Minneapolis property owners challenge their real estate taxes

Minneapolis homeowners have deluged City Hall with appeals of their tax valuations, saying their properties aren't worth what the city says they are.

Concerns about unjustified real estate tax hikes have contributed to more than 1,386 property owners disputing the city's market-price assessments, according to the city. That's an 83 percent increase from 2017 and more than four times the number filed in 2013.

Joann Greenwell, a retired Minneapolis schoolteacher, filed an appeal after the assessed value of her roughly 1,000-square-foot rambler in Linden Hills went up more than $50,000 in a year. She paid $6,000 in taxes last year, and that was after a hefty tax break she won't get anymore because her house is now worth too much, she said.

"Looking ahead, if this is what continues, I'm going to have to be looking for something else to live in," said Greenwell. "And that was certainly not my plan. Really, I would have to move out of the city."

City Assessor Patrick Todd attributes the tax challenges to a confluence of trends: The total estimated real estate market value in Minneapolis jumped from $36.1 billion to $52.3 billion over the past four years, an increase of 45 percent. Homeowners are both surprised to see how quickly their values are rising, and concerned higher property taxes will follow when the tax levy comes in November.

Todd also believes social media is playing a role. Homeowners are seeing other estimates on sites like Zillow, Trulia and Redfin and sharing information with their neighbors on Nextdoor and Facebook.

"People are very active, and they're talking to each other not only across the street but within the same community," said Todd. "The more informed the taxpayers are, the more likely that they're going to take action. … I'm not saying that's a bad thing, I'm just saying that's probably the new world for the assessor's office."

Minneapolis appears to be an outlier in the rise in appeals this year. Officials from Ramsey and Dakota counties say they aren't seeing much change compared to recent years. Outside of Minneapolis, appeals have not spiked in the rest of Hennepin County, said County Assessor Jim Atchison.

Todd said the city was caught off guard when it received 444 applications for appeals — or about 32 percent of the year's total — on the April 13 deadline for filing.

Of the applications filed, 1,226 are open, and last week the City Council's Ways and Means Committee granted the Local Board of Appeal and Equalization until the end of May to hear them all. The board normally would have completed the hearings this week.

Nearly 90 percent of appeals were filed by residential property owners, according to city data. And the largest share of those filing own homes in south Minneapolis neighborhoods like Lynnhurst and Fulton.

One of those came from Christopher Hughes, who watched the assessed value of his Lynnhurst bungalow rise for years and finally decided to take action when it shot up more than $50,000 this year.

"It's getting more and more difficult to live here," he said.

Scott Ewing appealed when the city valued his home at $65,000 more than last year.

"That just seemed crazy to me," said Ewing. "I know the market is good, but to me that just seemed at least double of what it should have been."

He thinks he has a good case, considering he just refinanced his mortgage and the bank valued his house at $37,000 less than the city did, he said.

Yet appealing can be risky. Before going to the hearing phase of the process, a deputy assessor visits the property to inspect it, and it's possible the assessor will determine the value was actually too low.

This is what happened to Greenwell this year. The assessor added another $13,000 to the value, she said, meaning the total jumped $67,000 in a single year, which she will appeal in a May hearing.

She bought the house in 1990 for $138,000 with no plans of ever leaving. Largely due to construction of expensive houses in the neighborhood, it's now worth $450,000. She fears what this year's tax levy will bring.

"I'd like to stay in my house, but it doesn't look like it's in the cards," she said.

City Council Member Linea Palmisano, whose ward includes that area of south Minneapolis, said she's received plenty of complaints from constituents, some who live down the block.

"I think there's just a bit of sticker shock there," she said.

Palmisano cautioned that an increase in home value doesn't directly translate to higher property taxes, and many other factors — such as new building in the city and how consistently values increase across neighborhoods — will also influence the tax levy. Still, Palmisano said she's been encouraging property owners to appeal if they worry their property value is incorrect.

"It's really important that we get it right," she said.

Given the rise in the market, it's not surprising that homeowners are seeing higher valuations, said Minneapolis property tax attorney Nick Furia.

And there may be more bad news for those concerned about the rising values: Many are still lagging behind the swift growth of the market, said Furia.

"In many instances with homes, the assessments haven't caught up with market values," he said. "So a lot of homes are under-assessed."

Valuations are likely to continue rising, said Becky Quinby, a real estate agent in south Minneapolis. But that's not always a bad thing for homeowners, especially those who want to sell.

"You can't be mad that you're basically gaining a ton of equity, but you also have to pay more taxes on it," she said.

Staff writer Adam Belz contributed to this report.