Print VersionStay Informed
Minutes/Board of Equalization Appeals Subcommittee
Tuesday, May 24, 2005 - 1:30 p.m._____________

Members present: Kreun, Hamerlik, Glassheim.
Mel Carsen, city assessor, Duane Jungels, appraiser.

1:30 p.m. John Dickinson, 126 Victoria Court.
Mr. Dickinson handed out two documents, one was an appraisal to his property pursuant to receiving the home equity loan two years, second documents is one he created using an excel spread sheet based upon the appraisal in 2003 as to what he computes to be the fair market value of his property should be from time he bought it in 1997 until currently. He stated he thinks his
figures are what he expects to sell the house for based on how much the market appreciation has gone up and he is saying appreciated value and City saying market value and to him they are the same thing. He stated that the City has him assessed at $143.800; and as he computes the fair market value based on appreciation from 1997 until 2003 and that appreciation remains fairly constant, he get fair market value at about $118,000.

Mel Carsen, city assessor, submitted papers to the committee showing what the 2004 value is, $128,900 market value for 2004, and market value for 2005 is $146,900, and sketch showing Mr. Dickinson's property, and third sheet is cost approach, and costing house out at today's costs as of about third quarter of 2004, and call it their 2005 cost - it costs up the house at what it would cost to replace it minus depreciation and that shows a value of $143,800. and their recommendation is to reduce it from $146,900 to $143,800. He also presented sales information on the last 12 months and comparing those homes against this subject property to see what subject property should be worth based on sales, and review comparable sales info. and have full access to everything in their computer system and can be projected on the screen (photos of houses or what committee might want to see).

Mr. Carsen stated that the market value of houses is not dependent upon the value of money, interest rate on money, but totally driven by what other houses are selling for, and his best opinion is that the house would sell for somewhere between $153,00 and $163,000, and are recommending a cost approach of a conservative $143,800.

Mr. Carsen stated they use the cost approach because it gives them the most consistent number, the market approach gives a good test if the cost approach is even in the ballpark, and all of their recommendations in the whole appeals process has been based on the cost approach backed up with the market approach.

There was some discussion re. comparable sales in the neighborhood and Mr. Dickinson stated that since the appraisal in 2002 they have made no other improvements to their home, and asked how they account for an increase in 5 years of only $9,000s and an increase in the last 2 years of $28,000. Kreun stated it is not Grand Forks as a stand alone situation, this is a national trend and we are lagging behind. Mr. Dickinson asked to what benefit would it be to him if he could show a counter appraisal at $125,000 and how much influence would that have on the value. Mr. Carsen stated he would have looked at any appraisal submitted.

Kreun stated their job as the Board of Equalization is to make sure that all the properties are equal in value and that is why tried very hard to make variables as equal as can; that in this particular market, doesn't look like it is going to end in the next year or so either and becomes very important that they get these values right and keep them right, and what has happened in the housing market esp. in your market range is extremely hot at this time and does inflate and people are paying more because the interest rates are lower and has brought the value of your home up.

Glassheim stated that this is separate from the valuation of your home but because the housing market is going up across the city, have been working very hard to bring the mill rate down. Kreun stated they are working with other taxing entities and hoping to drop down the mill levy so those numbers won't be the same as in the letter from assessing and increase won't be as dramatic as at first.

Glassheim stated they will wait until after additional hearings before making recommendations. Committee adjourned for special city council meeting at 2:00 p.m.


Next session of hearings by Board of Equalization Appeals Subcommittee.

Members present: Hamerlik, Glassheim, Kreun, Mel Carsen, Bob Lequire (city appraiser).

3:30 p.m. John Torrey, 2119 - 9th Avenue North.
Mr. Torrey did not appear.

