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04. 2024 Assessment Report Staff Report Date of Meeting: April 3, 2024 For: Honorable Mayor and Council From: Kyle Morell, City Administrator Subject: 2024 Assessment Report Background: Washington County has released its 2024 Assessment Report. City Assessor Patrick Poshek will detail the report at our Local Board of Appeals meeting on Monday, April 15. The full Assessment Report is available on the County Assessors website. As a reminder, I have included page 7 of the report, titled “Arm’ Length Transactions,” which shows property sales determine the statistical basis for the annual adjustments to valuation models. Sales from the 12-month period from October 1 to September 30 preceding the assessment date are used to determine the changes in the prior year's assessed values. I wanted to direct your attention to page 25 of the report, which shows the Total Taxable Class Summary: Current Year Adjustments, included below. This shows that the overall value of taxable land in Scandia decreased by 1.3% in 2024. Typically, this means the city's taxable value will also decrease. The city has used this value in the past to help determine its annual tax rate. Historically, we have seen an increase in the City’s taxable value. In the six previous budget cycles, from 2018 through 2024, the City has seen an average increase in its tax capacity of 9.81%. Comparing Total Taxable Class growth since 2020 to the change in the taxable value of the City does not yield any solid conclusions. However, I feel comfortable saying I do not expect a significant growth in tax capacity for 2025. I will continue to monitor this and report back as more information that may affect our 2025 budget becomes available. Attachments: Page 7 of Assessment Report Page 25 of Assessment Report 6 | Page Arm’s-Length Transactions The Department of Revenue requires all County Assessors to utilize a specified time period in their sales analysis. This time period is 12 months from October 1st through September 30th, preceding the assessment date. Sales within this time period will be used to determine the changes in the prior years assessed value in each community for the impending assessment. The sales that occur within this October 1st through September 30th time period, each year, are closely scrutinized by the appraisers within the Assessor Division. Evidence suggesting a forced sale, foreclosure, a sale to a relative, or anything other than an arm’s-length transaction requires the sales to be disqualified from the sales study. This is important, because the real estate sales information constitutes the statistical basis for determining the annual adjustments that are made to the valuation models. An arm’s-length transaction is any transaction in which buyers and sellers of a product act independently and have no relationship to each other. The concept of an arm's-length transaction is to ensure that both parties in the deal are acting in their own self-interest and are not subject to any pressure or duress from the other party. The following graphs and charts show the number of arm’s-length transactions that occurred within each sales period. Sales Period 10/1/18- 9/30/19 10/1/19- 9/30/20 10/1/20- 9/30/21 10/1/21- 9/30/22 10/1/22- 9/30/23 ay2020 ay2021 ay2022 ay2023 ay2024 Apartment 12 10 10 6 5 Commercial 51 49 61 59 44 Residential 4,103 4,004 4,341 3,810 2,938 Single Family 2,873 2,719 2,996 2,621 1,981 Townhome/Condo 1,230 1,285 1,345 1,189 957 TOTAL 4,166 4,063 4,412 3,875 2,987