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CC 2003 04 14 BORCHANHASSEN BOARD OF EQUALIZATION AND REVIEW APRIL 14, 2003 Mayor Furlong called the Board of Equalization and Review meeting to order at 6:3S p.m. CQUN~ ME~E~ PRESF. aNT: Mayor Furlong, Councilman ~ Councilman Lundquist, Councilman Ayotte, and Councilman Peterson STAFF PRF~ENT: Todd Gerhaxdt, City Manager; Justin Miller, Assistant to the City Manager; Angie Johnson, Carver County Assessor; Steve Clay, Carver County Assessor, and Dan Salsendahl, Hennepin County Assessor zoos osaI og EQtr ZATION gEV-m . Todd Gerhardt: The City of Chanhassen contracts with Carver County for our assessment services. Angle Johnson is our Carver County Assessor, and she's here to give an overview of the assessment pracfi~ for 2003. Angie. Angle Johnson: Here tonight also is Steve Clay, our Senior Appraiser who does the residential properties in Chanhassen, and representing Henuepin County is Dan Salsendahl. Basically every year we nm a 12 month sales survey with the Department of Revenue. This past year we had 432 residential sales in the city of ~n. Basically the 12 month sales survey starts the first of October and runs to the end of September which delermines our estimated market value for January 2, 2003. Basically overall we had about a 9 percent increase overall in the market value for the city of Chanhassen. About 10 percent for residential properties. About 4 to 6 tnax:em for commercial/industrial. 6 percent for apartments. Overall 9 to 10 percent for all other which is basically agricultural properties. Basically tonight is the night that cifizem and pmtxaxy owners can appeal their estimated market values or their classifications and they still, some of them have already contacted us and we do have some recommendations ready and I don't know if there's anybody that hasn't contacted us. We usually ask that pmtnmy owners call our office first. That way we can review the infonmfion prior to this meeting and come to the Board prepared with a recommendation right away, but if we need to reconvene we can reconvene also. Otherwise we could also close tonight. Is the~ any questious7 Todd Gerhardt: Angie, how many appeals have you received to date? Angie Johnson: Well basically we had about 3 that said that they would be coming to the meeting. I don't know if they're coming or not. We had about maybe only a couple dozen phone calls actually. It's been very, very quiet county wide. Unbelievable. I don't know. Value's been going up and everything else too but it's county wide it's just very quiet. Todd Gerhardt: Nobody's filled out a formal form? Angie Johnson: I think we have a couple. Todd Gerhardt: In the box tonight? Okay. At this time we'd welcome any residents that would like to speak in front of the Board to give an overview of their assessauent and too high or too low. Board of Equalization and Review - April 14, 2003 John Ridley: I guess I'll lead off. I'm John Ridley. Mayor Furlong: Could you give us your odd_mss too please. John Ridley: Yeah, 590 Bighorn Drive here in Chart. It doesn't ha~ very often but tonight I'm speaking for my wife and L Usually she has her say. She can't be here tonight I guess the reason I'm here tonight is to appeal both the taxable market value and the estimated market value that has been displayed on this notice of valuation and classification that came out for assessment year 2003, which will be used for next year. I've already met with Steve Clay. We walked through the house together. I expressed my concerns about valuation and why I felt that they were not in line with what I believe the market value of that house is. And he came back with a proposal of a quality adjustment of $10,000 on an overall estimated market value of $371,000. You know I'm not in the real estate business. I am a homeowner and concerned about obviously what the value of my home is and how it compares with the market, and also the assessed value and taxes I pay. But I live in the Shado~ subdivision which I don't know when that subdivision was started. When I bought the property it was in the fall of '91 and at that time out of 26 lots there was only about 3 of them that were left to be developed. The house was a spec house built by a builder that apparently bellied up somewhere in the process. It was finished by Lyman Lu~ Company. I really believe that Lyman Lumber Company decided that they were going to clean out their inventory of materials that people had ordea~ but they didn't want, or that they were buying to sell people because they finished it on the cheap, and that's okay. I mean you look at the