EYES F A L L. In this Issue: Official Publication of the Minnesota Association of Assessing Officers Fall 2011 Equal Eyes 1

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1 F A L L V o l u m e EQUAL 33 N u m b e r EYES 126 In this Issue: Zestimates? PAGE 11 Teeny Tenney PAGE 21 Propterty Assessment in the United Kingdom PAGE 22 ecrv: Another Multi-page paper form bites the dust! PAGE 27 Profile on the Sales Ratio Committee, with John Keefe PAGE 33 Sears Catalog Homes PAGE 35 Official Publication of the Minnesota Association of Assessing Officers Lake Minnetonka Dream home update Page 39 Fall 2011 Equal Eyes 1

2 Volume 33 Number 126 Features 11 Zestimates? 21 Teeny Tenney Fall 2011 CLICK ME! I M INTERACTIVE! Article to suggest, letter to the editor, or any other correspondence for EQUAL EYES? Send to: Equal Eyes Managing Editor 612 N Broadway Crookston, MN editor@mnmaao.org 22 Assessment in the United Kingdom 27 ecrv 35 Sears Catalog Homes Departments 3 In the Know 22 4 Boards, Directors, Chairs, and Representatives 6 President s Connection 7 Commissioner s Comments 8 MAAP Update 27 9 NCRAAO Update 10 Out of the Past 13 Let s Get Acquainted 15 Meet the new SAMA & AMA designees 17 Course Reviews 18 State Board of Assessors Minutes 34 Cover Photo Image Courtesy of Naomi Miranowski, Wilken County Visit the MAAO website at: The statements made or opinions expressed by authors in Equal Eyes do not necessarily represent a policy position of the Minnesota Association of Assessing Officers. 2 Equal Eyes Fall International Items 31 Transitions 32 Revisiting the Retirees 33 The Chair s Corner 37 What s New on the MAAO Website 39 Classif-Eyeds 40 A Letter From the Editor

3 In The Know Go to for all your membership needs! Equal Eyes Winter Issue Deadline: December 1, 2011 Coming up 2011 PACE Course October 17-21, 2011 Sawmill Inn, Grand Rapids Ethics for MN Assessors November 1, 2011 Bemidji County Admin Bldg 2011 PACE Course Nov.28-Dec.2, 2011 Inver Hills Comm. College PROPERTY VALUATION COURSES: Oct , 2011 Waite Park Stearns County Highway Building Oct , 2011 Fergus Falls Ottertail County Government Center Oct , 2011 New Ulm Brown County LEC Training Center Oct , 2011 Thief River Falls C'Mon Inn Nov. 2-3, 2011 Marshall Prairie Events Center NEEDS PROOF - PDF Fall 2011 Equal Eyes 3

4 EQUAL EYES James Haley, AMA Polk County Managing Editor, Chair Michael Stalberger, SAMA Minnesota Department of Revenue Associate Editor Editorial Board Solomon Akanki, AMA Scott County Julie Gustafson, SAMA City of Maple Grove Corey Erickson, AMA Ramsey County Jake Pidde, CMA City of Plymouth Nancy Gunderson, SAMA City of Moorhead Lori Thingvold, AMA Wright County President Cheryl Wall, SAMA Wilkin County Assessor PO Box 167 Breckenridge, MN Fax Executive Board First Vice President Stephen Baker, SAMA, CAE Ramsey County Assessor 90 West Plato Blvd, Suite 400 St. Paul, MN Fax Second Vice President John Keefe, SAMA Chisago County Assessor 313 N Main St Center City, MN Fax jekeefe@co.chisago.mn.us Finance Officer Bill Peterson, SAMA, CAE Dakota County Assessor 1590 Hwy 55, County Admin Center Hastings, MN Fax bill.peterson@co.dakota.mn.us Past President William Effertz, SAMA Steele County Assessor PO Box 890, 630 Florence Ave Owatonna, MN Fax william.effertz@co.steele.mn.us Region 1 Ryan Rasmusson, SAMA Freeborn County Assessor ryan.rasmusson@co.freeborn.mn.us Region 4 Kyle Holmes, SAMA Carlton County Deputy Assessor kyle.holmes@co.carlton.mn.us Region 7 Lee Brekke, SAMA Wadena County Assessor lee.brekke@co.wadena.mn.us Region Directors Region 2 Dave Armstrong, SAMA Le Sueur County Assessor darmstrong@co.le-sueur.mn.us Region 5 Gale Bondhus, SAMA Cottonwood County Assessor gale.bondhus@co.cottonwood.mn.us Region 8 Joseph Skerik, AMA Beltrami Chief Deputy County Assessor joe.skerik@co.beltrami.mn.us Region 3 Greg Kramber, SAMA Wright County Assessor greg.kramber@co.wright.mn.us Region 6 Judy Thorstad, SAMA Stevens County Assessor judythorstad@co.stevens.mn.us Region 9 Angie Johnson, SAMA Carver County Assessor ajohnson@co.carver.mn.us 4 Equal Eyes Fall 2011

5 Committee Chairs/Coordinators/Secretary/Treasurer Agricultural Chair Jeanne Henderson, CMAS Business Center Dr Elk River, MN Fax Nominating Chair Michelle Moen, SAMA th Ave SW Cambridge, MN Fax Secretary/Treasurer Nancy Wojcik, SAMA 6301 Shingle Creek Parkway Brooklyn Center, MN Fax Conference Coordinator Paul Knutson, SAMA, RES 320 NW 3rd St, Ste 4 Faribault, MN Fax Assistant Conference Coordinator Tami Paulson, CMA 151 4th Street SE Rochester, MN Fax Education Chair Bob Wilson, SAMA, CAE, ASA 4801 W 50th St Edina, MN Fax Information Systems Chair Teresa Mitchell, SAMA, CAE 1590 Hwy 55, County Admin Center Hastings, MN Fax Legislative Chair William Effertz, SAMA PO Box 890, 630 Florence Ave Owatonna, MN Fax Long Range Planning Chair William Effertz, SAMA PO Box 890, 630 Florence Ave Owatonna, MN Fax Membership Coordinator Jan Olsson, SAMA, RES 3400 Plymouth Blvd Plymouth, MN Fax Online Administrator Lori Schwendemann, SAMA 600 6th Street Madison, MN Fax PVC Coordinator Dan Whitman, SAMA Security Bldg 201 Lake Ave #326 Fairmont, MN Fax Research and Planning Chair Michelle Moen, SAMA th Ave SW Cambridge, MN Fax Rules and Resolutions Chair Marvin Anderson, SAMA th Ave N Brooklyn Park, MN Fax Sales Ratio Chair John Keefe, SAMA 313 N Main St Center City, MN Fax Scholarship Chair William Effertz, SAMA PO Box 890, 630 Florence Ave Owatonna, MN Fax Scholarship Coordinator Tina Diedrich-Von Eschen, SAMA 705 Courthouse Square Room 37 St. Cloud, MN Fax Silent Auction Jane Grossinger, SAMA MN HWY 15 Kimball, MN Site Selection Chair Kim Jensen, SAMA, CAE A-2103 Government Center Minneapolis, MN Fax Summer Seminar Coordinator Kim Jensen, SAMA, CAE A-2103 Government Center Minneapolis, MN Fax Tax Court & Valuations Chair Jim Atchison, SAMA A-2103 Government Center Minneapolis, MN Fax Weeklong Course Chair David Armstrong, SAMA 88 South Park Avenue Le Center, MN Fax Weeklong Course Coordinators Bob Wilson, SAMA, CAE, ASA 4801 W 50th St Edina, MN Fax Tina Diedrich-VonEschen, SAMA 705 Courthouse Sq Room 37 St. Cloud, MN Fax Department of Revenue Property Tax Compliance Officers and the Areas They Represent Lloyd McCormick Appraisal Supervisor Gary Amundson Anoka, Benton, Carver, Chisago, Hennepin, Isanti, Mille Lacs, Morrison, Sherburne, Stearns, Wright Brad Averbeck Becker, Clay, Clearwater, Hubbard, Kittson, Mahnomen, Marshall, Norman, Otter Tail, Pennington, Polk, Red Lake, Roseau, Todd, Wadena Larry Austin Aitkin, Beltrami, Carlton, Cass, Cook, Crow Wing, Itasca, Kanabec, Koochiching, Lake, Lake of the Woods, Pine, St. Louis Steve Hurni Big Stone, Chippewa, Douglas, Grant, Kandiyohi, McLeod, Meeker, Pope, Renville, Stevens, Swift, Traverse, Wilkin (and compliance investigations) Sherri Kitchenmaster Brown, Cottonwood, Jackson, Lac qui Parle, Lincoln, Lyon, Martin, Murray, Nobles, Pipestone, Redwood, Rock, Watonwan, Yellow Medicnine Tom Nash Blue Earth, Dodge, Faribault, Fillmore, Freeborn, Houston, Le Sueur, Mower, Nicollet, Sibley, Steele, Wabasha, Waseca, Winona Tom Reineke Dakota, Goodhue, Olmsted, Ramsey, Rice, Scott, Washington (and complex properties) Fall 2011 Equal Eyes 5

6 President s Connection The accomplishments of this association are truly some of the best examples of teamwork you ll ever experience Written by Cheryl Wall, SAMA Wilkin County Assessor MAAO President It s September and with it comes autumn, my favorite Minnesota season. These are the days; the mosquitos are fewer and bonfires are plentiful! With a multitude of Minnesota State Parks just around your corner, taking a day or a weekend to enjoy the fall foliage may be just what you need. For me, September brought the opportunity to attend the IAAO Conference in Phoenix, AZ. This was my first trip to Arizona, and I learned quickly that depending on the elevation there, you don t see many changes in the seasons. There s hot and then there s hotter! The landscapes of that state offer a beauty that s hard to put into words. It was interesting to learn more about the property assessment process in other countries. We all know firsthand how complex the MN property tax assessment process is, but other states and countries certainly have daunting tasks in dealing with the process as well. This past year as President of our organization has brought with it many exciting and challenging experiences for me. As members, you have allowed me to serve as your 2nd Vice President, 1st Vice President, and most prestigiously as your President. There is so much to be proud of and the accomplishments of this association are truly some of the best examples of teamwork you ll ever experience. Our committee chair persons, volunteers and staff have reported their accomplishments over the course of our Annual Meeting and Fall Conference. When I look back, some special highlights in memory are the following: Connection with the Department of Revenue broadened by offering a direct link, via the MAAO website, to detailed sales studies for commercial/industrial and apartment property types. Allowing members access to the sales data improves work efficiency when searching for comparables of unique properties and in time of minimal sales data. Special thanks to the Department for allowing us to utilize this data. The Resource Section of the MAAO website has been opened to our members. This is a section I hope will continue to expand. It categorizes forms, presentations, checklists, etc...for you to access when you need them. Before creating a sales verification form for use in your office, look to the Resource Section first, a fellow assessor may have created and shared the form you re looking for! Special thanks to Paul Sandvik, Josh Hoogland, Michelle Moen, and Mike Vanderlinden for their creative talents in organizing this project! Our Finance Committee has researched a credit card only policy for MAAO and made their recommendation to the Executive Board that we precede with it effective after September 30, At that point, MAAO will only accept credit card payment for our events. This will improve and enhance the efficiency of our website. Special thanks to Bill Peterson and others on the Finance Committee, we are fortunate to have you! A new Sales Ratio Methodology is something we all will be learning together. The Department of Revenue has done a great job in attending regional meetings and our Sales Ratio Committee has assisted assessors in detailing the workings of this methodology. The Department will continue educating and guiding us all as we move forward by utilizing the Regional Compliance Officers for your respective region. Lean on them and the members of our Sales Ratio Committee if you have questions! MAAO made our recommendations to the Commissioner of Revenue for the appointment of a County Assessor to the State Board of Assessors. Brian Koester was appointed by the Commissioner and we wish him all the best in his future with the State Board! Many of you have achieved a new level of licensure or accreditation over the last year or so. Reach out to those that are a bit more seasoned in their assessing careers with questions you may have along the way. Congratulations in your accomplishment! By the time this issue of Equal Eyes prints, our Fall Conference and Annual Meeting will have come and gone. The members of the Local Host committee, conference coordinators, and education team members have worked hard for months planning this event. Their talents are immeasurable and much appreciated. Next year, we ll be back at Breezy Point Resort for our annual conference so watch the MAAO website for dates and mark your calendars! I d like to thank you for allowing me to serve; it has been a very rewarding experience. Cheryl Wall 6 Equal Eyes Fall 2011