4:00 Art Huot, 1803 8th Avenue North
Mr. Huot stated his valuation was raised from $88,200 to $104,400, that his house was built in 1961, that a lot of work left to be done in his house from flood, that he is retired and lives on set income, his adjusted gross income from last year $14,911, and wanted to show you what people who are retired are up against - took 2 checks of his pension to pay health insurance, long term care and drugs. He stated his basement needs work, walls almost caved in, that he has not looked at comparable sales in his neighborhood. Glassheim stated he has value in his house at over $100,000, and that is how property tax works all over the country. Mr. Huot stated he cannot live in his own house when it is paid for. The committee asked if Mr. Huot would qualify for a senior citizen tax credit - Mr. Carsen stated it is possible but it is such a low income, $14,500, but that medical expenses are deductible. Mr. Huot stated his medical expenses have already been deducted from his income - that he doesn't want to move - that valuation is too high, cannot have increase of $300+. Kreun stated he is close to the senior citizens discount and that assessing has lowered this from $104,400 to $99,200 and suggested that he look at his adjusted gross income and visit with Mr. Carsen to see where those thresholds are and to see what can do with the senior tax discount as that makes a considerable difference

Mr. Carsen reported that one of the inspectors went out and looked at this house prior to the Board of Equalization and made adjustment down and did find that the basement was shored up and actually corrected but have given extra depreciation for that and there is a 5% depreciation allowance which is $3651.00 and have given that adjustment for the basement situation, assessed value reduced to $99,200.

Mr. Carsen asked Mr. Huot to come to the office and would look at actual income and expenses.

Kreun excused.

4:15 p.m. Dudley Benson, 1609 2nd Avenue North.
It was noted that assessing had recommending upholding the value of the property at
$120,600, and Mr. Carsen stated this property was protested last year at this Board, at the County Board and at the State Board and the value at that time was $101,900; the appraisals at that time showed $120,000; he went through the house with Mr. Benson a couple weeks ago and cost approach shows $131,200 and market approach shows a value of $142,300.

Mr. Benson stated he had estimates to repair basement of $1,250, repairs for cement work by garage and driveway and included ests. to do complete repairs of damages of $8,350, and front steps should be replaced and railing doesn't meet building code and est. of repairs to kitchen vinyl $4,422.90, dry wall = with material and labor over $15,000.

Mr. Carsen stated they have given this house normal depreciation for its age, plus given it a 10% ($10,891) for deficiencies in the house (floor covering, sheetrock in the basement, concrete work) and has difficulty believing that $8300 for concrete (19 x 43') and sidewalk contracts for the City this year are $3.50 sq.ft. replacement for new sidewalk. He reported that Mr. Benson's house burned in 1991 and this house was built on the same foundation with some additions to the foundation. It was noted that assessing's cost approach showed $131,000 and only assessing at $120,600, have subtracted from the cost approach both the age depreciation and other factors, and have given full consideration to all defects in the house in the appraisal. Mr. Carsen reported the appraisal they had last year indicated a value of $120,000 and were assessing at $101,000 and new appraisal indicated $120,600. Mr. Benson stated he disagreed and thinks value of $101,000-$105,000.

4:30 p.m. David Perry, 610 North 25th Street.
Mr. Perry stated his property went up about 15% over last year and would argue for lower value for his home, that the figure from assessing was $200,500, and Mr. Lequire from assessing came and did an assessment and that based on their estimate they would uphold the assessed value and reviewed comparable values they had used in their valuation process, two of the homes were on the south end of town which he thinks is a different market and that homes on the northend are valued less than homes in the southend, the ones used for comparison properties were between $153,000 and $174,000, that they had fewer sq.ft., that they have a split level home (comparable homes were approx. 1800 sq.ft.) Mr. Carsen stated they show gross living area is 3039 sq.ft, that gross living area on a bi-level home or split level homes is the garden level, first floor level and upper level, and to contrast that to comparable homes. Mr. Perry stated that his point is that according to the appraisal done by Johnson in 2001, they calculated sq.ft. differently, cost approach was $152,931 and using 3 comparable properties it was $152,000 in 2001; that in 2003 they did an external appraisal and that appraiser, Mark Zimmerman, said property values in this neighborhood are stable, neither increasing nor declining in June of 2003. He gave copies to Mr. Carsen; and stated that Zimmerman did not give a number if 2003 but stated that it was the same. He stated they were refinancing at that time and bank wanted to make sure it hadn't decreased in value. Mr. Carsen stated this is a desk top underwriter property inspection report, to determine if it is safe and sound and meets codes and nothing about value. Mr. Perry stated he didn't have any argument about last year's valuation of $174,000+ but to suddenly jump up to over $200,000 in one year seems a stretch to him. He stated their home is in the flood plain, north of University Park and there was a creek that ran through their alley and had problem with drainage and thinks that is a valuation issue with them.

