidence to disprove the assessor's value or classification. All changes made by the board must be based on facts. Recess or adjourn The board may not take action after adjourning. All issues must be resolved before the meeting is adjourned. If issues still need to be considered, the hoard should recess until the next meeting. The next (reconvene) meeting must he held within 20 calendar days (including the day of the injtial meeting) unless the board requests a time extension from thc Department of Revcnue, and the time extcnsion is granted by the department. The date and time for the reconvene meeting must be determined before the initial meeting is recessed. Once the Local Board of Appeal and Equalization has adjourned, they cannot reconvene. . Recess A break in a meeting or proceedings until a certain date and time. Recess is not to be confused with "adjournment," which winds up the proceedings. Adjourn The final closing of a meeting, such as a meeting of the board of directors or any official gathering. Adjourn is not to be confused with "recess," which means the meeting will break and then continue at a later time. It is the board's duty to review the facts and make corrections as it deems just. It is not appropriate to turn the decision over to the assessor. The board should not order the assessor to review the property and change the value or classification and then adjourn. In this instance, the issue is not resolved. The board may ask the assessor to review the propcrty and report back to the local board at a reconvene meeting. Ultimately, it is the local board that must make any adjustments. Decisions All decisions should be adopted by a fOffi1a] vote. Options for decisions include: · No change; · Lower the value; · Raise the value; · Notify a property owner of intent to raise the value; · Change the classification; or · Have the assessor inspect the property and report to the local board (within the 20-day timcframe). 1m Local board meeting procedures that foster fair and impartial assessment reviews and other best practices recommendations