7 Commissioner s Comments Improving tax administration always makes policy sense Written by Myron Frans Minnesota Commissioner of Revenue As commissioner, one of my top priorities is to make certain that the tax system and the Department of Revenue are working efficiently and accurately. As Revenue does every year, we are in the process of reviewing and considering potential changes that we can recommend to Gov. Mark Dayton and the Legislature to improve and streamline state tax laws. Though it is too early to say what changes might be recommended, some property tax changes are typically included among tax system reforms. At Revenue, we strongly believe that sound tax administration is good tax policy. With that in mind, we have several initiatives in the works, including: changing sales ratio studies to include forward-looking time adjustments; a statewide rollout of the ecrv (Electronic Certificate of Real Estate Value) system; and improved/streamlined agency operations. Sales ratio changes Forward-looking time adjustments were adopted for sales ratio studies after discussions between the department and MAAO. Effective for the 2012 study, the new adjustments should improve sales ratio data by more accurately reflecting the current market. While the new adjustments change your calculations, they ultimately increase the accuracy of your assessments and enhance statewide consistency. In addition, the new adjustments mean that your county sales ratio data should more closely match the data used by the Minnesota Tax Court when property tax appeals are heard. The number of property tax appeals may decrease over time, which would save time and court costs for both property owners and local or county governments. We look forward to working with you to implement this improved methodology. You will be receiving training materials and additional guidance from your Revenue property tax compliance officer (PTCO). ecrv The ecrv system will be available statewide on Dec. 1 for submitting sales data. This rollout is the result of years of development and testing; it was only possible to reach this point with the work and cooperation of your offices throughout the state. I want to thank everyone who has helped with this project from Revenue, your county offices and the real estate industry. While the familiar printed form is not disappearing any time soon, its digital successor makes it easier to submit real estate transactions to the county of sale. Counties and the state can then access that data more easily and more quickly for sales ratio studies, equalization/ adjustment and other purposes. You can find more information about ecrv elsewhere in this issue. Agency operations Gov. Dayton has asked all state agencies to improve the quality and efficiency of their services while reducing costs. At Revenue, we are working to improve our internal operations while giving taxpayers more ways to do business with us online. We are combining our Individual Income Tax and Withholding divisions to reduce duplication and costs. The department also has filled a newly created position internal audit manager to help improve our oversight of public funds. Mike Turner will oversee all of Revenue s financial, operation and compliance audits while working to ensure that agency assets are protected by appropriate internal controls. Mike will also lead the newly created internal audit committee that will report directly to me and advise the department on ways to improve internal audit controls. In addition, we are enhancing e-services as we switch to a new account management platform for taxpayers. The software that makes this possible is part of the integrated tax system that we have been phasing in over the last few years. The new system is more efficient and helps provide tighter security for both the department and taxpayers. In October, we will start moving business taxpayers to the new e-services filing and payment system. (This includes counties that pay or remit statewide taxes to the department.) We expect to complete the switch by the end of this year. Individual taxpayers will eventually be able to use the system, too. Moving forward In addition, we are taking a bottom-up look at how we can improve Minnesota s overall tax policy for residents and businesses. Creating jobs is a top priority for Gov. Dayton. In August, he began a statewide economic development tour. The governor s tour culminates with a jobs summit in St. Paul on Oct. 25. Along the way, Gov. Dayton is meeting with local business owners, community leaders and elected officials. People who live, own property and work in a community are the ones who know best the challenges and opportunities they face. In a similar vein, you assessors know how our property tax system affects individuals and businesses at the local and county level. You see firsthand how our property tax laws interact with your area real estate markets. Your input has often guided the department in the past, and I want to make sure you stay involved as we move forward. If you have suggestions and comments about our proposals, or ideas of your own, please tell your PTCO, notify Property Tax Director John Hagen or contact me directly. As we enter Truth in Taxation season I know that explaining the new homestead market value exclusion to taxpayers is one of your major concerns. To that end, our Property Tax Division is working on some new resources to assist you. Autumn is a season of change in Minnesota, and also one of your most challenging times of the year. As always, let us know how we can help. Fall 2011 Equal Eyes 7

8 MAAP MAAP Update Update Summer Happenings Written by Melissa Janzen Compiled by Lori Thingvold, AMA MAAP President Wright County Wright County Assessor s Office Editorial Committee Member kldjfa;lkjf;daklfj MAAP Officers Melissa Janzen, President Wright County Melissa.janzen@co.wright.mn.us The Annual MAAP Summer Seminar was held in Duluth, MN August 18 th and 19 th 2011 Krista Krupa, Vice President City of Willmar kkrupa@ci.willmar.mn.us MAAP held its annual Summer Workshop on August 18-19, 2011 at the Holiday Inn Conference Center in Duluth, MN. The event was well attended and we were lucky enough to have beautiful weather to explore and enjoy the city. On day one of the conference, Drew Imes of the Department of Revenue reviewed the 2011 New Laws and Legislative Changes, as well as Special Ag Homesteads, Disabled Veterans Market Value Exclusion and Mortgage Foreclosures. Jason Parker, also from the Department of Revenue, presented information on the new ecrv system, the equalization process, and the role of the CRV in the valuation process. Members were also treated to a presentation and slide show about the infrastructure and history of the beautiful Glensheen Mansion. The presentation was given by Dennis Lamkin of US Bank, who is a direct descendant of the original owners. Wright County Assessor Greg Kramber and Stearns County Assessor Gary Grossinger gave a fun and educational presentation on day two of the workshop. Topics included A Day in the Life of a Field Appraiser, Assessment Challenges and a competitive game of Assessor Jeopardy. Elections took place at the conference, and we would like to congratulate and welcome Krista Krupa Vice President, Shayla Strack Secretary/ Treasurer, and Dawn Anderson Education Committee Member at Large. Once again, MAAO provided scholarships which were given away at the conference in a random drawing. We would like to thank MAAO for their continued support of the MAAP organization. Interested in Joining MAAP? Annual membership is only $10 Contact a MAAP Officer for details Shayla Strack, Secretary/Treasurer Morrison County ShaylaS@co.morrison.mn.us Jason Vaith, Past President Stearns County Jason.Vaith@co.stearns.mn.us Christie Fox, Executive Board Blue Earth County Christie.fox@co.blue-earth.mn.us Dawn Anderson Wright County Dawn.anderson@co.wright.mn.us 8 Equal Eyes Fall 2011

9 NCRAAO News 2011 Annual Conference Written by Julie Roisen, SAMA, CAE Former Blue Earth County Assessor Former NCRAAO Representative The 2011 NCRAAO annual conference was held in Topeka, Kansas June 12-14, There were 171 attendees representing all member states. Dale Lambrecht and I were there from Minnesota. There were also 21 vendors in attendance, which was a record number! A really big thank you goes out to the vendors who contribute so much to the success of this conference. Course offerings included: Development of a Capitalization Rate Study, Legal Descriptions, Valuation of Fast Foods, Valuation of Hotel/Motels, Calibrating Depreciation Schedules, Dealing with the Media, All State General Topic Roundtable, Use of Street View Imaging and Technology, and Foreclosure Sales and the Mass Appraisal Process. I attended the Valuation of Hotel/Motels, Foreclosure Sales and the Mass Appraisal Process, and the Valuation of Fast Foods courses. The Valuation of Hotel/Motel class was exceptionally well done. It was presented by Antonia Viens, MAI, SRA from Johnson County Kansas. Her presentation style and materials were informative, easy to understand, and provided new and additional insight into the use of professionallypublished materials as well as income and expense specific to the subject property. The Foreclosure Sales and the Mass Appraisal Process course was also very interesting. It was presented by staff from the City of Milwaukee, and they demonstrated how they incorporated foreclosure sales in their ratio studies in an effort to account for the vast number of foreclosures found in their market. Of course, this generated significant discussion. It was insightful to hear the variety of opinions across the region. It was beneficial to hear from our surrounding states in regard to the issues they face and how their particular state handles a variety of issues, not just foreclosures. The planned events were also fun and well attended. IAAO President Bruce Woodzell, Charlottesville, Virginia, was a tremendously good sport on Tuesday evening at the Grand Central Station where the M & M Sisters provided the evening entertainment. IAAO was also represented by IAAO Executive Director Lisa Daniels with her attendance at the annual banquet. Again, thank you for the opportunity to represent Minnesota in this organization. Upcoming NCRAAO Conferences Kansas City, Missouri Fargo, North Dakota Deadwood, South Dakota Wisconsin Iowa Fall 2011 Equal Eyes 9

