The pandemic’s rapid and topsy-turvy impacts on property values, assessments, and more have prompted plenty of problems, as reported in a number of recent News Tribune articles.
But also opportunity.
On the home-sales front, the rise in working remotely has meant being able to work — and live — pretty much anywhere, even places that once were strictly vacation spots. Think New York or Twin Cities wages in a Duluth or North Shore setting and cost of living. The demand for residential properties, including here, has exploded. Houses are being sold before they’re on the market. Buyers are offering more than asking prices and are forgoing inspections to beat other purchasers. Unheard of, but suddenly not anymore.
At the same time, the demand for office space has plummeted. To head off the spread of the coronavirus, many businesses closed their doors to the public and sent their staffers to work remotely. Nonetheless, “many owners of commercial properties saw little reflection of hard times in the assessed values recently assigned to their holdings by St. Louis County,” as the News Tribune’s Peter Passi reported this month. Commercial assessments in many cases held steady or even increased — even though demand for commercial properties, a good gauge of true value, decreased.
In Carlton County, a property value assessment problem of another sort has emerged. The oil transportation company Enbridge successfully argued in court that its state-assessed property value was too high. With the Minnesota Supreme Court expected to offer a final ruling later this month, officials from the county, school district, and elsewhere already have been working to lessen the impact on other property taxpayers who’ll be called on to make up the difference. They’ll be on the hook for millions, as Cloquet Pine Journal writer Jamey Malcomb reported in a story last week that was published also in the News Tribune.
It actually could be “tens of millions … to address a problem (county, school district, and other property owners) had no part in creating,” as Tiffany Gustin, associate director of the Minnesota School Board Association said in the story.
Since that hardly seems fair, Carlton County and others threw their support this legislative session behind a bill to put the burden of the Enbridge refunds on the state. After all, it was the state’s assessments, done by the Minnesota Department of Revenue, that were successfully challenged as inaccurate.
These problems as a result of the pandemic are just a glimpse when it comes to property values and property tax assessments. They’re failing to keep pace with reality, as rapidly shifting as reality has been. How they’re determined has shortcomings exposed by a year-plus of economic upheaval and altered work- and home-life behaviors.
A big part of the reason was captured in this comment from Sandy Hoff, president of F.I Salter Co., a Duluth-based property-management firm: “Market value and the assessments are based on historical sales data,” he said in the May 8 News Tribune. “So, in a sense, they’re a rearview-mirror analysis.”
That traditional rearview-mirror approach is suddenly leaving far too many property owners in a lurch and with unfairly bigger bills to pay.
So here’s the opportunity: Post-pandemic, find a better way to evaluate and re-evaluate property values, market values, assessments, and more. Work together with a goal of ensuring, and then also maintaining, fairness and accuracy — all the time and in something closer to real time.