Last week, property owners received their truth-in-taxation (TNT) statements from the Steele County Assessor’s Office — and the numbers inside those envelopes were alarming.
Due to the competitive and expensive housing market seen in late 2020 and throughout 2021, many Steele County residential properties saw a significant increase in their proposed taxes for 2023 — some as high as 20%. According to County Treasurer and Finance Director Cathy Piepho, this is an extreme change that even shocked the county administration team when they first saw the numbers.
“It’s so difficult when you get those valuations, because you don’t understand the big picture. It’s just one tiny parcel,” Piepho said, adding that most people, as they get their first proposed valuation in March, assume everything including ag land and industrial property are also increasing.
“The last few years, it really hasn’t made a huge impact on people …,” she said. “Things are different this year.”
Because of the dramatic increase directly impacting homeowners, county administration wanted to take the time to educate taxpayers about the property valuation process. Piepho, along with County Administrator Scott Golberg, County Assessor Tom Reineke, County Auditor Laura Ihrke and representatives from the city of Owatonna met Friday morning to discuss the 2023 property taxes and how to best get the message out.
“Due to our 2023 preliminary property taxes being calculated, truth-in-taxation statements going out, there’s some significance that we wanted to work with our media partners to get the message out about what is going on,” Golberg said. “We have seen a rather significant increase in the residential market values and subsequently the residential property taxes … We’re trying to get the message out, so, as people get their truth-in-taxations statements, they can get the whys and hows and whats and whens.”
Explained by Reineke, the property valuation process to determine the 2023 taxes began in January, as his office compiled the information they monitored, including property sales between October 2020 and September 2021. Steele County is mandated by the state to value properties at their market value, which is based on sales.
Those preliminary property valuations were then determined for taxes payable in 2023; property owners then received valuation notices in March. Through April and May, property owners were able to appeal valuations with the Assessor’s Office and appeal boards, before they’re finalized in June with the County Board of Equalization meeting.
After the passing of the preliminary tax levy in September, Ihrke uses that information to calculate the preliminary property taxes and send out the TNT statements that shows the proposed tax assessments for next year based on valuations, tax rates and preliminary tax levy information.
According to Piepho, the residential tax impact has been “relatively flat” for a number of years, and the last time they saw such a dramatic increase was in 2006-07. Golberg, however, pointed out that what is being seen in Steele County is what is being seen everywhere else.
“Steele County is not unique with what is going on,” he said. “This is happening all over the state and probably beyond.”
In Rice County and the city of Northfield, many residential properties are also seeing property tax increases upward of 20%. In Dodge County, the increase is at 6.5%, and the city of Austin is seeing anywhere from 10-40% residential property tax increases.
It all depends on the valuations of individual properties and how much they go up, combined with the city’s overall levy.
Aside from the highly competitive market during the valuation time period, Golberg said the values of home properties increased at a much faster rate than all other property classes, with commercial property values having increased by less than 5%.
“Some years, we have more equal increases in other property classes, so it kind of evens off a little more and isn’t so significant in one area. You also might have, in a given year, new tax capacity with new development,” Golberg said. “Unfortunately, this time around, residential is going to see the big increase.”
Though the current numbers are daunting, Reineke said there may be potential for a shift in 2024.
“Sales of agricultural properties are continuing to increase,” Reineke said, noting there may be an up to 30% increase in ag property taxes in 2023-24. “Industrial numbers from Olmsted County are also increasing, and here we could be seeing double digits.”
To determine some of these numbers, Reineke said his office often has to look at price/square foot comparisons from like to like properties when there isn’t an abundance of sales in a particular area.
“We are always trying to use the most current data from the Department of Revenue’s timeframes for the sale study period,” Reineke said.
Because there is such a dramatic increase in residential property taxes inevitably coming in 2023, Golberg said they feel it is important the county provides residents with property tax relief options that may be available.
“The county is not a tax advisor, but we want to provide resources,” Golberg said.
For special tax relief options, homeowners who see their property taxes increase by 12% or more, and by more than $100 from the prior year, and who have not added improvements, can apply for a special property tax refund through the Minnesota Department of Revenue.
There is also an income-based tax refund program through the same Department that could qualify a homeowner for up to $2,930 in tax refunds, if the total household income is less than $119,790. There is a similar refund program for renters.