10 Out of the Past Written by Corey Erickson, AMA Ramsey County Editorial Committee Member 5 Years Ago 2006 M. Lynn Duncan, the assessor for the City of Duluth, retired after 29 years of exemplary service. MAAO and educational partner St. Cloud State University (SCSU) first offered the Management and Supervision Course, taught by SCSU professor Dr. Richard Sebastian, Ph.D. The new course received rave reviews. Bob Schmitt was appointed Scott County Assessor to complete the term ending in December of Steve Behrenbrinker and Teresa Mitchell were named IAAO Professional Development Advisors to help establish a mentorship program for any assessor seeking AMA or SAMA designations. 10 Years Ago 2001 Freeborn County decided not to fill their county assessor position, and instead chose to contract out the duties to Faribault County. Minneapolis Building Owners and Managers Association (BOMA) announced that they supported the Minnesota Property Tax Reform Coalition in urging Governor Jesse Ventura and the 2001 State Legislature to reduce the CI property tax rate to 3 percent. Steve Skoog was hired to fill the Becker County Assessor position that was vacated when Curt Piepenburg left the county to fill the Pipestone County Assessor. The Pipestone County position was vacated by Tom Houselog. Deputies from the Steele County Sheriff s Office gave a presentation at a Region 1 meeting on gang activity in southeastern Minnesota. They explained that the problematic situation was thought to originate in Chicago. The MAAO Top Pen Award was renamed the Peter M. Koole Top Pen Award in memory of Peter Koole for his distinguished career and many contributions to the assessment field in Minnesota. 10 Equal Eyes Fall Years Ago 1996 Greg Johnson became the assessor of Kanabec County, and after 45 years of service, Henry Evens retired as a local assessor for Stearns County. Commissioner of Revenue James Girard, reported in Equal Eyes about Governor Arne Carlson s wishes to make all units of government more accountable to local taxpayers, compress property tax rates, and offer provisions making it easier for taxpayers to understand where their tax dollars go. Kim Jensen and Jody Keyes received their accreditations, and Dean Champine was named the new Lyon County assessor. After a four year delay, Underwater World opened at the Mall of America in Bloomington. Mall officials described the delayed opening as a good thing, pointing to the importance in mall retailing of keeping things fresh and always adding new attractions and retailers. The mall did this in 1996 by not only adding Underwater World but also adding the Planet Hollywood restaurant and bar. A discussion and hearing on suggested revisions to the IAAO Standard on Ratio Studies took place at the organization s annual conference, which was held in Houston that year. The Minneapolis Federal Reserve bank s quarterly agricultural bankers survey found that the proportion of Minnesota farmers at their debt limit had increased from 10 to 17 percent. 20 Years Ago 1991 Bill Coons retired as Olmsted County Assessor and Don Nyseth retired as Dodge County assessor. On the importance of submitting articles, Peter Koole said, It s vitally important that we all reach down to give back a little to what Equal Eyes has given us. Former Ramsey County assessor Richard Ward, joined Computer Network, Ltd. as Vice President of CAMA Operations. At the time, Ward was well known for his research work and teaching for IAAO. Actor Burt Reynolds filed an appeal on the value of his 147 acre ranch in West Palm Beach, Florida. The assessed value for the 1996 assessment was $2.4 million, and Reynolds thought the property was worth only $1.3 million. 35 Years Ago 1976 Michigan joined NCRAAO to make it the seventh state to be a member of the organization. For the first time, IAAO officers were elected by mail ballot. Prior to this, officers were elected at the annual convention with votes cast only by those present at the convention. This meant that only 10 to 15 percent of the members were electing IAAO officers. In order to cut the cost and effort involved and to improve the accuracy and timeliness of valuations, more than 50 assessment jurisdictions throughout the United States were engaged in the development and implementation of computer assisted mass appraisal systems or what we have so fondly known as CAMA systems for decades now.

11 Zestimates? Zillow and Assessors Written by Jake Pidde, CMA City of Plymouth Editorial Committee Member Have you ever had a property owner call and say, My property value is WAY too high! Ha, ha! Dumb question, right? What about a property owner saying, My property value is WAY too high, my Zillow Zestimate says so. This is where technology starts to make our jobs a little more difficult. First of all, what is Zillow? According to their website, Zillow is A home and real estate marketplace dedicated to helping homeowners, buyers, sellers, renters, real estate agents, mortgage professionals, landlords and property managers find and share vital information about homes, real estate and mortgages. We are transforming the way consumers make home-related decisions and connect with real estate professionals. It starts with our living database of more than 100 million U.S. homes - including homes for sale, homes for rent and homes not currently on the market. Add to that Zestimate home values, Rent Zestimates and lots of other useful information you won t find anywhere else, and as a result, consumers are given an edge in real estate. Ok, then what is a Zestimate? Zillow says that a Zestimate is an estimated market value, computed using a proprietary formula. It is not an appraisal. It is a starting point in determining a home s value. They compute this figure by taking zillions of data points - much of this data is public - and entering them into a formula. This formula is built using what Zillow statisticians call a proprietary algorithm - big words for secret formula. Currently, it has data, Zestimates and Rent Zestimates on approximately 100 million homes on Zillow. How accurate is a Zestimate? Well, according to Zillow, the home data they have compiled to generate a Zestimate home valuation varies by location. Some counties provide all the data they need, but others are lacking such key things as the number of bedrooms and bathrooms. In some cases, the square footage of the home is missing. The more data available, the more accurate the Zestimate. The company has made it easier for users to help improve accuracy by incorporating edited home facts into Zestimate calculations. In some areas, Zillow might not be able to produce a Zestimate at all, but it will still have some basic information on the homes. To measure the accuracy of the Zestimates, the company has gone back in time and compared the historic Zestimates with the actual transaction prices of homes that sold. The table below also provide various measures of that accuracy. What does this Zillow information mean for assessors? Using Minneapolis/St. Paul as our example, we can see that they have a rating of 3. This means that they fall within the 7.2%-9.2% range for median error. This is a good rating according to Zillow. But, according to their definition of Median Error, 50% of the homes sold in MSP are within 8.1% of the sale price. Worse yet, only 34% of the homes sold in MSP are within 5% of the sale price. This reminds me of the classic quote from the movie Anchorman, 60% of the time, it works every time. It is also interesting to note that a rating of 1 is defined as Tax assessor s value, or unable to compute Zestimate accuracy. Zillow goes on to define Tax Assessor s Value as: Depending on the jurisdiction where you live, this value could be the tax assessed, tax appraised, or market assessed value. This value comes from the taxing authority of the city, county or state where you live; this is not Zillow s value. Note: Tax assessor s values differ from Zillow s Zestimate, which is computed by entering numerous data points into a proprietary formula, often resulting in a more accurate value estimate. According to the Wall Street Journal, its study of the accuracy of Zillow s estimates found that they often are very good, frequently within a few percentage points of the actual price paid. But when Zillow is bad, it can be terrible. This doesn t sound like a ringing endorsement. The most common theory about Zillow on the internet today, from appraisers to bloggers to real estate agents, is that Zillow should be used for entertainment purposes only. After comparing numerous values of recent residential sales, that theory seems fairly accurate at least 60% of the time. Fall 2011 Equal Eyes 11

12 Within 5% of Sale Price Within 10% of Sale Price Within 20% of Sale Price Zestimate Homes on Homes with Median Metro Area Accuracy Zillow Zestimates Error Atlanta, GA 3 2,229,215 2,013, % 54.2% 73.7% 8.8% Baltimore, MD 3 971, , % 57.5% 78.3% 7.9% Boston, MA 4 1,444,468 1,379, % 62.1% 80.2% 7.1% Chicago, IL 2 3,527,633 3,145, % 51.5% 71.7% 9.5% Cincinnati, OH 1 730, , Cleveland, OH 3 815, , % 52.9% 71.7% 9.2% Dallas-Fort Worth, TX 2 2,144,860 1,935, % 48.2% 70.6% 10.5% Denver, CO 4 978, , % 71.5% 88.9% 5.5% Detroit, MI 2 1,869,264 1,735, % 49.9% 67.8% 10.0% Houston, TX 1 2,035,650 1,781, Kansas City, MO 1 738, , Las Vegas, NV 4 727, , % 67.5% 85.6% 6.4% Los Angeles, CA 4 3,261,891 2,972, % 68.2% 86.3% 6.2% Miami-Fort Lauderdale, FL 2 2,650,334 2,437, % 50.9% 72.1% 9.7% Minneapolis-St Paul, MN 3 1,184,423 1,117, % 57.9% 77.4% 8.1% New York, NY 3 4,857,481 4,358, % 58.7% 78.5% 7.8% Orlando, FL 3 916, , % 53.0% 73.1% 9.2% Philadelphia, PA 4 2,062,217 1,977, % 60.8% 78.1% 7.1% Phoenix, AZ 3 1,687,727 1,462, % 57.2% 78.0% 8.1% Pittsburgh, PA 2 937, , % 50.7% 68.7% 9.7% Portland, OR 4 788, , % 65.2% 83.8% 6.5% Riverside, CA 4 1,614,609 1,286, % 62.9% 82.1% 7.0% Sacramento, CA 3 823, , % 54.6% 76.2% 8.6% San Antonio, TX 1 822, , San Diego, CA 4 1,031, , % 70.1% 88.3% 5.8% San Francisco, CA 3 1,302,352 1,195, % 62.3% 81.5% 7.2% Seattle, WA 4 1,295,985 1,151, % 67.8% 85.8% 6.2% St. Louis, MO 3 1,089, , % 54.6% 75.9% 8.6% Tampa, FL 3 1,277,509 1,148, % 53.4% 72.6% 9.0% Washington, DC 4 1,881,957 1,826, % 68.9% 85.3% 5.7% As of June 15, 2011 *Note - Zillow does not include sales of foreclosures Zestimate Accuracy/Rating: This rating is tied to the Median Error in an area. The ratings are as follows: 4= Best Zestimate 3= Good Zestimate 2= Fair Zestimate 1= Tax assessor s value, or unable to compute Zestimate accuracy 0= No valuation Homes on Zillow: This indicates the number of homes for which data (e.g., number of bedrooms or bathrooms) in a particular locale is available. These are the homes you can find via maps or search on Zillow.com. Notes About the Table Homes With Zestimates: Zillow only calculates Zestimates for homes where there is certain data, including transactions. This column indicates the percentage of homes in an area with Zestimates. Within 5% of Sale Price: This is the percentage of transactions in a location for which the Zestimate was within 5% of the transaction price. For example, in the Portland area, 41.2% of the time the Zestimate was within 5% of the selling price. Within 10% of Sale Price: This is the percentage of transactions in a location for which the Zestimate was within 10% of the transaction price. Within 20% of Sale Price: This is the percentage of transactions in a location for which the Zestimate was within 20% of the transaction price. Median Error: Half of the Zestimates in an area were closer than the error percentage and half were farther off. For example, in Seattle, Zestimates for half of the homes are within 6.2% of the selling price, and half are off by more than 6.2%. 12 Equal Eyes Fall 2011

