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✓ 3S �. <br /> t <br /> The State of Minnesota has one of the most complicated property tax systems �'� <br /> a a�w�-X3.,., # - --772,0 <br /> ,' <br /> . in the nation. There are three factors that affect a property owners property <br /> , -Foot- tax:the estimated market value of the property,the classification ofthe property(how <br /> the property is used), and the total local tax rate. <br /> cleil Market Value <br /> The assessor's estimated market value is established by the county assessor on an annual basis with a <br /> al valuation as of January 2nd. The market value reflects only real property(land and buildings),witha <br /> few exceptions including electrical utility personal property. Equipment value would not be taxed; <br /> other states do levy a property tax on equipment. <br /> Each year,the Minnesota Department of Revenue reviews the actual sales of various types of property <br /> in the city or county and compares the sales to the assessor's estimated market value. This process is <br /> wiromma known as a sales ratio study. If the assessor's market value is found to be higher than 105 percent of <br /> the actual sales price or lower than 90 percent the actual sales price,the current year's assessment of <br /> property may be unilaterally adjusted. <br /> Individual property owners also retain the ability to contest their level of valuation through a Board of <br /> Equalization process or other appeal processes. <br /> 0 Workingwith the local assessor to determine his/her opinion on the market value is always <br /> 14..1 <br /> recommended before proceeding with any type of financing for a tax increment project. <br /> `" Class Rates to Taxes -The Minnesota Two-Step <br /> _ 0 Each property type (rental property, homestead, commercial, etc.) is subject to a conversion from <br /> market value to tax capacity according to state statute. The conversion from market value to tax <br /> capacity is based on the classification,or use of the property. Each type of property is assigned a class <br /> rate, or percentage, as determined by the Legislature. Commercial, industrial and other business <br /> property tend to have higher class rates than residential and agricultural property. See the attachment <br /> showing the class rates for taxes payable 2001. <br /> Tax Rates and Jurisdictions <br /> The tax capacity is actually the taxable value of the property. This value is multiplied by the local tax <br /> rate to determine the amount of property tax a piece of property pays. The local tax rate is a <br /> combination ofthe city,county,school district and special taxing jurisdictions tax rates.This is the final <br /> step to the calculation of taxes. The local tax rate is applied against the combined tax capacities of all <br /> classes of property within their taxing jurisdictions to generate property taxes. <br /> Local tax rates vary in Minnesota from 110%to 200%. Therefore, properties with the same market <br /> values in neighboring cities could have property tax bills which vary by as much as to two times. The <br /> local tax rates are often shown as decimals (1.3000) rather than percentages. <br /> 2-'is ttk8:110-� <br /> y <br /> EHLERS&ASSOCIATES, INC. 3060 Centre Pointe Drive, Roseville, Minnesota 55113 651.697.8500 <br />