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CCM 04/22/2019 BOAE BOARD OF APPEAL & EQUALIZATION MEETING CITY OF FRIDLEY APRIL 22, 2019 MEMBERS PRESENT: Mayor Lund Councilmember Barnette Councilmember Tillberry Councilmember Eggert Councilmember Bolkcom OTHERS PRESENT: Patrick Maghrak, City Assessor Brian Northenscold, Appraiser Scott Hickok, Community Development Director Wally Wysopal, City Manager Peggy Nordrum, Assessment Compliance Coordinator, Anoka County BOARD OF APPEAL AND EQUALIZATION – 6:30 P.M. Patrick Maghrak, City Assessor, stated State Statute requires the City hold this meeting to allow people to appeal their classification or their valuation of property. Upon hearing the appeal, the Board has three courses of action they can take. They can choose to affirm, increase, or decrease valuation depending on the information provided. Mr. Maghrak stated if they are not able to resolve a homeowner’s or business owner’s issues this evening, they can move onto the County Board of Appeal which is held June 17 at 6 p.m., at the Anoka County Courthouse. Mr. Maghrak stated to have a majority, the members in attendance need a quorum. There must also be at least one member who has attended or taken an on-line appeal and equalization course approved by the Commissioner of Revenue within the last four years. Mr. Maghrak stated if property has been omitted from the tax roll, the Board has the authority to add that property back. The Board has the right to increase or decrease individual values, but cannot increase or decrease a class of values, such as all apartments. The amount of a Board reduction cannot exceed 1 percent of the citywide aggregate assessment. If the Board finds a case of undervaluation, it may raise the value of the property, but it must first notify the owner. The Board must complete and adjourn within 20 days from the time it is convened. Mr. Maghrak stated the procedure to hear any appeals for folks who have contacted staff that have not resolved or to take as they come anyone who has shown up tonight. They have no one so far in attendance. They have had three appeals within the last ten days which have been resolved on a staff level. However, they did get a phone today about 4:10 p.m. from a homeowner. Staff has been working with the homeowner for quite some time and have not been able to reach a resolution. Staff would like to read that tissue into the record. FRIDLEY BOARD OF APPEAL & EQUALIZATION MEETING PAGE 2 Mr. Maghrak stated in total staff has had 31 contacts with the public since the notices were sent, and they changed a total of 18 values as a result of those calls. At the end of the meeting he will have one they written appeal to write in. Mr. Maghrak stated the City had 488 sales this past year and that compares with 478 sales the prior year. The volume of sales has been steady; however, they are facing a significant decline in inventory. As of March 31, if you wanted to buy a house in the City of Fridley, you essentially had 5 or 6 to choose from. Everything has an offer on it. Of the 8 that did not have an offer on that date, 4 of them were next door to City Hall. There is not a lot of variety, so constrained supply means the City is going to have some upward pressure. Mr. Maghrak stated they studied 359 qualified sales for this assessment period and made changes to all property types. They started out with structure value changes. Some properties went up 8 percent and others as high as 17 percent. For example, a one and one-half story starter home, which is in very high in demand, would have been a property which had a higher increase. The 8 percent properties would have been more like new construction. Mr. Maghrak stated along with structure increases, as kind of a final means locally of getting values where the City wants them, they were able to go in and look at locations which are important and move land values. They did that as a last means to reach the City’s goal of 94.5 percent assessed level. The City’s final assessment level wounded up being 94.52 percent. Mr. Maghrak stated as to commercial, the City was judged countywide as a city because it did not have enough sales within the City of Fridley to “stand alone.” Along with the County, commercial properties were assessed at a level of 94.14. The City did not stand alone with industrial. That ratio came out to 92.59. Mr. Maghrak stated based on the changes staff saw in the marketplace from 2018 to 2019, they made changes to commercial properties that moved the total valuation up 3.8 percent, including new construction. The figure was a little bit higher at 8 percent for industrial properties, including new construction. After the application of both land changes and structure changes, the combination of the two – commercial and industrial – there was a 6.5 percent increase from 2018 to 2019. Mr. Maghrak stated apartments went up quite a bit. There was a lot of evidence in the marketplace for it. They did see structure value changes as high as 30 percent. Those would have been on 4-unit buildings which are high