13 Let s Get Acquainted Mark Peterson Researched and Written by Julie Gustafson, SAMA City of Maple Grove Editorial Committee Member Mark Peterson is one of the many new assessors appointed in the past couple years. He was appointed Cass County Assessor in May of Like many assessors, Mark s entrance into the assessing field was far from planned. Prior to becoming an assessor, Mark worked as an insurance agent for several years before circumstances arose that forced him to seek other employment. Unfortunately, the insurance agency he worked for was unable to fulfill some of their financial obligations in particular, agent commission bonuses. As a result, like any intelligent and hard working individual with responsibilities would do, Mark decided it was time for a change. Consequently, he responded to an advertisement in the paper for an appraiser position at Cass County, and according to Mark, the rest is history. Speaking of history, before we continue regarding Mark, here is a little background on Cass County. Cass County was created by legislative act in May of Upon creation it became one of ten counties that existed in the Minnesota Territory. At the time, Cass County wasn t fully organized. Instead, it was a created county with no officers of its own, and was actually a part of Crow Wing County. In 1987, Cass County became fully organized into its own county with the county seat located in Walker. Cass County is approximately 100 miles north to south and 50 miles east to west. It includes 50 organized townships, 14 unorganized townships, and 15 incorporated cities. It has a total land area of 2,018 square miles with a relatively low population of only 13.5 persons per square mile compared to Minnesota s more typical It has just over 50,000 parcels; 40,450 of them being taxable, of which 26,320 are improved. Cass County is a prime vacation destination. It is home to 156 resorts spread out amongst its 896 lakes. The county features many recreational attractions such as Leech Lake, the third largest lake in Minnesota with over 600 miles of shoreline; Chippewa National Forest, the first National Forest established east of the Mississippi River encompassing about 1.6 million acres of land, water, and wetlands including the Cass Lake Chain of Lakes; and Itasca State Park which totals more than 32,000 acres and includes more than 100 lakes. It is also home to the Leech Lake Land of Ojibwe Indians, later named Chippewa by the U.S. Federal government. Given these attractions, it is not surprising that there are more seasonal recreational properties than any other property type in Cass County: 30% of the parcels are seasonal recreational. Of the remaining parcels, 20% are exempt, 24% are residential, and 20% are agricultural. The Cass County Assessor s Office has ten staff members including the County Assessor: one Appraisal Supervisor, one Office Administrator, six Staff Appraisers, and one clerical position. Considering the size and amenities this county offers, they must have their hands full. On a positive note, I can t imagine a more beautiful area of our state to drive around to complete assessments. Mark has worked for Cass County since He started working there as a staff appraiser and was appointed to appraisal supervisor in Five years later, he became the County Assessor. He has been a faithful MAAO member for the past 21 years, and he became an IAAO member this past year. He currently serves on the MAAO Legislative Committee, and is also the current Region IV President. If he could change anything about the assessment field, besides making it mandatory for homeowners to wear at least a bathrobe during inspections (you ll understand this better later in the article), Mark would like to simplify the property tax classification system. The biggest challenge he sees as an Assessor is not directly related to the assessment field, but is instead a result of being a small part of an overall government system that he says is obviously broken. When asked about an unusual or memorable situation encountered on the job, Mark indicated he has had his fair share of incidents involving dogs and threats from angry taxpayers. However, he recalls one incident (his most memorable) that unfortunately will be etched in his brain forever. As the story goes, Mark scheduled an appointment for an interior inspection of a very nice lake home owned by an older gentleman. Upon arrival, he was met by the owner who had been out on his deck sun bathing. For the purposes of this story we ll refer to him as Mr. X. Mr. X was an extremely hairy man in his mid 60 s, in poor physical shape, and was wearing only a tiny Speedo which Fall 2011 Equal Eyes 13

14 was, according to Mark, at least three sizes too small. Let s just say it wasn t a good sight. Being a good citizen engaged in the task at hand, Mr. X led Mark around the interior of his home pointing out specific issues he believed to be important to the inspection. To Mark s dismay, the home had a loft area that Mr. X wanted him to see. A steep narrow spiral staircase led up to this loft. With Mr. X leading the way, Mark proceeded to climb the staircase with, as Mark put it, Mr. X s hairy rear mere inches from his face. Midway up the staircase, Mr. X stopped, turned around, and proceeded to commence a conversation with Mark. Need I say any more? I m not sure why, but Mark says he ll face angry dogs and taxpayers any day over another Mr. X! On a personal note, Mark has been married for the past ten years to his wife, Bonnie. He has five children: a daughter, Brianna, age 25; and four step-children: Kelley, age 23; Megan, age 19; Caitlin, age 16; and John, age 14. Mark also has two step-grandchildren: Caden, age 4; and Trace, age 6 months. Mark lives seven miles east of Hackensack on Lost Lake. He and his wife own and operate a small seasonal resort called Sunny Spring Farm. According to Mark, his wife is into horses so they also board horses for others along with some of their own. Mark s hobbies include fishing, hunting, and golf. His favorite hunting activity is archery hunting for turkeys, and pheasant hunting in South Dakota. He also helps a friend with his bear guiding business a few days each Fall. Last but not least, he is a licensed gunsmith. However, Mark claims he doesn t have much time for it these days. I wonder why? Looking to the future, Mark plans on working for Cass County until retirement. Upon retirement he hopes to spend a couple winter months somewhere warm with a golf course nearby. As a side note, a couple years after leaving the insurance agency Mark found out why he failed to receive his commission bonuses: a co-worker had been embezzling funds leaving no money to meet its financial obligations to its agents. Mark believes he would still be with that agency today if it were not for the actions of that one individual. Lucky for Cass County and MAAO, as fate would have it, that is not the case. Assessor Education: At-A-Glance 2011/2012 MAAO Education Schedule Course Date Location Assessment Laws and Procedures January Plymouth, Best Western Kelly Inn 2011 PACE Schedule Date October November 28-December 2 March Location Grand Rapids, Sawmill Inn Inver Grove Heights, Inver Hills Community College Coon Rapids, Anoka-Ramsey Community College Registration and Questions Visit to register for any of these educational offerings, to find more information, or to find the contact person for additional questions. 14 Equal Eyes Fall 2011

15 Meet Minnesota s New SAMA & AMA Designees Written by Jake Pidde, CMA City of Plymouth Editorial Committee Member Joseph Skerik Joseph Skerik, Beltrami County, was awarded the SAMA designation on May 23, His education includes Courses A, B, H, J, IAAO courses 302 and 400, MAAO Ethics Seminar, and Narrative Report Writing Seminar. Mr. Skerik s Residential Demonstration Narrative appraisal passed the grading committee in November He has attended PACE and passed the Income Case Study Examination. He had a successful Oral Interview with the Board in November 2001, and he has 23 years of assessment experience. Congratulations to you, Joe! Russell Steer Russell Steer, Marshall County, was awarded the SAMA designation on May 23, His coursework includes Courses A, B, H, J, IAAO 2, Assessment Administration and the two-day USPAP from Kaplan/ ProSource. Mr. Steer s Form Report passed the grading committee in September 2009, and he passed the Residential Case Study Exam in October He had a successful Oral Interview with the Board in December Mr. Steer passed the Income Case Study Examination in April 2011, and he has 12 years of assessment experience. Congratulations to you, Russ! To recognize the accomplishments of new AMA and SAMA desginees, we are spotlighting them when awarded by the State Board of Assessors. Are you a new designee? Get your photo ready! Lane Thor Lane Thor, Ramsey County, was awarded the SAMA designation on May 23, His coursework includes Assessment Law and Procedures, ProSource , H, J, MN Assessment Administration and an MS in Real Estate from the University of St. Thomas. Mr. Thor s Form Report passed the grading committee in May 2009, and he passed the Residential Case Study Examination in July Mr. Thor had a successful Oral Interview with the Board in February, 2010, and he passed the Income Case Study Examination in February Mr. Thor has 5 years of assessment experience. Congratulations to you, Lane! Adrienne Garcia Adrienne Garcia, City of Edina, was awarded the SAMA designation on May 23, Her education includes Courses A, K, a successful challenge to Course H, ProSource 105, a Bachelor s Degree in Real Estate from St. Cloud State University, PACE, and the Income Case Study Examination. Ms. Garcia had a successful Oral Interview with the Board in October of 2005, and she has 10 years of assessment experience. Congratulations to you, Adrienne! David Buswell David Buswell, City of Eden Prairie, was awarded the SAMA designation on May 23, His education includes courses A, B, H, J, K, IAAO 102, 151 and 400. Mr. Buswell s Form Report passed the grading committee in November 2006, and he passed the Residential Case Study Examination, PACE and the Income Case Study Examination. Mr. Buswell had a successful Oral Interview with the Board in March of He has 1 7 y e a r s o f a s s e s s m e n t e x p e r i e n c e. Congratulations to you, Dave! Fall 2011 Equal Eyes 15

16 Terrance Chacka Terrance Chacka, Scott County, was awarded the SAMA designation on May 23, His education includes: Assessment Law and Procedures, Advanced Income Capitalization from the IAAO, Highest and Best Use & Market Analysis, Advanced Applications, Advanced Sales Comparison and Cost Approaches from the Appraisal Institute (Income course), Mass Appraisal Basics, Assessment Administration, USPAP, and a Bachelor s Degree in Real Estate from St. Cloud State University. Mr. Chacka s Tax Court Narrative passed the grading committee in March of 2011, and he has 5 years of assessment experience. Congratulations to you, Terrance! Mark Meili Mark Meili, Carver County, was awarded the SAMA designation on May 23, His education includes Assessment Law and Procedures, Residential Appraisal, Mass Appraisal, Assessment Administration, Income Approach to Valuation, Basic Income Approach to Value, and a 15 hour USPAP. Mr. Meili s Form Report passed the grading committee in April 2010, and he passed the Residential Case Study Exam in December He had successful Oral Interview with the Board in January, Mr. Meili passed the Income Case Study Examination in April of 2011, and he has 6 years of assessment experience. Congratulations to you, Mark! Julie Hackman Julie Hackman, Olmsted County, was awarded the SAMA designation on May 23, Her education includes Courses A, ProSource , NAIFA course Fundamentals of Rural Appraisal, Mass Appraisal, IAAO 102, Investment Property Appraisal and Investment and Fiscal Analysis (two of the four ProSource income courses accepted as an alternate to one income course), PACE, and Assessment Administration. Ms. Hackman s Residential Demonstration Narrative passed the grading committee in April 2009, and she has passed the Income Case Study Examination. She had a successful Oral Interview with the Board in May of 2010 and has 13 years of assessment experience. Congratulations to you, Julie! Ryan Short Ryan Short, Blue Earth County, was awarded the SAMA designation on May 23, His education includes Course A, ProSource and 107, USPAP, Mass Appraisal Basics, Assessment Administration, Basic Income Capitalization and Advanced Income Capitalization from the Appraisal Institute, as well as several other courses from the Appraisal Institute. Mr. Short passed his Form Report in April 2010, and he passed the Residential Case Study Exam in February, Mr. Short had a successful Oral Interview with the Board in March of He passed the Income Case Study Exam in April, He has over four years of assessment experience in addition to his appraisal experience (since 2004). Congratulations to you, Ryan! Dan Schaffler Dan Schaffler, Olmsted County, was awarded the AMA designation on May 23, His education includes Assessment Law and Procedures, IAAO 102, MAAO Assessment Administration, 2-day USPAP, a successful challenge to the Mass Appraisal Basics exam and a Bachelor s Degree in Real Estate from St. Cloud State University. Mr. Schaffler has 5 years of assessment experience. Congratulations to you, Dan! Charles Zieman Charles Zieman, Nicollet County, was awarded the SAMA designation on May 23, His education includes Courses A, B, H, J, K, IAAO 102 and 151. Mr. Zieman s Demonstration Narrative passed the grading committee in December 2007, and he had a successful Oral Interview with the Board that same month. Mr. Zieman passed the Income Case Study Examination in May 2011 and has 10 years of assessment experience. Congratulations to you, Chuck! 16 Equal Eyes Fall 2011

