Why some property taxes jump.

In general property taxes in Rochester are going up at about an inflationary rate.  However some are substantially higher. Typically this is because their value went up. The city does not set valuations, that comes from the county. Here is an explanation of why this happens.

From: Krupski Mark [mailto:krupski.mark@CO.OLMSTED.MN.US]
Sent: Tuesday, December 02, 2014 9:09 AM
To: Neumann, Gary
Cc: Kvenvold, Steve; Spaeth, Terry; Hackman Julie; Paulson Tami; Kraft Ryan; Devlin Richard; Krenik Belinda; ‘rmiller@rochestermnchamber.com
Subject: RE: Commercial Valuation Increases

Good Morning Gary,

Please find attached a copy of the City of Rochester 2014 Assessment Commercial Sales Ratio  study stratified by property type: Fast Food, Hotel, Strip Retail, Office, etc.

Based upon the review of what types of commercial property were selling, adjustments were made to those property types to better reflect the market. State law mandates that all property is to be assessed at 100% of market value. The Sales Ratio study is relied on to assist in making those market value determinations.

Reviewing the study, some of the larger increases were applied to strip retail and office condos. Office condos were significantly reduced during the recession and have since made a recovery although not quite as high as they once were prior to 2008.

Strip retail properties also improved based upon the sales study.

The overall commercial segment of the real estate market in Rochester had been flat since about 2008. The last assessment sales study period (October 1, 2012 thru September 30, 2013) demonstrated the first signs of appreciation in some commercial property types.

The core of downtown Rochester also saw increases to land values based upon recent sales of commercial property that are slated for demolition.

Assessors are typically considered ‘historians’ responding to a past market, however I do anticipate that the commercial real estate market will continue to grow based upon buyer enthusiasm around DMC, low interest rates and pent up demand due to a market that had been stagnant from 2008 thru 2012.

Increases in budgets for the City, County, State General Tax and School District further increased the impact to those commercial properties that increased in taxable market value.

I believe the City Bio-business Building would have been impacted by the adjustments made to both Office properties and perhaps land values in the downtown core.

For further explanation on that property please send me the parcel id and I will look into it further.

I hope this helps explain the increases in property taxes you mentioned in your email.

If you have any further questions please let me know.

Mark Krupski, CAE


2 comments

  1. I was at both the city council meeting on tax’s heard and seen the way the council didn’t really take a intrest in tax payer comments about real estate tax raising as high as 40% you could tell they are on the receivino end of hard working tax payer. I have my business on 37th street and 10th lane and my real estate tax’s are proposed to go up 37% that $450 a week in real estate tax’s no doubt for the city come with these tax numbers on the budget you must be using common core math . How you people that are running the city expect businesses to pay these ridiculous tax’s you must be in fantasy land. Commercial real estate is empty every where in Rochester. People can’t afford to be in business in this city with tax’s like that. With tax’s like this you are proposing will cost businesses $ 5 to $6 a Sq. Ft. In tax’s. . With the way Rochester is taxing more small businesses will be closing. Minnesota 3rd highest taxed state in America and Rochester one of the highest tax city’s in Minnesota it will be one of the most expensive places to live in America in the next couple of yr’s.

  2. I think that we did hear what was being said, however the topic raised was not the topic being discussed. Those that are seeing the big increases are seeing them because their property values were raised by the county assessor. If someone feels those numbers are correct they need to be appealed when that notice comes in the mail. The budget we passed only results on inflationary level increases on properties with constant values. I always like to offer the reality check that Minnesota’s economy is one of the best in America right now and our unemployment rate is less than 3% so we are doing things pretty well here…

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