Hamerlik stated they have the city in units and make comparisons because of homogeneous of the area but in this case did go to another area to find a comparable type of house, and is his assumption correct. Mr. Carsen stated most appraisers go all over town, that he likes to stay in same neighborhood but if find a lack of comparable recent sales in that particular area - this is very nice house - across the street from West School. Mr. Lequire stated to find comparable sales in the north end, would have had to go out into Congressional, Burdick area and make large adjustment for the age of the property and felt more comparable to use homes of the same vintage that do into the southend in homogeneous area. Mr. Carsen stated the increase was 15% in this entire neighborhood was increase between 2004 and 2005 and then went back and looked for comparables which actually priced above. He stated they code each property whether northside or southside and for northside also grade the particular neighborhood and this neighborhood is an N-4 (on north side, slightly above average) and use a 2.5% adjustment (reduction) going northside to southside; and thinks their statistics bear out the 2.5%.

Mr. Perry stated their house was built in 1957. Mr. Carsen stated effective age is similar to house that would have been built in 1974 without any improvements, and Mr. Perry's house has had improvements and when make a major improvements (kitchen cabinet, new windows, etc.) it changes the effective age and calculate that mathematically. Mr. Perry stated regarding the 15% increase for his neighborhood, that houses in this middle range have gone up because of the demand but when one gets a little higher than that the demand is less but still under the same 15%. Mr. Carsen stated the predominant price range in that area is little more, but $200,000 would be top of that scale, but thinks the reappraisal that Mr. Lequire did would support the value of $200,000 and have to go with that, but up to the committee. Mr. Perry stated that the cost estimate value (assuming replacement cost) was $209,000 and surprised because 4 years ago with appraisal done by Darren Johnson, the cost replacement was $152,00 and asked if costs for building have gone up that much in 4 years. Mr. Carsen stated costs have gone up in 4 years ago, 6% per year and last two years - adjusted their manual this year by 8%, last year by 7% so in last two years 15%.

Glassheim asked if anybody gets less because in the floodplain; and property values have been inflated for 2 or 3 years and will they lower the property values when market turns around.. Mr. Carsen stated they do not make an adjustment for floodplain and not sure any appraiser does; and do find neighborhoods that do go down, and in Richard's West area there have been two years in last 10 or 12 that have made a reduction because sales supported a reduction. Glassheim stated he wanted to make sure that was our policy but attempt to follow the market. Mr. Carsen stated they look at last year's sales to determine this year's value.

Mr. Carsen stated there will be a notice to everybody if we upheld the value or reduced it; and recommendations will be made to the Board of Equalization on June 7 at 7:00 p.m. and those protesting could also speak to the Board. Hamerlik stated that there is another appeal to the County on June 7 (afternoon) and if appeal before the County they can appeal before the State but cannot appeal before the State unless they appeal before the City and the County before going to the State.

The Committee made the following recommendations to the Board of Equalization:

1: John Dickinson, 126 Victoria Court.
The assessor recommendation was to reduce the value from $146,900 to $143,800.
Hamerlik stated that Mr. Dickinson appeared and committee heard his testimony and that the city assessor's recommendation through the cost approach and the market approach and to uphold his recommendation. Hamerlik stated based on the materials presented, moved we accept the assessor's recommendation for John Dickinson at $143,800. Glassheim seconded the motion. Motion carried.

2) Arthur Huot, 1803 8th Avenue North.
Hamerlik stated that Mr. Huot appeared and testified primarily about basement of his house and about his income, and moved that we accept the assessor's value at $99,200 . Glassheim second the motion. Motion carried.

3) Dudley Benson, 1609 2nd Avenue North.
The assessor is recommending that we uphold his findings of $120,600 at 1609 2nd Avenue North. Glassheim stated they went into details at some length and found that the defects in the house claimed by Mr. Benson were in fact subtracted in the assessor's valuation. Hamerlik reported they heard the testimony by Mr. Benson, and recommended that we uphold the amount $120,600 as estimated by the city assessor. Glassheim seconded. Motion carried.

4) David Perry, 610 North 25th Street.
Glassheim stated that Mr. Perry did make a good point about lower priced homes in his area and that the homes in the area of a lesser value as his is one of the more valued homes probably didn't appreciate at the same levy of 15% and that the city assessor should give some thought to that for future and how it could be done if it happens again, Hamerlik moved that we recommended that we uphold the city assessor's recommendation for Mr. Perry, 610 North 25th Street, at $200,500. Glassheim seconded the motion. Motion carried.