17 Course Reviews Recent MAAO Courses Reviews by Solomon Akanki, AMA Scott County Editorial Commitee Member Appraisal Principles & Mass Appraisal Basics Appraisal Principles The 30-hour MAAO Appraisal Principles was held July 18-21, 2011 at the Holiday Inn Hotel, St Cloud and had 22 attendees. All students took the course for licensing requirements and one person was from North Dakota. This course is approved for 30 hours of assessor continuing education by the Minnesota State Board of Assessors. The reason why we take courses to meet licensing requirements and for continuing education is because humanity can t connect the dots looking forward, we only connect them looking backward. This course is the first dot towards a successful Appraisal and Assessing career. Another reason we take courses is to ensure preparation meets opportunity. Are you prepared for the next opportunity? The following chart shows attendance across regions. Most of the attendees came from Region 7 (5). Regions 9 and 4 each provided four attendees. The Minnesota Department of Revenue and North Dakota each provided one attendee. Region 1 and 8 did not have any attendees. We thank the Minnesota Department of Revenue as usual for allowing MAAO to sponsor this course and get the proceeds. It is a substantial contribution to the association s funding. We are also grateful to Bob Wilson SAMA, CAE (City of Edina Assessor) for coordinating this weeklong course. Mass Appraisal Basics The 30-hour MAAO Mass Appraisal Basics course was held Aug 22-26, 2011 at the Best Western-Kelly Inn, St Cloud and had 34 attendees. All students took the course for licensing requirements and one person was from North Dakota. This course is approved for 30 hours of continuing education with the Minnesota Board of Assessors and the Minnesota Department of Commerce. Abraham Lincoln said: I will prepare and some day my chance will come. This is a very fitting quote because it means that in life, we alone are responsible for gaining the skills and knowledge we need to succeed. It also means that as long as we are ready to prepare and persevere, someday our chance will certainly come. One thing we all need to avoid is procrastination. Because it might cause us to continually defer preparation until the opportunity is lost. Are you prepared for the next opportunity? This chart shows attendance across regions. Again, most of the attendees came from Region 7 (5). Region 9, 3 and 1 each provided four attendees. The Department of Revenue, North Dakota, Region 8 and the private sector all provided one attendee. We thank the Minnesota Department of Revenue as usual for allowing MAAO to sponsor this course and get the proceeds. It is a substantial contribution to the association s funding. We are also grateful to Bob Wilson SAMA, CAE (City of Edina Assessor) for coordinating this weeklong course. Appraisal Principles Attendees Mass Appraisal Attendees Fall 2011 Equal Eyes 17

18 State Board of Assessors Meeting Minutes Provided by Pam Lundgren Minnesota Department of Revenue May 23, 2011 Lake George Municipal Complex, St. Cloud Chairperson Doreen Pehrson convened the meeting at 9:30. Gregg Larson was unable to attend. All other members were present. The minutes of the March 15, 2011 meeting were read and discussed. Dave Marhula made a motion to approve the March 15, 2011 Meeting Minutes as read. Brian Koester seconded the motion. The motion carried. Announcements: On April 8, license renewal forms and transcript data for the 4-year cycle were mailed out. A total of 941 forms were sent. To date 414 licenses have been issued; 22 Record Retention Requests have been processed and 7 license requests are on Hold until the renewal forms are completed and returned. Request for Continuing Education Hours: Susanne Barkalow from the NAIFA submitted a request for CEH s for the seminars she ll be teaching: Mortgage Fraud 4 hours Appraising 2-4 Family Properties 7 hours The 2010 ERC Appraisal Form 4 hours The HP12C Calculator 4 hours The National USPAP Update 7 hours Completing FHA Appraisals 7.5 hours Foreclosures and Short Sales 7 hours Market Analysis 7 hours Understanding the Message 4 hours Dave Marhula made a motion to award the seminars the CEH s as listed above. Mike Amo seconded the motion. The motion carried. Gary Grossinger, Stearns County Assessor, requested CEH s for one-half day of the MCCC Annual Conference in Alexandria from June 6 9, The conference presentation covers 4 hours of CAMA Training on June 6 th and the sessions cover Security, Soft-Literals, Recalculations and Updates, Manage Mass Update and Mass Updates Subarea. There is one 15 minute break which leaves 3.75 CEH s for approval. Per Board Policy, 3.75 CEH s will be awarded to assessors who provide documentation of attending this seminar. Jason Vaith, MAAP President, requested 10 CEH s for the 2011 Summer Seminars on August 18 and 19, 2011 at the Holiday Inn in Duluth. Topics to be covered are ecrv s; data on the Glensheen Mansion including construction techniques used, special rooms, HVAC, electrical, plumbing, etc.; discussion on assessment related topics and presentations from Jason Parker, DOR; County Assessors Greg Kramber and Gary Grossinger. After discussing the offerings, the Board members decided that the Business meeting, the presentations from Jason Parker and the information on the Glensheen Mansion did not meet the requirements for continuing education and would be omitted from the request. Steve Hurni made a motion to award 7 CEH s to assessors who provide documentation of attendance at the MAAP Summer Seminars. Deb Volkert seconded the motion. The motion carried. Applications for Certified Minnesota Assessor: Kathleen Brady, Ramsey County Drew Imes, DOR Property Tax Anthony McGibbon, Dakota County Patrick Orent, St. Louis County Jonathan Thompson, City of Minneapolis Applications for Certified Minnesota Assessor Specialist: Linda Wiener, Anoka County, applied for the Certified Minnesota Assessor Specialist license. Her education includes courses A, B, F, H, and G. Ms. Wiener s Form Report passed the grading committee in May, 2011, and she has 32 years of assessment experience. Brian Koester made a motion to award the Certified Minnesota Assessor Specialist License to Linda Wiener. Jan Jackson seconded the motion. The motion carried. Appointments With the Board: Terrance Chacka, Scott County, met with the Board for his Accreditation Oral Interview. His education includes: Assessment Law and Procedures, Advanced Income Capitalization from the IAAO, Highest and Best Use & Market Analysis, Advanced Applications, Advanced Sales Comparison and Cost Approaches from the Appraisal Institute (Income course), Mass Appraisal Basics, Assessment Administration, USPAP, and Bachelor s Degree in Real Estate from St. Cloud State University. Mr. Chacka s Tax Court Narrative passed the grading committee in March of 2011, and he has 5 years of assessment experience. Jan Jackson made a motion to award Terrance Chacka the Senior Accredited Minnesota Assessor s License. Steve Hurni seconded the motion. The motion carried. Dan Schaffler, Olmsted County, met with the Board for his Accreditation Oral Interview. His education includes: Assessment Law and Procedures, IAAO 102, MAAO Assessment Administration, 2-day USPAP, a successful challenge to the Mass Appraisal Basics exam, and a Bachelor s Degree in Real Estate from St. Cloud State University. Mr. Schaffler has 5 years of assessment experience. Dave Marhula made a motion to award the Accredited Minnesota Assessor License to Dan Schaffler. Brian Koester seconded the motion. The motion carried. Steve Behrenbrinker, St. Cloud City Assessor, met with the Board to discuss grading of the Income Narratives and Tax Court Narratives. He also answered some questions and provided information on how many assessors have taken advantage of the current program since its inception in 2005: 100 Form Reports have passed; 92 Income Case Study Exams have been passed; and 18 Equal Eyes Fall 2011

19 82 Residential Case Study exams have been passed. I t was noted that Bob Wilson now grades the Income Case Study Examinations and that Teresa Mitchell and Kyle Holmes handle the instruction and grading for the Residential Case Study Examinations. Applications for Senior Accredited Minnesota Assessor: David Buswell City of Eden Prairie. His education includes courses A, B, H, J, K, IAAO 102, 151, and 400. Mr. Buswell s Form Report passed the grading committee in November 2006 and he passed the Residential Case Study Examination, PACE, and the Income Case Study Examination. Mr. Buswell had a successful Oral Interview with the Board in March of He has17 years of assessment experience. Steve Sinell made a motion to award the Senior Accredited Minnesota Assessor License to Dave Buswell. Brian Koester seconded the motion. The motion carried. Adrianne Garcia - City of Edina. Her education includes Courses A, K, a successful challenge to Course H, ProSource 105, a Bachelors Degree in Real Estate from St. Cloud State University, PACE, and the Income Case Study Examination. Ms. Garcia had a successful Oral Interview with the Board in October of 2005, and she has 10 years of assessment experience. Jan Jackson made a motion to award the Senior Accredited Minnesota Assessor License to Adrianne Garcia. Mike Amo seconded the motion. The motion carried. Julie Hackman, Olmsted County. Her education includes Courses A, ProSource , NAIFA course Fundamentals of Rural Appraisal, Mass Appraisal, IAAO 102, Investment Property Appraisal and Investment and Fiscal Analysis (two of the four ProSource income courses accepted as an alternate to one income course), PACE, and Assessment Administration. Ms. Hackman s Residential Demonstration Narrative passed the grading committee in April 2009, and she has passed the Income Case Study Examination. She had a successful Oral Interview with the Board in May of 2010 and has 13 years of assessment experience. Deb Volkert made a motion to award the Senior Accredited Minnesota Assessor license to Julie Hackman. Brian Koester seconded the motion. The motion carried. Mark Meili, Carver County. His education includes Assessment Law and Procedures, Residential Appraisal, Mass Appraisal, Assessment Administration, Income Approach to Valuation, Basic Income Approach to Value, and a 15 hour USPAP. Mr. Meili s Form Report passed the grading committee in April 2010, he passed the Residential Case Study Exam in December 2010, and he had a successful Oral Interview with the Board in January, Mr. Meili passed the Income Case Study Examination in April of 2011, and he has 6 years of assessment experience. Dave Marhula made a motion to award the Senior Accredited Minnesota Assessor License to Mark Meili. Steve Hurni seconded the motion. The motion carried. Ryan Short, Blue Earth County. His education includes Course A, Appraisal License number: , ProSource and 107, USPAP, Mass Appraisal Basics, Assessment Administration, Basic Income Capitalization and Advanced Income Capitalization from the Appraisal Institute, several other courses from the Appraisal Institute, and a passing Form Report in April He passed the Residential Case Study Exam in February, Mr. Short had a successful Oral Interview with the Board in March of 2011, and he has over four years of assessment experience in addition to his appraisal experience (since 2004). He passed the Income Case Study Exam in April, Steve Sinell made a motion to award the Senior Accredited Minnesota Assessor license to Ryan Short. Dave Marhula seconded the motion. The motion carried. Joseph Skerik - Beltrami County. His education includes Courses A, B, H, J, IAAO course 302 and 400, MAAO Code of Ethics Seminar, and the Narrative Report Writing Seminar. Mr. Skerik s Residential Demonstration Narrative appraisal passed the grading committee in November 2001, and he has attended PACE and passed the Income Case Study Examination. He had a successful Oral Interview with the Board in November 2001, and he has 23 years of assessment experience. Mike Amo made a motion to award the Senior Accredited Minnesota Assessor License to Joseph Skerik. Jan Jackson seconded the motion. The motion carried. Lane Thor, Ramsey County. His coursework includes Assessment Law and Procedures, ProSource , H, J, MN Assessment Administration, and an MS in Real Estate from the University of St. Thomas. Mr. Thor s Form Report passed the grading committee in May 2009, and he passed the Residential Case Study Examination in July Mr. Thor had a successful Oral Interview with the Board in February 2010, and he passed the Income Case Study Examination in February Mr. Thor has 5 years of assessment experience. Deb Volkert made a motion to award the Senior Accredited Minnesota Assessor License to Lane Thor. Steve Sinell seconded the motion. The motion carried. Russell Steer, Marshall County. His coursework includes Courses A, B, H, J, IAAO 2, Assessment Administration, and the 2 day USPAP from Kaplan/ProSource. Mr. Steer s Form Report passed the grading committee in September 2009, he passed the Residential Case Study Exam in October 2009, and had a successful Oral Interview with the Board in December Mr. Steer passed the Income Case Study Examination in April 2011, and he has 12 years of assessment experience. Brian Koester made a motion to award Russell Steer the Senior Accredited Minnesota Assessor License. Dave Marhula seconded the motion. The motion carried. Charles Zieman, Nicollet County. His education includes Courses A, B, H, J, K,and IAAO 102 and 151. Mr. Zieman s Demonstration Narrative passed the grading committee in December 2007, and he had a successful Oral Interview with the Board that same month. Mr. Zieman passed the Income Case Study Examination in May 2011 and has 10 years of assessment experience. Mike Amo made a motion to award Charles Zieman the Senior Accredited Minnesota Assessor License. Brian Koester seconded the motion. The motion carried. Discussion Items: Rule Changes the effective date for the Rule Changes is July 1, New License Level Requirement Sheets reflecting the Rule Changes in the requirements will be made available on July 1. Kaplan Professional Schools has entered into an agreement with the IAAO to hire an instructor to teach IAAO courses 101 and 400. In addition, there are some new courses that will be coming out, some of which will be available on-line. The website address is: So far, there Fall 2011 Equal Eyes 19