overall package and you decide whether you're inmmst~ for what the p~ sells for and you move ahead. But ~vely speaking to the rest of the houses in that subdivision, our house is smaller in size and the quality of the finishings are si~ificantly different than the others, and Fm not going to waste all of your time to enmnemm that but the size of that house is 1,100 square foot a level and there's 3 levels. We're a total of 3,300 square feet. Most those homes in that area are in the 4,000 to 5,000 range. I could go on and on about the finishing but just basically there are no name brand windows in that home. There's no quality fixtures in any of the plumbing locations. The main entry is not a wood entry. It's some kind of a pressed wood entry. I believe the realtor called it wonder wood beea~ you wonder what it is. But there's several things about it that are not going to demand or command a premium price when you go to sell it. And I just think that that, those features have not been taken into consideration. I know Steve's offer of a reduction of $10,000 may sound like it's si~ifieant but not when you look at the overall assessed value of what that house has now risen to. You know I'm looking at what has happened to that taxable market value in the last 2 years going from 2001 to 2003, it's an increase of 23 percent. It was sitting at $294,500 and now the, for 2003 what we're trying to get to is $362,900 which is a 23 percent increase over the 2 years. The estimated market value which I guess is what it should sell for was raised from $294,5130 to $371,300. That's 26 percent~ I don't know that I can go out on the market and get over $335,000 for that house. I think that's the max. I haven't tried to sell iL I'm not in that position but I just, I think that those numbers that have been submitted on this notice of valuation need an adjustment and I don't believe that the $10,000 that Steve proposed is adequate. Mayor Furlong: Good, thank you. Questions? Todd Gerhardt: Mayor, it's not our place tonight to make a decision on it. I would recommend that you continue to work with Angle in the next 2 weeks. Final decision from the cotmcil will be made April 28~ at 6:30 in this room agaim Right now tonight the objective is to receive cormnents. Have you work with Carver County Assessor's office to come to some conclusion. If not, then this City Council board will make a decision at their April 28~ meeting. And then from Board of Equalization and Review - April 14, 2003 that it will go down to Carver County Board and then ff you're not satisfied with thig council or the Carver County Board decision, you always have District Court as your next step. John Ridley: Okay, thank you. Mayor Furlong: And there is an opportunity if people do not wish to make a public statement to just file a written? Todd Gerhardt: Co~ Mayor Furlong: Request too as well. Todd Gerhardt: But your verbal is enough tonight to put you on record. Mayor Furlong: Okay. Are there any other individuals that wish to speak up in fxont of the Board? Okay. Councilman Peterson: Angle, did I mimmderstand you. I thought I heard you say that we could make this the final meeting tonight Angie Johnson: Yes you could. Councilman Peterson: So as Todd walks away. Angie Johnson: Basically we've always been at two before. This meeting and a second meeting because we've had so many people coming to the meetings, but basically the other meeting is basically for the convenience of knowing that we have a set meeting schedule, although since we only have one appeal here, and Steve has ~y talked to him. Councilman Peterson: That was my point so. Angie Johnson: And has his recommendation ready because the one gentleman that I talked to basically I had a recommendation ready but he didn't have time to hear my recommendation of no change and such so. People that we talked to, we basically told them that they would have to present their appeal to the Board tonight and it would have to be txmight and the ones that we have talked to, we have recommeadations for. Steve does have reco~ons alxeady tonig~ for this property. Councilman Peterson: So that being said Todd, I mean I don't see any reason to have another meeting. Todd Gerhardt: What was in the notices? Angie Johnson: lust the first night. Todd Gerhardt: Just tonight? Angie Johnson: If you do not. Todd Gerhardt: We don't put the second one? Board of F, qualizstion and Review- April 14, 2003 Angie Johnson: ...because we've always done that before. Todd Gerhardt: Our past practice has been to hold two meetings m solicit input, but in the past, I think last year we had 12 appeals. Prior