Taxes respond to housing market

A sinking housing market may at last be on the verge of dragging down property tax bills.

But in Scott County at least, a briefing on property-tax valuations for county commissioners on Tuesday showed, the details are going to be quite a bit more complicated than that.

Among the major themes:

• The tax impact of the slump will vary a great deal from city to city. New Prague, for instance, will see major declines in home values while other cities are flat or even higher. And they will vary within cities.

"Town homes in Shakopee are down considerably," County Assessor Bob Schmitt said about their value. "There is simply an abundance of town homes -- in the county in general, and in Shakopee in particular."

• The value of farmland is still up strongly, so farmers may pick up some of the slack.

• Owners of commercial and industrial property may also be hit with property tax increases, beginning in Prior Lake and spreading to other cities.

The mere fact that values decline doesn't mean taxes go down.

The tax is the combination of the rate that elected officials choose to impose, and the value that assessors decide is fair.

County boards and city councils could choose this fall to raise rates to compensate for falling values.

And there's one additional twist: governments can and usually do choose to tax property at less than what they consider its full market value. They can choose to increase that ratio, and Tuesday's background briefing suggested that in most cities in Scott County, that will happen.

County Administrator Dave Unmacht said afterward that there has been no directive from the board to increase those ratios. They represent a combination, he said, of market forces and the assessor's professional judgment.

As for commercial and industrial property, he said, Prior Lake has seen enough sales of those properties lately to allow for an update. That will be followed next year by updates for Savage and Shakopee, the county's two other major cities.

Foreclosed properties don't affect this process, he said, and people who buy a $210,000 house for $160,000 at auction won't necessarily see tax values decline accordingly. "Good for you" on the price, he said, "but we look at prices of similar homes."