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Property values take big jump in Douglas County

Taxes are proposed to go up in 2023 because of a significant increase in property values — 15% to 25% for some residential and seasonal residential recreational properties, according to Douglas

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Taxes are proposed to increase in Douglas County next year because of rising property values and other factors.
Alexandria Echo Press staff photo
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DOUGLAS COUNTY — Douglas County residents who received their Truth in Taxation notices in the mail recently may have done a double take, thinking taxes can’t be that high.

But the truth is, taxes for many residents are going up because of a significant increase in property values — 15% to 25% for some residential and seasonal residential recreational properties, according to Douglas County Assessor Stacy Honkomp.

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Stacy Honkomp

The proposed taxes are based on the current year’s estimated market values, which are set by the county assessor’s office as of Jan. 2, 2022 for taxes payable in 2023.

Here are a couple examples: The value of a seasonal, non-homestead property on Lake Ida increased from $169,700 to $223,700, a 31.8% increase. Property taxes on that land are proposed to increase from $1,616 to $1,942, a 20.1% jump. Meanwhile, the value of a residential homestead parcel just outside Alexandria's city limits increased from $151,700 to $175,200, a 15.5% spike, and taxes are proposed to increase from $1,293 to $1,420, a 9.8% jump.

The newspaper asked Honkomp for details about the proposed property taxes in Douglas County and she provided the following responses.

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Some property owners in Douglas County say their property values are increasing 20% or more. Is this the trend?
Yes, we are seeing this is the trend. Our job is to essentially report the current market. The property value increases for the 2022 assessment year did see increases from 15% to 25% for residential and seasonal residential recreational. Most all properties on lakes had additional increases above that depending on what lake the property is located on.

Why are values going up? What are the main reasons?
The three main factors are: higher sale prices, high demand for properties, and higher costs of building. State law requires assessors to value property at full market value.
Our assessment is measured through sales ratio studies, and we are audited by the Minnesota Department of Revenue. Most people have heard from the news or through personal experience that the housing market has been quite active, with low inventory and favorable interest rates we have seen the vast majority of sales above the county’s estimated market values.
As a result, we are required by state law to raise our market values based on what we see happening in the market. Last year, there were 591 “good sales” for residential and seasonal residential properties in Douglas County, which is a 5.4% increase from the previous year. There has been an increase in the cost of building materials (approximately 20%), which we also need to consider when calculating what it costs to construct buildings.

Is this happening in other counties too? Or statewide?
Yes, this has happened regionally, statewide and nationwide. Our bordering counties and statewide are seeing sales that are above the estimated market values. There are some rough numbers of what some counties had for value increases from a state data survey.
Some examples of increases in other counties: Grant County had an increase of approximately 39% for seasonal residential recreational, and Crow Wing an increase of approximately 34%.
Residential property values increased approximately 37% in Pope County, and 34% in Crow Wing County. So yes, this is hitting property owners statewide. There are other counties that had increases that are higher than those mentioned.

Are the increases across all classifications?
There were increases to all classifications, residential, seasonal rec, ag, commercial. The most substantial increases were to our lake properties and that market was very strong this past year. We have not seen that level off for this year.
There are fewer sales for this sales study, but we are still seeing sales coming in over the assessed value increases we made for the 2022 assessment, not just lakeshore, but for all the above classifications. Property owners can expect to see values continue to increase for 2023.

How does the increase in values compare to past years? Is it unprecedented or fairly common?
The increases this year have been larger than more recent years. As I stated before, we are required by the state to respond to the market, and it is a tough mandate at times like this, when we have to raise values by double digit percentages, just to keep up with the market.
The state looks at all our sales and runs extensive data analysis for all the classifications. If we do not get our values close to the market per Minnesota Statute, the state can essentially override our values and set their own blanket increases. The county works very hard to prevent that from happening.

Are these amounts set in stone or can the county board change them?
The 2022 assessment, which is used for tax calculations for the 2023 taxes, are set as of Jan 2, 2022. The assessor’s office mails out a valuation notice each year in March in the same envelope with the Property Tax Statement.
The appeals process takes place at the township or city level during the month of April each year and at the county level in June of each year. At this point, it is too late for a property owner to appeal their 2022 assessment for taxes payable 2023.

What can taxpayers do if they believe the value is incorrect? If you have issues with your assessment, you should contact the assessor’s office and go over your property information. Our number is 320-762-3884, for the City of Alexandria the number is 320-763-6678. But please be aware that the assessor cannot adjust a property’s value because the owner feels the property taxes are too high. The assessed value is based on the physical data of the property and what is happening in the market.
The assessor can make corrections to the physical data, if necessary, but the assessor cannot control what is happening in the market or change the tax rates.
There are budget hearings listed in the notices for the county, city or township, and school district, but that isn’t the place for taxpayers to contest the value of their property, according to Honkomp.
“These are not meetings to address property values and classification,” she said. “Please contact the Douglas County Assessor’s Office if you have any questions about your property.”

Do you have any other insights to share, maybe answering some of the most common questions you've been getting?
A few things that may help: If this is your primary residence, make sure you are getting homestead. Homestead properties may get a reduction in taxes and those may also qualify for a property tax refund. With the increases in market values, it does not necessarily mean that your taxes are going to increase that same percent. Taxes will be determined by the local levy and what your jurisdiction needs for operating funds.
A classification change on a property can trigger a difference in taxes, your classification is based on the use of the property. That is why it is important to take a good look at the valuation notice that is mailed out each March and make sure you are being classified correctly and look at the difference in the values from the previous year. Most often a call to the assessor’s office can resolve questions you may have.
Finally, although there have been media reports about the housing market “cooling off” nationally, we have not seen that happening here in Douglas County in any significant way. Properties are still selling and selling for more than the assessed value. Whether or not that changes going forward, only time will tell.

Al Edenloff is the editor of the twice-weekly Echo Press. He started his journalism career when he was in 10th grade, writing football and basketball stories for the Parkers Prairie Independent.
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