to that I think it was 40. rye been here when we've had 200 appeals before. I think Al's been at a few of those meetings, and it's. Steve Clay: That was before we. Todd Gerhardt: That was before you guys, yeah. Those were Orlin's days. Angle Johnson: We want to state that we weren't here at that time. Todd Gerhardt: They were not fun meetings. And it's up to the cotmciL If you want to maim a decision tonight, you're within your realm to do thaL Councilman Labatt: I'd just like to ask Mr. Clay a couple questions on this property. Steve Clay: You can do that but I can pass out the information... Councilman Labatt: Could you? Mayor Furlong: I've got a question as you're doing that. Is there, just for my edifi~on from a notice standpoint. The meeting starts at 6:30. Generally we were planning to nm this to 7:00 prior to our council meeting. Is there any desire to make sure we give people the proper time to get here? I guess it's been 20 minutes so we're probably covered from that standpoint. I wouldn't want to make a decision tonight and keep somebody. Councilman Peterson: We'll wait til 7:00. Mayor Furlong: Yep, and that's fine. Todd Gerhardt: That would be a good practice. Mayor Furlong: If somebody's nmning a little late. Angle Johnson: In the meantime Steve could distribute his infornmfion to you and you can have a discussion on it. Mayor Furlong: And were there any requests lef~ written out in the hallway Todd? Angie Johnson: Apparently not. Mayor Furlong: So this is the only one at this point? Angie Johnson: Apparently. Mayor Furlong: Okay. Well unless there's objection, maybe we can start talking through this particular property. Steve Clay: I guess maybe we could start with the last page. Photos of the trrotmrty. This subdivision where he lives is basically one long city block. I don't know, at the end of this block Board of Equalization and Review - April 14, 2003 there's 3 or 4 lakeshore, or 5 lakeshore properties. The one at the end has a new house being constructed on it. You had to make some decisions about pilings and setbacks. If you're familiar with this neighborhood. What part of town... His house is, as he spoke of course is subject... The other 3 sides. Councilman Ayotte: Steve, talk a little louder into the mic. Steve Clay: It's stucco front and wood on the. Councilman Peterson: Steve, talk right into the microphone otherwise we won't be able to hear you. Steve Clay: Mr. Ridley is right, this house has a lot more appeal from the street than it does when you get inside. The rooms are broken up fairly small for this type of house. And his description was fairly accurate. If you were to, the other homes on that street we would rate at a quality level of 50's or 60's out of a scale of about 10 to 100. And what I've got his, after inspecting it, was 40 quality so regardless of it's exterior appeal, I am, I did adjust the quality level down. And the 3 comparables that I used, the~ were no real comparable sales on his irnrr~liate street so I did use two sales about half a mile north of him in...sutgiJvlsion south of Highway 5. Look at those 3 sales, the sale prices and then with them all sold in summer of last year. That made adjustments in dollar amounts for the diffemnc~ between the two subjects and the 3 comparable sales and the subject. The general rule of thumb of an analysis like this, and this is very, extremely similar to what a field appraiser uses when they're doing an appraisal for your mortgage or a second mortgage. If the comparable sale is superior to the subject to subtract money and it's approximate market value, whatever the difference is. ff the comparable is inferior to the subject, that would add money to the sale price. Doing that to all 3 sale prices gives us 3 indicated values at the bottom which says that if con,arable one sold for $345,000, after making adjustments for these differences, the subject would sell for $363,500. $365,000 for the second comparable and $276,400 for the third. This final estimated value, the computer's just doing an average of those 3 numbers. Our original esOnated value when the notices went out was $371,300. Councilman Peterson: How much? Steve Clay: $371,300. And after looking at the pmw. xty and adjusting the quality a little bit, we're now looking at a reconmm~dation of $361,400. It'd be $9,900 reduction so we're recommending $361,400 which is the number that our computer calculates. And we're looking at the comparable sales analysis of these 3 sales, it suggests that the value is slightly more than that so I think we could be safe with the 361. Mayor Furlong: Okay, thank you. Are there any