Glassheim yielded chairmanship of the meeting to Chairman Christensen.

Hamerlik stated he had suggested that they get together because there will be 4 more individuals who are on the agenda for this evening, that they have acted on this group of 5 or 6 individuals and have balance of the protestors listed (up to 107) and had suggested they meet because about 69 of the total have been upheld and about 38 have been reduced and need a recommendation for the Board of Equalization on the 7th of June and was forwarded to this committee and up to our group to take the action on those not appearing before us.

Glassheim stated normally would recommend upholding the assessor's values although we have not looked at each one, not sure if that is a problem or not, but the assessor has been in touch with each of the protestors and they are aware of their right to come in and speak to us and bring documentation, and they haven't - a number of them, 30 to 40, have agreed with the assessor's new or existing values and asked if should forward to the Board of Equalization a motion to recommend upholding the assessor's values.

Hamerlik stated we don't have any additional information from them for any reason to change it, and it was noted they can appear before the Board of Equalization should they have any additional information regardless of what our recommendation is. Mr. Carsen stated that every person they talked to after inspection of their property, what their recommendation would be to this body, they either agreed with that if it was a downward adjustment or upholding the value or they would have said they would still like to appear before the committee and that is where they got the 8 protestors from. He stated he couldn't think of anyone who was upset with the value after done with the process, some that didn't like the taxes and wanted this group to know that and said that this group and also the School Board and the Park District and County are looking at the mill rate reduction and that still will not offset their increase but will soften it a little bit. He stated that they don't make deals in their office, went on the facts - that there were about 5 or 6 when last inspected the property were not allowed access and when did that the appraiser bumped them a little to the upper end and when come back now find they bumped them too high on an estimate. There are 2 or 3 of them that have some significant water problems and noted that in the remarks.

Chairman Christensen stated as he understands the process, they receive the protests, sent notices to individuals and scheduled times for hearings, and before that assessing reviewed all the assessed valuations, and have come forward with recommendation to reduce some values or sustain valuations but in every case discussed that with the owner. Mr. Carsen stated that was correct. Christensen stated they should report that back based upon hearings and based upon assessor's recommendations and his comment sheet and give to Board of Equalization for approval.

Hamerlik moved that we accept the recommendation of the city assessor to individuals appearing on the Protest Recommendations for City Board of Equalization dated May 24, 2005 except Doreen Collatt, Ross and Becky Bossart and Edward Beneda who will be heard later this evening; Glassheim seconded the motion. The motion will include the findings of the remaining individuals who will be heard tonight. Motion carried.

ADJOURN

It was moved by Council Member Glassheim and Hamerlik to adjourn. (5:15 p.m.) Motion carried.


NEXT SESSION OF BOARD OF EQUALIZATION APPEALS SUBCOMM.
Members present: Gershman, Kerian, Christensen.
Mel Carsen, Dave Kaufman (city appraiser)

7:00 Doreen Collatt, 1416 4th Avenue North
Ms. Collatt stated they purchased house in 1993 for $79,000, completely finished
basement with a 3/4 bath, bedroom, washroom, wet bar with cabinetry and sizable recreational area, all carpeted in the basement except for the washroom and the flood of 1997 took care of that, that they no longer have any of that, basement just 4 concrete walls with furnace and hot water heater. and have not had a chance to remodel their basement and living on one floor and less than 2 years ago in 2003 had an appraisal during refinancing of their house and appraisal was at $90,000 and the City assessed their property at $94,000, that every year the property tax has gone up but feels that this house without a basement is not worth $100,000 and amount of money to refurbish it, can't see anybody paying $100,000 and that the average increase this year was 6% and 6% of her 2004 assessment which was over to begin with , would come up with a value of $102,000 rather than the $107,000 which she is being assessed for this year by the City. The neighborhood she is in, this is best house in the block, most of the houses in that block are assessed at $60,000 and value of the neighborhood is there and neighborhood is old, no basement and this went extremely high.

