Homes on opposite sides of street face vastly different property tax increases

The folks from Arbor Lane in Mound rode their “squeaky wheels” into the Hennepin County Board room to complain about 2013 property tax increases ranging from 28 to 33 percent, while   their neighbors across the street are seeing increases of 3 to 4 percent.

It didn’t seem right, they said.

“It’s a tear-down. It’s in the flood zone,” said John Evans about his house, which received a 32 percent increase in property taxes for 2013. “Lake Minnetonka is the home of the rich and famous, but we are not rich or famous.”

Arbor Lane is on a point of land jutting north into Lake Minnetonka. Most of the houses along the western shore are small, 800 to 1,600 square feet, with 50-foot lots.  Some were built as summer cabins in the 1920s.

But the houses all have lakeshore, and that has attracted builders and buyers of bigger new homes. Three of the big houses were sold this past year, one for slightly more than $1 million.  And there goes the neighborhood.

“It makes no sense when just a few homes can drive your real estate values up so much,” said Cathy  Van Der Schans, who is critical of an assessment process that doesn’t consider family sales, short sales and foreclosures.

 “When you are not looking at those, you are knocking out the bottom [of the market],” she said.

The Arbor Lane neighbors turned out for the annual Truth in Taxation Public Hearing required of all levels of government that levy property tax. The Hennepin County Board gave everyone who wanted to speak three minutes to make his or her case. 

But the real action was taking place in the lobby where city and county assessors huddled with the aggrieved, laptops at the ready, to explain why the 2013 property taxes were what they were.

For the last three years, the seven houses on the west side of Arbor Lane have mostly seen their property taxes drop or climb by a single digit. But the real estate market, which has been slow in recent years, is waking up, and when that happens, the estimated market value, on which property taxes are calculated, also goes up.

Assessed market value should be within 90 to 105 percent of sale price by state law, said Rob Winge of the Hennepin County Assessor’s Office. Assessed market value is based on the selling prices of homes in a neighborhood.

There was only one sale on Arbor Lane in 2011, and that was for $381,000, according to Winge.  But this year there were three sales with one of those at $1,122,500.

Another factor considered in the 2013 property tax figures is that the Arbor Lane neighborhood stretches beyond the seven homes with protesting owners. That group makes up only about one-third of the property considered by the assessor.

Then there is the factor that homes facing west are supposedly more desirable than homes facing east, which may explain why the homes across the street had modest increases in property taxes for 2013.

“When two sides of the same street, both with lakeshore, have this disparity, it highlights a problem,” said property owner Jim Dustrude, who spent most of the hearing time in the lobby bent over a computer with Winge. “It looks to us like kind of a fluke.”

“I don’t see an error, but I’m going to look,” said Winge following his session with Dustrude.

That sounds like a bit of good news, but it might not change those 2013 assessments. The earliest Arbor Lane residents could see relief would probably be for property taxes payable in 2014.

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