questions? Councilman Lundquist: Steve, when I'm looking at this comparable grid, on the subject ~ you've got quality of construction listed as above average. And I think we just heard Mr. Ridley say that. Steve Clay: Well that is, yeah. We give arbitrarily give names to these different numbered code levels. We call, we start with below average, average, above average, above average plus and good. Good plus. It's for no other reason than just to put a name to these different levels of quality. Board of Equalization and Review- April 14, 2003 Councilman Lundquist: So if then they're all of similar quality, comp 1, 2 and 3, does that mean that all 3 of those houses have poor, or you know, nothing fancy on the inside? Steve Clay: They would be of a similar quality. Similar quality cabinets, doors, ceiling heights, things like that. Houses can vary quite a lot by character and where sometimes you have to practice the art of appraisals when you're judging quality. As you go into a house you look at things like how high are the ceilings and what's the quality of the cabinets. How much flooring is wood or ceramic tile or cheap vinyl or carpeting. What k~nd of railings do you have on the stairway or is it just a haft sheet rock wall and a border across the top. Is it hollow core doors ox 6 panel doors and if they're 6 panel, are they fir or are they maple or are they birch. And you may have some aspects of one quality level represented in the house and other aspects of a lower quality. You have to sort of look at all these things together and come up with an average or an aggregate for those features to say this house is generally this quality. Councilman Lundquist: Okay. Mayor Furlong: Any other questions? Councilman Ayotte: Of the homeowner but is that approlrriate now? Mayor Furlong: Certainly. Councilman Ayotte: So you didn't think $10,000 was enough of a reduction. What do you believe is an appropriate reduction and why? John Ridley: I had, what I put in my letter to Steve or the Board was, I figured a 10 percent reduction of that value. Because I think the original, the original value in 2001 was $294,500. Estimated market value was the same. But that was 60,000 last year and now it's increased again this year and I just think that it's about $30,000 high. Councilman Labatt: Steve, can you go and look at both the dwelling and the land value in what the increases were in the land only over thi~ same pexiod of time too? Do you have th~? The estimated land value is 88. I'm wondering what that was in~ fxom last year, if it was. And how that relates into the total total. Angie Johnson: Actually last year we were at $95,000 so the land was reduced to $88,800. The building was at 265,400 and it increased to 282,500. Basically his value in~ from $360,400 to $371,300. Mayor Furlong: So last year the assessment total was $360,400. Angle Johnson: In 2001. Mayor Furlong: And now the recommendation is 3617 Steve Clay: Correct. Mayor Furlong: 400. Councilman Lundquist: It'd be $1,000. Board of Equalization and Review - April 14, 2003 Councilman Labatt: Okay. Todd Gerhardt: And why did the land go down? Steve Clay: As he stated, and I can't remember if he stated it attbe podium or if I read ~ inthe letter he gave me. Also that there's no underground sprinkling system. The landscaping is fairly minimal for that neighborhood. The drop off is fairly steep limiting some of the back yard functional use. Adjusted the land a little more. Mayor Furlong: How do you address from overall percentages, you said market value increase of about 9 percent overall. The resident's comment about the 23 percent over 2 years. Angie Johnson: We're just looking at last, we only look from one year to the next. We can't go back any further. Mayor Furlong: Okay. Just, and maybe not specific to this property but property values in general, what were the calculated if it was 9 percent from last year to this year, do you recall what the comparable increase was a year ago? Steve Clay: The year prior was about, no I think it was about 10 or 12. Councilman Peterson: Yeah, I think it was closer to 12. Steve Clay: Our adjusting values by individual neighborhoods in town so one neighborhood might be higher or lower. General adjustment than another. We don't just do one adjustment for the whole city anymore, which is part of increasing the equality and the equity between the two areas ofthe city. On averageit'sbeen 10-12 percent the last 2 or 3 years. Mayor Furlong: Okay. Councilman Labam I would just go with the assessor's recommex~on. What he's come up with here for a decrease. I think it' s fair. Councilman