20 State Board of Assessors, continued isn t much information, but when it becomes available it will be added to the meeting agenda(s) for approval for CEH s. CEH s for Board Meetings - Board Members who are licensed assessors earn continuing education credit for attending and participating in the meetings. After averaging out the number of hours spent over the course of a year, it comes out to 5 CEH s per meeting. As with all CEH requirements, no lunches or breaks are included in the 5 hours. Discussion regarding the lack of elective courses brought out the lack of education for agricultural land and lakeshore property. Would it be possible for development of MAAO instruction of two 15 hour seminars on Ag and/or Lakeshore as an acceptable alternative to an elective? Brian Koester will bring that information to the Education Committee in the hope that they will develop a course or two. However, these must be tested seminars to be used as an elective alternative. There being no further business, the Chairperson set the date for the next meeting as July 19, 2011 at the Department of Revenue, Room We will convene at 9:30 AM. Dave Marhula made a motion to approve payment of expenses in conjunction with the meeting. Steve Sinell seconded the motion. The motion carried Steve Sinell made a motion to adjourn. Brian Koester seconded the motion. The motion carried. Regions 7 & 8 Meeting Friday, July 15, It was a beautiful sunny day in Northern Minnesota. Along with the shining sun, the birds were chirping and the fish were biting. And the assessors were meeting!!! Long Lake Campground, located in the southern part of Clearwater County, was the site of much activity and excited greetings as retired assessors and appraisers gathering for a Joint Region 7 & 8 Meeting and an Old Timers Picnic. It has been a long-time tradition for Region 7 to host a picnic in their region in July, and Region 8 hosted a separate picnic in their region. After much discussion, it was decided that a joint meeting might be fun. And it was!!! Assessors of all ages and backgrounds came together for a very enjoyable picnic and social gathering. Current assessors and appraisers met at 10:00 a.m. for their traditional monthly meeting, and as the retired assessors and appraisers joined us under the picnic shelter, the air was soon filled with the buzz of renewing acquaintances. For some of us, new acquaintances were made, too. Retirees/former assessing staff in attendance included: Reuben and Wanda Rydeen, Harris and Sylvia Sachau, Don and Linda Holm, Bob and Dixie Moe, O dean Hokanson, Harvey and Darlene Chermak, Dana and Gini Powers, Trula Teiken, Ann Cease, Vern and Gunny Johnson, Laura Jordahl, and Dale Lambrecht. Each of the retirees gave a brief work history and an update on their time spent during retirement. It was a wonderful opportunity to spend time with past region members. Regions 7 & 8 are already making plans for the 2 nd Annual Joint Region Picnic in If other regions reading this article do not have this awesome tradition those who attended the picnic in July will tell you that you do not want to miss the opportunity to connect with your retired assessors and appraisers! What a great opportunity to hear about those Golden Retirement Years! Submitted by Cheryl Grover Clearwater County 20 Equal Eyes Fall 2011

21 The Smallest City No More Teeny Tenney Written by Naomi Miranowski, CMA Wilkin County Tenney, a small community in the southeast corner of Wilkin County, has lost its title as one of the nation s smallest cities, but not because of a suddenly booming population. The 2010 Census listed the population of this tiny town at five, and this summer the three registered voters of Tenney, Minnesota, decreed to dissolve the town with a majority vote of 2-1. The petition of dissolution came from Mayor Kristen Schwab after she was unable to acquire enough members to form a City Council. Three people just did not provide enough manpower to keep the city alive. The maintenance of the city buildings and lots will now fall into the hands of Campbell Township. The township will also absorb the $10,000 the city had in its city coffers. Located close to the Minnesota/North Dakota border on Minnesota Highway 55, Tenney is about 20 miles south of Breckenridge. Nestled in amongst the vast fields of the Red River Valley, Tenney can be identified in the distance by a row of massive grain bins that make up the Wheaton-Dumont Cooperative Elevator, the sole commercial enterprise in town. As much as 32 million bushels of grain are trucked into Tenney from other elevators and shipped out by the Soo Line Railroad each year. In 2010, the elevator underwent a three million dollar renovation, including the construction of four new 750,000 bushel grain bins, to help support this kind of grain traffic. The 2011 total taxable market value for the entire city of Tenney for 2011 is $4,358,200; over 97% ($4,233,400) of that figure can be attributed to the market value of the Wheaton-Dumont Elevator. This leaves a mere $89,800 attributable to the market value of the rest of the city. Besides the elevator and Highway 55, the town site is completely surrounded by fields and appears to be just a speck of civilization in an ocean of wheat, soy beans, and sugar beets. The entire city of Tenney is comprised of a mere 28 parcels. Only three houses still stand in Tenney, along with two churches and a handful of abandoned buildings. Many of the old city streets are covered in overgrown grass and wild flowers. The remnant of the old general store remains and acts as a reminder as to what must have been. If you squint hard enough, you can almost see where the little houses used to sit, or where the bank, the barber shop, the hardware store, or the hotel once stood; you can even imagine the streets bustling with people. In 1885 the original landowner, John P. Tenney, a lumber company executive from the Twin Cities, gave the land to the railroad. The Soo Line Railroad was making its progression through the area and because of John Tenney s generosity, the town was named for him. On August 4, 1887, a plat was filed for record with the Wilkin County Register of Deeds Office. Tenney was incorporated in November of A post office was established in 1887 and soon the city was home to stores, a butcher shop, bank, school, pool hall, lumberyard, hotel, barber shop, and saloon. The original city plat shows Tenney encompassing four square miles. The city never grew enough to meet its boundaries. Unfortunately, by 1910 the young town had already begun its decline. Many of the small farms in the area began to sell out to larger, corporate farms. There was a lack of jobs and a steady migration to the Twin Cities. By 1930, the hardware store had closed and the bank had gone out of business. The schools were used until the early 1950s and in 1980, the post office was discontinued as the population fell to 19. Just four miles west of Tenney are sections 13 and 14 of Campbell Township. These sections today are just fields; acres and acres of crops, dirt, and gravel roads. But, once there was a small community here; the town of Childs. This little village was home to a post office, a station of the Great Northern Railway, and a handful of houses. But today, not a trace of it remains. Nothing. It is a true ghost town. It makes one think - will Tenney also meet this fate someday? Fall 2011 Equal Eyes 21