in demand and have a lot of potential buyers out there because they do not require commercial financing. As a result of those changes, apartment values went up 12.9 percent. That included new construction. Mr. Maghrak stated to summarize the 2019 assessment, the properties that went up the highest, from 18 to 19, were really the starter level buildings. Condominiums, townhomes or just that first year of housing when you are moving from an apartment, went up considerably. A home under $250,000 does not last long on the market; and they are primed for that again this year. The smaller unit apartment buildings went up quite a bit. Mid-bracket and upper-bracket housing were a little less--around 5 percent for the 2018 to 2019 assessment. FRIDLEY BOARD OF APPEAL & EQUALIZATION MEETING PAGE 3 Mr. Maghrak stated they looked at sales as they currently are which include basically the last six months. They started the new assessment period all the way through March 31, and staff is already seeing a 14 percent increase for residential properties over last year at this time. Marketing time is down by 6 percent, and sellers are getting 100 percent of their asking price if not a little more. Again, this is consequence of there being 6 buyers on the street for every house priced under $250,000. Mr. Maghrak showed a graphic depicting the sales from September 30 through March 31. Most of them are in the $200,000 to $300,000 range. The 4 under $100,000 would be Innsbruck Townhomes and probably the Black Forest Condominiums. A lot of townhomes would be in the next bracket from $100,000 to $200,000. They are starting to see upper bracket sales but the 13 sales in the $300,000 to $400,000 bracket, a few of them, are in the area next door. Mr. Maghrak stated with the constrained supply, the City has very few properties on the market. Interest rates are still decent. They are hoping for things to continue very much like they did last year. Councilmember Bolkcom stated the 31 contacts Mr. Maghrak mentioned with 18 being resolved, could he go over that again? Mr. Maghrak replied three of the properties were apartment properties. The process would be to look at them and do an income approach and a sales approach. There were not quite as many sales for 2 of the apartments because they were larger; but one of them was a 4-unit building, and there was a lot of sales. They go through and analyze that data and come to an agreement with the owner. Of the properties, 2 were commercial, including the office building next to the old City Hall. They did have the benefit of two years of marketing materials and appraisal on that property. The effort there was to work with them to not only keep them from filing a tax repetition but to recognize the two years of earnest good faith marketing to try and get that property leased. That has not proven successful, so they did work with the owner. The rest of the contacts were from residential properties. Councilmember Bolkcom asked if they were all resolved except for those he wanted Council to review at this meeting. Mr. Maghrak replied, yes. He said he had four he is required to read into the record, but he wanted to make the distinction of the one that was not resolved. The other three would be properties where there were issues brought up within 10 days of the Board and that is just part of the Statute. Councilmember Bolkcom asked, so out of the cases Mr. Maghrak is reading into the record, there is only one that was not resolved. The other three are resolved, so there is nothing the Board must do. Mr. Maghrak replied, yes. FRIDLEY BOARD OF APPEAL & EQUALIZATION MEETING PAGE 4 Mr. Maghrak asked the Board to make a motion to accept these properties into the record and allow one to move onto appeal at the County level if they are not able to resolve her issue prior to the June 17 meeting. Mr. Maghrak stated the first property, one of three that was resolved, is 6379 Highway 65 NE, PIN 13-30-24-31-0076. The second property that was resolved is 1439 Mississippi Street NE, PIN 13-30-24-13-0007. The third property that was resolved is 1351 Hillcrest Drive NE, PIN 24-30- 24-12-0058. The fourth property which was not resolved is 6203 Heather Place NE, PIN 13-30- 24-43-0118. MOTION by Councilmember Barnette to accept into the record three properties--6379 Highway 65 NE, PIN 13-30-24-31-0076; 1439 Mississippi Street, PIN 13-30-24-13-0007; and 1351 Hillcrest, PIN 24-30-24-12-0058, which have all been resolved. Seconded by Councilmember Eggert. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. MOTION by Councilmember Bolkcom to allow the property located at 6203 Heather Place, PIN 13-30-24-43-0118, to proceed to the County level as it was not resolved by City staff. Seconded by Councilmember Tilberry. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. MOTION by Councilmember Bolkcom to close the meeting. Seconded by Councilmember Eggert. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY AND THE MEETING WAS CLOSED AT 6:52. Respectfully submitted by, Denise M. Johnson Scott J. Lund Recording Secretary Mayor