Ayotte: Talk a little louder Steve. Mayor Furlong: Do you want to make a motion? Councilman Labal~ I would move that we approve the assessor's recommendation of a decrease of $9,900 to a new estimated market value of $361,400. Mayor Furlong: Is there a second on the motion? Councilman Peterson: Second. Mayor Furlong: Any discussion? Councilman Ayotte: I'd like to again query him. When you said that the closest comps were how far away? Councilman Labatt: 7/lO~'s of a mile. Board of Equalization and Review - April 14, 2003 Councilman Ayotte: 7/10~ of a mile. Now, is that unusual? Typical? Atypical? Not to find any other houses closer by than that to get a comp? Steve Clay: It depends a lot on the neighborhood. This particular street that he's on is fairly unique. If you go south of it or north, the quality and the age of the homes is lower so tlgu~ really isn't anything similar within a quat~ mile or something. By underwriting standards for mortgage companies, things like that, you typically look at 1 mile as being acceptable. Mayor Furlong: Okay. There has been a motion made and ~. Is there any furth~ discussion on this property? Councilman Labatt moved, Coundlman Peterson seconded to approve the assessor's recommendation of a decrease of $9v000 to a new estimated market value of $361~100 for the property located at 590 Bighorn Drive. AH voted in favor, except Coundlxmm Ayotte who opposed, and the motion carried with a vote of 4 to 1. Mayor Furlong: At this time are there any other, I'm sorry. Todd Gerhardt: We have one more appeal. Mayor Furlong: Okay. Todd Gerhardt: Just for the gentleman that did submit his appeal. Carver County will be meeting as of their Board of Equalization on June 17~ at 1:30 down at the Carver County Courthouse building in Chaska. That's June 17m at 1:30. Mayor, we have one more appeal that did come in. Nancy, do you want to speak or, we're trying to make a decision tonight on all the a~. We only received 2 appeals. Nancy Mancino: Oh okay. Nancy Mancino, 6620 Galpin Boulevard. We've been out of town and we just got it when we came back into town a few days ago so I would just like to have the time to talk to the assessor. Have them come out to our property, etc. We left I think on the 23rd, March 23ra and haven't been in town so I'm wondering if you can go ahead and pass everyone else and then can you come back and do that again Mr. Mayor? I don't know how you do that so. Mayor Furlong: Okay. Well to the extent that you're here this evening, that's a start so. Nancy Mancino: Okay, thank you. Mayor Furlong: If it's the desire of the committee, I think have you had an opportunity to view her property yet? Steve Clay: Last year. Mayor Furlong: A year ago. Steve Clay: Last year's Board. Nancy Mancino: So I have some questions about the value that went up excessively this year. Mayor Furlong: Okay. Alright. I guess the question is, would you be prepared to talk this evening about her situation for this year's assessment? Board of Equalization and Review - April 14, 2003 Steve Clay: Well just spe-king. Nancy Mancino: I mean I didn't come with anything prepared or I didn't know that this was going on tonight so, it kind of caught me. Steve Clay: I didn't make any changes to either the characteristics in our computer valuating systel~ I didn't make any changes to the characteristics of the land or the house on what they were last year so any increase she has would have been the same increase that was pm on everybody's building values or land values in th~ class of land. Mayor Furlong: Okay. Nancy Mancino: I think it was over 9 percent thought tha~ it went up. Steve Clay: 9 percent would be right in line with the rest of the city. Nancy Mancino: But I think it was way over that. Steve Clay: More than tha~? Nancy Mancino: No, I don't have anything with me, I'm sorry. I just went to the acco~ today to get our taxes done and that's when I saw it so. Councilman Ayotte: Well typically if it's a 2 week period anyways, why not give her the chance to. Mayor Furlong: I agree. I agree. I guess I'd like to entertain a motion to continue until April 28"' and request that the assessor work with Ms. Mancino to come back with a recommendafiom Is there a second? Councilman Lundquist: Second. Mayor Furlong: Any discussion on the motion? Okay. Seeing none, we'll call the question without objection. Ma~or l~m'iong mo~ed, Councilman Lundquist seconded to reeess the Board ~ Equali~tion and Review until April ~ 2~003 at ~:~4) p.m. All ~oted in favor and the motion eAHTied nn~nimnl~y with ~ vote Of 5 tO 0. Submitted by Todd Gerhardt City Manager Prepared by Nann Opheim