22 Global Assessment Trends United Kingdom Written by Solomon Akanki, AMA Scott County Editorial Committee Member From Africa, we move to Europe specifically the United Kingdom. The United Kingdom is located off the northwestern coast of continental Europe. The sovereign state includes the countries of England, Scotland, Wales and Northern Ireland. Its area is 94,060 square miles. Its population in mid 2010 was estimated to be 62.3 million. The seat of government is in the capital city of London, which is also the world s largest financial center alongside New York and has the largest city GDP in Europe. There are three devolved national administrations, each with varying powers situated in Belfast, Cardiff and Edinburgh; the capitals of Northern Ireland, Wales and Scotland, respectively. The UK is a developed country and has the world s sixth largest economy by nominal GDP and seventh largest economy by purchasing power parity. England accounts for just over half of the total area of the UK, covering 50,350 square miles. Its population in mid 2008 was estimated to be 51.4 million. It is one of the most densely populated countries in the world, with 990 people per square mile in mid 2003, with a particular concentration in London and the southeast. Political Structure The law in Scotland and Northern Ireland is very similar to that of England and Wales, but in Scotland there are minor differences in land ownership and lease occupation. The use of land is classified under the Use Classes Order, which indicates which changes within classes and between classes can occur without formal permission. Similarly, a General Development Order sets out those minor alterations and improvements (often relating to residential property) that can proceed without formal application for permission. If planning permission is refused, there is a right of appeal. The planning law in Wales and Scotland 22 Equal Eyes Fall 2011 comes within their devolved powers and is not quite the same as England. Property is subject to various taxes. At the local level, occupiers of residential property have to pay an annual council tax based on capital value banding of the home. In place of individual values for every home, residential properties in England and Wales are placed in one of eight value bands for England and nine for Wales. A revaluation of residential property in Wales was completed in 2005, but residential properties in England have not been revalued (rebanded) since The value bands relate to market values. Revaluations for banding should occur every five years but have regularly been postponed by the government due to the cost involved in carrying out a complete revaluation of the whole residential property stock. Commercial property is assessed for the purpose of the uniform business rate (UBR) every five years. The assessment known as the rateable value approximates the annual rental value at an antecedent date. The level of UBR is centrally determined for England, Scotland, Wales, and Northern Ireland. Units of Measure Retail (shop) rents are often quoted at pounds per square foot in terms of Zone A, which is by custom, usually the first 20 feet from the front of the shop. This is the shopper attraction zone and is considered the most valuable space to a tenant. The next 20 feet of depth is classified as Zone B and is taken at one-half of the value of Zone A. The remaining depth is taken at onequarter of Zone A. Upper and lower floors used for sales or sales-related activity are taken at one-eighth or one-tenth of Zone A, depending on the trading location of the shop. Inflation Inflation has fluctuated considerably since It dropped below 3% in 2005 and then fell to a low of 2.2% in December 2005, but the most dramatic changes have been those since 2009 when the monthly year-on-year figures fell to -1.6% in June The economic climate since then has been one of uncertainty, and inflation has changed monthly, from 0.3% in November 2009, rising to 5.3% in April But inflation has begun to ease back, and as of August 2010 inflation was at 3.1%. Long term inflation is often taken for valuation purposes at between 2.5% and 3%. Income Approach The preferred approach in the United Kingdom for valuing income-producing property is income capitalization (spelled capitalisation in commonwealth countries). Investors have placed an increased emphasis on initial yields during the period of recession after the credit crunch which in turn has strengthened the reliance of investors on income capitalization. The method relies on good evidence of market rents and capitalization rates (yields) and in its simplest form, income divided by yield produces an expression of market value that is seen to mirror the behavior of buyers in the market. UK lease structures are predominantly on full repairing terms or subject to full recovery of operating costs through a separate service charge, which means that the lease rent or contract rent represents net operating income.

23 Discounted cash flow (DCF) analysis is mainly used as a tool of investment analysis, i.e. to assess the internal rate of return, possibly using a range of scenarios as to future changes in net rents. But the technique can be used in a static format to present an income capitalization as a tenyear cash flow. Given the complexity of voids and nonrecoverable operating costs, a DCF analysis is seen by some appraisers and some buyers as a clearer explanation of the valuation than direct capitalization. DCF analysis is also used to assess investment value or worth. These are the what if figures based on a specific client s or market sector s perception of likely future changes in rent (i.e. the cash flow incorporates growth in rents). When a market value is required, the direct market capitalization method is seen as being more supportable than a DCF approach because the latter requires the appraiser to express a view of future rental growth. Since 2007, rents in the United Kingdom have moved in such a way that very reasonable predictions of rental growth have proved to be very wrong over the short term (i.e. the rate of growth used has proved to be unsupportable by market evidence). Second, UK appraisers (they call them valuers) have some reservations with respect to the discount rate to be used in a DCF analysis it is more difficult to assess a market discount rate compared to a market capitalization rate. Sales Comparison Approach Like in the United States, the sales comparison approach lies in the availability and quality of information relating to known sales of comparable properties. The aim of the approach is to find matching pairs, which rarely occurs. However, the concept is valid and explains why valuers have to make adjustments to the comparable evidence; namely to make them match. Units of comparison are usually needed, and the UK market is fortunate in that RICS (Royal Institution of Chartered Surveyors) members follow a strict Code of Measuring Practice so that prices quoted per square foot will be known to relate to a specific definition of area. The common bases for measurement are gross external area (GEA), gross internal area (GIA) and net internal area (NIA). Each is fully defined and identified as the appropriate basis for different purposes and different types of property. Comparable data can therefore be used with a high degree of certainty as to meaning. NIA is typically used for assessing rental values of shops and offices when only the areas that can be used for the purpose of the letting are included. Once suitable comparables have been identified, they can be analyzed in terms of price per square foot and adjusted for differences in time of sale, location, condition, accommodation, and so forth. Sales comparison is the primary method in the residential homes market, in all rental markets, and in a number of markets where the income approach could be used. When there is good evidence of sales of office space, business parks, and similar properties to investors, direct comparison can be used if there is strong evidence of similar market rents and yields. In these cases, the income approach and the sales comparison approach will produce similar values. This will not occur if the subject property does not comply with the market norm. Cost Approach The cost approach or depreciated replacement cost method (DRC) is used to assess DRC for accounts purposes in respect to special purpose buildings that are not normally bought and sold in an open market. Examples might be schools, churches and hospitals. The cost approach is seen as a method of last resort, and while in certain circumstances it might provide an indication of the value of a specialist property to an owner occupant, it is not a market based method. Taxpayer The present tax is almost exclusively a tax on the occupiers of property. However, there are circumstances in which rates may be charged to the owners rather than occupiers. A typical case would be buildings occupied in parts for example, a property having several bedsitters or flats, where a high turnover of tenants is expected. In relation to unoccupied property, the owner is liable to pay the unoccupied rates. Basis of Assessment The unit of assessment in England and Wales is known as the hereditament with each hereditament forming a separate entry in the rating list with its own description and valuation. The basis of assessment of any hereditament is the determination of its annual value. All non-domestic (commercial) hereditaments are assessed to their net annual value. This reflects more closely actual market conditions, in that, most commercial property tends to be let on a full repairing and insuring basis, with the incidence of all outgoings being passed onto the tenant A hereditament which is neither used wholly for domestic purposes nor wholly for non-domestic purposes is a composite hereditament; this roughly corresponds to mixed hereditament under the old system. In terms of the rating valuation of such properties, only the non-domestic part will be valued and entered into the list. Problems arise in balancing the actual uses of the hereditament with notional distribution of uses. Typical composite properties would include shops with living accommodation, hotels and guest houses, and bed and breakfast accommodation. Tax Rates In the past, tax rates were set by the local authorities. With the enactment of the Local Government Finance Act, parliament took away the power of local authorities to set their own business rate poundage and instead Fall 2011 Equal Eyes 23

24 Global Assessment Trends, continued central government sets a uniform business rate for the whole of England and also a separate one for Wales. Property Tax Formula Non-residential properties: Annual Rental Value (RV) x Tax Rate Residential Properties: Set amount according to band value. The National tax rate generally applicable for the April 2010 rate year was 41.4% in England, 40.9% in Wales and 46% in Scotland. Some municipalities in England may apply a supplementary rate of up to 2%. Number of Parcels There are 25,190,000 parcels in England and Wales; 250,000 parcels in Scotland. Revaluations Five year revaluation cycle for non-domestic (commercial) properties; most recent was April 1, Exemptions Under the English rating system, exemption and relief from rates is given to a wide variety of properties similar to that of the United States. The following are some of the properties exempt from taxes in the UK but taxable in the United States: property occupied by charities are granted mandatory relief of 80 percent (the remaining 20 percent is at the discretion of the charging authority); unoccupied property is given full relief for 3 months - after which if the property remains vacant the owner is liable to 50 percent of the full rates. Tax collection The property tax is paid in 10 monthly installments; usually 1 st of the month from April to January. Where a tax payer is overdue with his tax payments and remains in default after the service of reminders, the charging authority can commence recovery proceedings by applying to the magistrate s court for a liability order. The liability order gives the authority fairly wide powers including distress and insolvency. In the event that there are insufficient goods on which to levy the amount due, the authority can apply to the court for a warrant committing the debtor to prison. With regard to companies, there are a number of courses of action open to charging authorities from winding-up proceedings to the issue of bankruptcy orders. Appeal Procedures An interested person is defined as the occupier and any other person owing an interest in the hereditament. Where an interested person makes a proposal to the valuation officer and if the valuation officer considers the proposal to be well founded, the value is altered. If the officer is of the opinion that the proposal is not well founded and no agreement as to the assessment can be reached, the matter is then transferred as an appeal to the Valuation and Community Charge Tribunal (VCCT). The Valuation and Community Charge Tribunal is a relatively informal tribunal which was formerly known as the Local Valuation Court. The VCCT with regard to non-domestic rating appeals can confirm, reduce or increase the assessment. The fact that tribunals can now increase assessments has placed much more onus on the taxpayer to ensure that his case is well prepared and that there is no evidence which might lead the tribunal to raise the assessment. After the VCCT, there is a further right of appeal to the Lands Tribunal, which is the final arbitrator on matters of fact and valuation; however, on points of law the matter can be taken to the Court of Appeal, and ultimately the House of Lords. Score Card What else can I say? At this point, we still seem to have one of the best real estate assessment systems in the world. No matter how perfect something is, however, it can still be made better. The following is a quote from a British assessor: Just like the English film industry in 1970s, we have much to learn from our North American cousins regarding CAMA. Like then however, our message is Watch out the British are coming! MAAO Minnesota Association of Assessing Officers Executive Board Meeting Calendar: ~ November 9th-10th, Crown Plaza, St. Paul ~ 24 Equal Eyes Fall 2011

25 It s Not Too Late! There s Still Time to Complete the 2011 Minnesota Assessor s Census The MAAO Editorial Committee Presents: The 2011 Minnesota Assessor s Census The survey is intended to reveal some information about Minnesota s assessment professionals. We had a few questions about MAAO and its members that we hoped to answer with this questionairre. Help us advance MAAO by participating in this brief survey. Answers are anonymous and you could win one of two $150 prizes. We only need your name to pay you! Go Here to complete the survey today! What do our members like and dislike about Equal Eyes? Who are our members, and what interests do they have? Surveys Completed by November 1, 2011 will be included in the prize drawing. (Include your name to be eligible.) How do our assessor s offices function from county to county? What information systems do we use? What interesting ideas do our members have for the future of MAAO? What should we be writing about? How much salary are we taking home from region to region? Are we aging? If so what should we do about it? Fall 2011 Equal Eyes 25

