Software switch bedevils assessment process

The Park Rapids Board of Appeal and Equalization, meeting Thursday, April 13, approved several recommendations to adjust properties’ taxable values.

City council members, absent Joe Christenson, comprised the board.

Assistant County Assessor Maria Shepherd explained that in most instances, errors in the valuations for 2024-payable taxes were due to the past year’s conversion from the county assessor’s office’s old assessment software to the new.

After hearing several examples of glitches in this conversion, board member Liz Stone said, “I’m losing confidence in this software.”

“With any conversion, you’re always going to have this one year,” Shepherd said, noting that the two systems used different assessment methods and orders of operation. However, she said, the old software provided less flexibility and the new system will be better when the conversion is complete. She added that rising market values compounded the changeover issues.

Property owner Barbara Peterson asked the assessors to consider the “human element,” such as the fact that homeowners living on a fixed income are being taxed out of their homes.

Shepherd and city assessor Loren Tolkkinen discussed past and current state programs that used to, or still could, provide relief for older homeowners.

Shepherd explained that if she doesn’t bring property values within the range the state requires, based on annual sales studies, the state could come in and make across-the-board adjustments that property owners will like even less.

She said county assessors analyze property values with care “to make sure that we are in compliance and that we’re doing the right thing for all taxpayers. … It is not something that we take lightly.”

Shepherd added that if valuation increases are spread around evenly, everybody’s share of the city’s tax levy will be about the same. If they see tax increases, it will be due to costs going up and the city needing to increase its levy.

“We do hear you on the human side,” she told Peterson. “Unfortunately, if I don’t do my job, someone else is going to come in and do it, and you’re not going to like the results of it.”

Shepherd said that as the assessor’s office is always conducting a 12-month sales study, there is a chance property values will come back down.

Responding to appeals of local property valuations, the board approved Tolkkinen’s recommendations as follows:

• Adjusting the total value of Mary Lou Murray’s residential homestead property at 510 6th St. W. from $210,000 to $201,100. Tolkkinen described it as an older home that needs fixing up.
• Adjusting the commercial property at 600 Park Ave. N., owned by Smith QZF Consulting LLC, from a valuation of $221,000 down to $183,800. The owner had challenged the proposed increase, saying he paid $175,000 for the property in October 2022. Tolkkinen said the issue was a change in the way the new assessment software grades building quality.
• Adjusting the value of Shane Sundet’s residential homestead property at 903 Park Ave. N. from $459,900 to $379,900. Tolkkinen acknowledged that the proposed valuation would have increased by $109,900 from last year, due to a software conversion issue.
• Adjusting Echopoint Design & Development LLC’s commercial valuation at 104 Park Ave. N. from the proposed $911,200 – double last year’s value of $544,900 – to $733,100. Tolkkinen said this was an example of the software’s conversion issues regarding commercial properties. Meanwhile, Shepherd said the owner’s comparison with the nearby McDonald’s valuation didn’t account for the two properties being in different sales study groups.
• Restoring the homestead designation to Ann Trammell’s residential property at 1012 Konshok Loop, which had fallen off the property’s classification by mistake. 
• No change regarding Steven & Kay Peloquin’s residential homestead property at 403 Oak Blvd., which was valued at $267,900 last year and $353,000 this year. Shepherd said the neighborhood saw an 11% increase in the base rate per square foot, acknowledging that the Peloquins’ increase was unusual for the neighborhood. She said assessors are looking into a difference between the old and new software systems and hinted that they might bring a countywide adjustment to the county board of appeal and equalization. 
• Correcting an error in the valuation of two resort properties. At 19311 Eagle Pointe Trail, owned by BKLarson Inc., last year’s valuation of $1,495,187 would have gone down to $1,426,280 this year, but was adjusted to $1,410,780. At 700 Park Ave. N., owned by Akason Hospitality LLC, last year’s valuation of $729,300 would have gone down to $686,500, but was adjusted to $643,000.

Appeals of property tax classification and assessed value will next move on to the Hubbard County Board of Appeal and Equalization at 5 p.m. Monday, June 12 at the county government center.

The following median ratios are based on data from the property sales study period of Oct. 1, 2021 to Sept. 30, 2022 in Park Rapids, before and after adjustment. State law requires median, or midpoint, sales ratios to fall between 90 and 105% of assessed valuation.

• Apartment properties (2 sales): 84.57% before, 86.79% after. 
• Commercial properties (16 sales): 73.44% before, 95.39% after.
• Industrial properties (3 sales): 74.23% before, 94.29% after.
• Residential, seasonal and recreational (71 sales): 90.38% before, 94.15% after, regardless of water status. Non-waterfront (64 sales): 89.17% before, 94.12% after. Waterfront (7 sales): 91.38% before, 94.87% after.