7 things to know about new property valuations

ROCHESTER — Olmsted County property owners can start watching their mail to see how much the estimated value of their property has changed.

The new valuations for 2024 will be included in the 2023 tax statements, which are expected to start hitting mailboxes this week, according to Mary Blair-Hoeft, the county’s director of Property Records & Licensing.

While the tax statements reflect amounts due this year, the valuation notices are sent in advance so property owners know the value that will be used to determine 2024 taxes.

Here are a few things to know about the valuations:

1. Now is the time to consider disputing the value. 

Blair-Hoeft said too many people wait until later in the year to dispute the new valuations, which means their only option is heading to tax court.

“Unfortunately, the public a lot of time feels that it’s (disputed) during the truth-in-taxation hearing,” she said of the annual county meeting designed to discuss the next year’s county budget and tax levy.

Specific information for disputing a new valuation is listed on the notice, since details can vary between local jurisdictions. Any questions related to the process can be directed to the assessor's office at 507-328-7670.

Some townships and cities require taxpayers to take concerns to their boards before going to county staff, while others leave the initial review to the county assessor’s staff. The outcome of both reviews can be appealed to the county board of appeals and equalization.

If a township or city has a local review board, reviews will start in April, while a May 15 notification is expected for county staff reviews, with a June 30 deadline for any adjustments.

2. The state sets requirements for assessments. 

While county and local boards can make changes to valuations determined to be out of line with actual property values, Olmsted County Assessor Julie Hackman said the values must fall within state guidelines.

Minnesota requires valuations to fall within 90% to 105% of comparable area sales, based on category.

If a county is determined to be setting values too low or too high, the state can take over the process and force blanket adjustments to property valuations.

Comparisons for 2024 valuations are based on actual sales between Oct. 1, 2021, to Sept. 30, 2022, under state law, but sales deemed to be abnormal or involving special circumstances are typically removed from the process, Hackman said.

3. Valuations are often lower than market values due to lag. 

Hackman said county valuations in the current market tend to be lower due to the gap between the comparison period and when the new values are implemented.

The gap allows time for the property owners to review and potentially contest a new valuation, but it can also leave a difference between assessed value and real market value.

“In a year when sales are increasing at a steady pace, we are always lagging behind,” she said.

A slight drop in the number of home sales in recent months might close the price gap between the 2022 comparisons and the 2024 valuations, Hackman said.

4. Industrial properties are likely to see the greatest adjustment. 

“Industrial property has been selling quite quickly and for much more than we have on those properties,” Hackman said, pointing to a need to adjust the values of similar properties.

She said farmland has also seen a shift to a higher value, which will be noted by many owners.

Not all adjustments are made across an entire category.

While overall apartment valuations are closer to sale prices, Hackman said larger complexes have been valued at a higher ratio than fourplexes in the county, which is likely to lead to an increase in valuations for the smaller rental properties.

“That should balance it out some.” she said.

5. Increased values don’t always equal higher taxes.

While 2024 property taxes will be determined based on the valuations sent out this week, the actual tax collected is also based on the overall tax levy approved each year and how it’s divided.

As a result, valuation is just one factor in an individual tax bill.

If all property values were to rise equally and nothing else changed, an individual’s property tax wouldn’t change, but valuations don’t increase equally across different property mixes and new development can help spread the collected taxes over more properties.

6. Downtown Rochester values are being watched. 

Hackman said past development activity has increased values for downtown properties in recent years, but empty storefronts could reduce some property values.

“We recognize a lot of downtown is probably starting to become vacant,” she said. “Leases are starting to come due and they are having a harder time, so we will continue to watch that and look at the vacancy on some of those properties.”

At the same time, she said the assessments can’t be hastily made, since businesses tend to move in and out of downtown over time.

“There’s already a given amount of vacancy that we give to properties with just the assumption that leases are going to turn over from time to time,” she said, adding the county staff is watching for any unexpected changes that could lower property values.

7. Rochester no longer has a board of equalization.

The Rochester City Council decided in December to shift the initial appeal of valuations to Olmsted County, where the assessor’s office will review concerns to make potential changes before it reaches the county board.

Hackman said the change provides Rochester residents with a little more time to consider appealing, since the city review would have started in April and the county staff is asking for notification of intent to appeal by by May 15

“We could very well see an influx from people in the city of Rochester at the board of equalization, just because of the timing,” she said.