Mr. Carsen stated one of the appraisers in his office reviewed this, repriced it on their current manual, did a market approach and that information in their handout containing the 2004 value and 2005 value and value went from $96,900 in 2004 to $114,700, a sketch of the property, a cost approach appraisal and that indicates a value of $107,000 and that is their recommendation, reducing it from $114,700 to $107,000. It was noted that is taking into consideration an unfinished basement; and Mr. Carsen stated they have added for a one-story house, central air-conditioning, a wood deck and depreciated that amount, there is an attached single stall B grade garage at $9200 minus depreciation, a detached 3-stall garage (garage built in 1978). He stated the market approach selecting 3 of the most comparable sales in the last 12 months, each lists address and what sold for, and each sale adjusted for differences between subject property and comparable sales property. He stated the biggest adjustment is the garage adjustment. In 2004 the average increase in this neighborhood was 3% and in 2005 increased somewhere between 18 and 19% and one of the bigger percentages.

Mr. Carsen stated that this is Sales Area 6 which goes from 20th Street to Washington and from Dyke Avenue to Gateway - there were 51 sales in that area last year and the average sale price was $87,400, lot of homes $40,000 to $50,000 in there. Mr. Carsen stated median number was $90,675; he stated this is better than average valued house for that neighborhood. He stated a very good home in a very poor neighborhood is going to drag that home down but doesn't think have that situation here.

After further discussion it was moved by Gershman and seconded by Kerian to uphold the assessors valuation in view of the fact that have come down $7,700. Motion carried.

Mr. Carsen stated a better way to do it is to reappraise every year but not very acceptable by the people; and this is one of the older appraisal areas, last appraised 1988, after flood reviewed. Christensen asked if increased staff and computer area and do areas every 5 years. Mr. Carsen stated computer system is top shelf and time to arrange with people to get into a house and even with people who knew they were coming, took several calls to get them to respond. that they would have offered evening. Christensen stated why not have part-time appraisal staff and become pro-active rather than reactive. Gershman stated this year nationally homes went up 15% percent - had some complaints last year but this year many but whether change procedure based on one year. Reassessment every 5 years would be good.

7:45 Ross & Becky Brossart, 1702 7th Avenue North
Mr. Brossart reported house built in 1971 and put large addition on back of the house in 2002, that he was unable to get certified appraisal of his house from an appraisal company to compare to assessing; and has reviewed some of the surrounding neighborhood, there were couple homes for sale within a two block area of his home; that he has done improvements to his home in 2002 added on a kitchen to their house, and in 2003 received letter from assessing saying that their house was going to increase in value and understood that; and in 2002 went from $97,400 to $126,300 and increased by $28,000 (labor and materials $50,000), and Mr. Carsen stated they normally would have re-appraised the property. Mr. Brossart stated he was concerned about increase in 2003 for addition, small increase in 2004 and a large increase this year and didn't do anything to his house. He stated his house is proposed to be valued at $157,000 and in his neighborhood on values of houses in the area and none coming close to it, and reviewed comparable sales.

Mr. Brossart stated his concern is if he were to sell his property, but people who buy a home also look at the value of neighborhood and his home at $157,000 and the neighboring homes at $110,000 or $120,000; another concern is that there are homes within their block are rental homes and if home in a rental neighborhood, doesn't that bring down the value to some degree. Mr. Carsen stated one rental property a block away wouldn't have any effect but if a number might have some effect, but at what point does it become a negative, when looked at sales and some are for rental property, hasn't studied that, but even higher priced homes in that neighborhood which is generally modest neighborhood would indicate that across the board, are about 18% lower than should have been.

The committee reviewed assessor's comparable sales information

Mr. Brossart stated an 18% increase is quite high after having a 30% increase previously after adding addition to his house - look at 60% increase after 3 years. He also stated that market value not so much concern as the property tax and that is based on the value of the property.

Gershman said that the taxing entities are working to take the mills down, that the City is going to go down about 9 mills or 74% of its portion of the increase and based on that your taxes are going to go down from the proposed amount - 4% decrease and rather than 18% increase have 14% increase or 13.5%.

It was moved by Gershman and Kerian to uphold the assessor's valuation of $157,000. Motion carried.

Gershman stated that the public has to address the School Board, County Commissioners and Park District as well as the City. Mr. Carsen also noted that those protesting can also present their appeal to the County Board of Equalization, and to the State Board.

8:00 Edward Beneda, 5482 West Plum Drive.
Mr. Beneda did not appear.
Moved by Gershman and Kerian to uphold assessor's valuation. Motion carried.

ADJOURN

It was moved by Council Member Gershman and Kerian to adjourn (8:35 p.m.). Motion carried.

Alice Fontaine
City Clerk