26 International Items IAAO Events and Resources Written by Jan Olsson, SAMA, RES City of Plymouth Assessor IAAO Representative IAAO Membership Services Committee IAAO Executive Board Meeting IAAO held its Executive Board meeting in Minneapolis July Many MAAO members were present for the Executive Board meeting and MAAO hosted various activities during the visit. IAAO Elections Service to others is a privilege. The process of selecting future leaders of IAAO is in progress. Board elections are important and IAAO members play a key role in determining who will serve the membership over the next several years. Voting begins November 1. A limited amount of broadcast messages will be sent from each candidate. Take the time to read each one and get to know your future leaders. If you are at all interested in serving on an IAAO committee, contact President-Elect Debra Asbury at presidentelect@iaao.org. Serving on a committee is one of the best ways to network and make life-long friends and contacts. Member Benefits IAAO recently released several new member benefits and a new educational offering: F&E digital edition, the new AssessorNet Forum, the InfoTrac journal database, an on-line 7-hour USPAP course, and a Mass Appraisal Revaluation Template. These new items are available through the website. F&E digital increases the accessibility to publication content and adds new features to the familiar magazine. AssessorNet offers networking and sharing features similar to social media sites. InfoTrac journal database is the latest addition to the IAAO library that allows members to quickly access information. IAAO Executive Board in Minneapolis The new on-line USPAP course continues IAAO efforts to meet member needs. Online courses are becoming increasingly popular as budget, time, and distance constraints affect jurisdiction budgets. The Mass Appraisal Revaluation Template and Mass Appraisal Revaluation Experience Log are available on the Appraisal Foundation Resource page of the IAAO website. These tools help assessors document the mass appraisal process. Join Now! IAAO) is a nonprofit educational and research association of individuals in the assessment profession and others with an interest in property valuation. Membership is open to anyone and includes individuals working in government, private industry and academia, as well as members of the general public. Membership falls into one of four categories: Regular, Associate, Retired and Affiliate. If you are interested in joining IAAO, contact: Bill Peterson CAE, Dakota County Bill.peterson@co.dakota.mn.us Doreen Pehrson CAE, Nicollet County Dpehrson@co.nicollet.mn.us Tom May AAS Tom.may@co.hennepin.mn.us Jan Olsson RES, City of Plymouth Jolsson@plymouthmn.gov KEY REASONS TO BECOME AN IAAO MEMBER Education: Cost effective education programs help you meet the challenges of an increasingly complex career. IAAO offers a range of educational opportunities for the beginner to seasoned professional. Textbooks are known for their depth and quality of information. Professional Designations: Receive certification that recognizes professionalism, and competency in matters regarding property appraisal and assessment for property tax purposes. Peer Networking: Meet other assessment professionals to share common ideas, concerns and interests. Tap the IAAO brain trust with IAAO s new on-line networking forum AssessorNET. Share and receive ideas at conferences and seminars. Locate other members through Member Look-Up. Publications: Fair & Equitable and Journal of Property Tax Administration IAAO s monthly and quarterly publications bring you up-to-the-minute perspectives and research on today s assessment issues. Library Services: Access to a research library featuring 10,000 volumes of literature and over 600 periodicals. Members-only Access and Discounts: Receive special rates on publications, text books, technical standards, seminars, and conference registration. Utilize special sections and resources on the IAAO Website including access to the library through memberlink and the Glossary for Property Appraisal and Assessment. Leadership Opportunities: Become an author in one of IAAO s publications. Help shape industry policies by volunteering for a committee, or consider running for the IAAO Executive Board. 26 Equal Eyes Fall 2011

27 ecrv - Electronic Certificate of Real Estate Value Another Multi-Page Paper Form Bites the Dust Written by Jason Parker Business Project Manager Property Tax Division Minnesota Department of Revenue On December 1, 2011, an on-line electronic Certificate of Real-Estate Value (ecrv) form will become the preferred Certificate of Real Estate Value (CRV) form for all sales of realestate property in the state of Minnesota. It has been a long-time coming. The hardest forms to migrate from a paper world to an electronic one are forms that are filled out, processed, used, and referenced by a diverse and large number of people and organizations. Such is the case for the CRV form. A CRV is required to document a sale of property in Minnesota. It gathers information on the price, and financial arrangements, as well as the circumstances of the sale that help determine its applicability as a fair market transaction. Depending on market conditions, about 100,000 CRVs are created each year. CRV information is reviewed by the county of sale and the Department of Revenue to verify sale terms, and ensure fair and equitable property tax assessments statewide. The data collected is also used by the real estate industry, the State Demographer, the Met Council, the DNR, the public, and many others. After many years of planning, testing and development, the ecrv will be a great improvement for the state and all stakeholders. An informal survey of about 16 mid-western states, including Minnesota s neighbors, show that only South Dakota, Wisconsin, and Indiana provide some form of electronic entry of similar data. Creating an electronic version of CRV has been a daunting task, compounded by a Minnesota Statutory requirement to include the private data of Social Security and Tax IDs of buyers and sellers. Early attempts to recreate the form using simplistic form templates, such as an on-line PDF file, proved expensive, insecure, inflexible, and unable to handle the multiple process steps from submitters, to counties and to Revenue staff. The ecrv project was kick-started in 2005 by the Property Tax Division of the Department of Revenue under the leadership of then- Division Director Gordon Folkman, and with the urging and encouragement of the Electronic Real-Estate Recording Task Force (ERERC -- now a Commission) chaired by Mike Cunniff, the Hennepin County Recorder. Mike states, having seen ecrv, [ecrv] will bring about a significant savings to the Governmental Agencies and better service to our citizens. Funding Challenges A project the size of ecrv should normally require a significant amount of dedicated funding to get it off the ground and operational in a short amount of time. With tight budgets throughout the state, funding was an issue from the start. Though money is collected with every recorded document in Minnesota, it was not directly available for the ecrv project. (The CRV itself is not recorded but is required in order to record the deed.) Roughly ten dollars of that fee goes to the county, and ten dollars to the state, explicitly to assist in technology and technology improvements. The state funds are deposited into the general fund, and are not dedicated to a project like ecrv. Working with counties, the ERERC and industry, Revenue produced $200,000 from a Business Systems Planning Fund along with providing on-going management and programming time. A modest county contribution schedule was created based on CRV volumes, and early adopter counties donated up-front to assist in contracting initial consultants. Only 14 counties contribute $5,000 or more, and 44 counties contribute $1,250 or less due on adoption. The early funding allowed business analysis and an XML schema to be created that defined what an ecrv would consist of. Although the process of getting ecrv to production has taken longer than many would have liked, without this bootstrap approach, there is little doubt we would still be only talking about the need for an ecrv. Ditching Paper and Managing Private Data Security A move to an electronic world allowed a break from a host of limitations imposed on the paper CRV. These include space for listing buyers, sellers, and PIDs, along with multiple property classes and finance arrangements. In addition, ecrv allows for a convenient Fall 2011 Equal Eyes 27

28 ecrv, continued combination of the two CRV paper forms into one. The second form had been reserved for apartment, commercial, industrial and agricultural property sales, but the nature of sale questions are relevant in all sales. The change also allowed for a revamp of the list of property class types and uses that identify property. Submitter reaction of a single ecrv online form has been positive. Designing an ecrv form involved defining the entire process from Submitter, to County, to Revenue that would work well, support all requirements, and safeguard private data. Buyers and sellers can be anyone in the world, and for practical and simplicity reasons submissions were kept anonymous (i.e. no login required). In the paper form, the bottom pink carbon copy is longer than the others. The extended area is where SSNs are written. On receipt, the county immediately removes the pink copy to mail directly to the Department of Revenue. In an older paper world, this level of handling SSNs was acceptable. In a newer electronic world with more incidents of identity theft, and growing concerns of electronic data copied across many servers, securing private data needed to be improved. For ecrv it was imperative to securely manage the private data of SSNs and Tax IDs. As an on-line web application hosted solely within Revenue, ecrv private data can be collected directly from the submitter and separated immediately upon submission. This happens even before county staff look at an ecrv. Counties no longer even see or handle SSNs, and SSNs do not travel across county desks or through the mail. The electronic form not only handles private data securely, but improves the 28 Equal Eyes Fall 2011 paper model in a variety of ways. In the past, counties had to visually check for completeness, usually after the paper was left behind at a county desk. In contrast, ecrv validates entry of all fields prior to allowing submission, greatly cutting down rejections. Submitters also may save a partially completed ecrv and return later to fill out and submit. Submitters may even pass the partial ecrv PINs to anyone who may be involved in completing it until submission to the county. Finally, using ecrv eliminates the use of typewriters. It is common for submitters, such as real estate companies, title companies or small town lawyers, to exclaim the only reason they still have typewriters in their offices is to fill out the paper CRVs. Good riddance! 87 Unique Processes, One ecrv When an ecrv is submitted, submitters receive a receipt page showing the ecrv ID with the option of saving a PDF copy. Once the county of sale has fully adopted ecrv with logins, the submitter need only provide the ecrv ID to the county along with the deed. The county then looks up the ecrv and makes sure it matches the deed to accept the ecrv for processing. A big challenge for ecrv was enabling each county to process ecrvs in their own unique way. A consistent feature in county paper processes are the four steps of: County Accept, Auditor Complete, Assessor Complete and County Final. Despite this, each county has their own way of marching ecrvs through their offices to ensure accurate and complete information, property IDs, and terms of the sale. In version 2 of the ecrv application, the ability for counties to manage their own workflow steps was fully implemented in a way that also simplified identifying ecrvs needing tasks by county staff. Each county defines the tasks required to process an ecrv, beginning with the first task after an ecrv has been accepted as matching the deed. It is challenging for a county to review what had been a paper process, and determine ecrv tasks and how to organize them. Luckily, this may mean a quicker and simpler process, as staff uses a web browser to access ecrvs and route them to the next task. For instance a county assessor may have a county defined task of Assessor Review. To select ecrvs needing this task, simply choose Assessor Review from the Routed To criteria on the search screen. Whenever an ecrv has the current task set to Assessor Review, it would appear in the query serving as their in-box. Once the task is complete, they simply select the next task needed for the ecrv. This allows ecrvs to follow different paths, as users only assign tasks to the ecrv when they are needed. For instance, a task could be defined as Commercial Review that indicates an ecrv needs review for a commercial sale. A residential ecrv may be assigned an alternate task. Tasks can be set to be mandatory, and side tasks can also be defined that may be needed off the primary path (an example of a side task for metro counties might be called ACE System Entry ). Again, each county will define their own workflow as complex or simple as they may need. Once a county has their workflow defined and set up, managing ecrvs should proceed easily. Workflow step names can be changed, new workflows defined, or old ones made inactive. The ecrv team met repeatedly with counties to understand and design a workflow system that had the flexibility that counties need, while still deploying only one ecrv system for all counties. The goal of a single state-wide ecrv application was largely achieved, with the exception of enabling first class cities to process ecrvs. For Duluth, Minneapolis, and St. Cloud, when a sale occurs, the county accepts the ecrv, enters the correct PIDs for the sale, and then routes it to city staff. A city version of ecrv with minor modifications manages the interchange between the city and county staff. In the case of the City of St. Cloud, they exchange ecrvs routed from three different counties! Public Access A central system also has the benefit of allowing a single location for public access

29 of ecrvs. A Search application serves the purpose of providing retrieval of county accepted ecrvs. However, there are issues. First, only county accepted ecrvs are returned. Submitters of an ecrv will not see their ecrv in the result set until the county has accepted it for processing. There may be many ecrvs submitted that do not represent actual sales due to mistakes or other reasons. The public search application must not return ecrvs that do not represent actual sales. In addition, because of the long CRV processing time from county to state, only the submitted data is returned. It does not include county or state entered or edited data, which is not consistently available until after the June State Board of Assessors meetings up to 18 months after an ecrv may have first been submitted. Access to ecrv after State Board meetings may be provided at a later date via a separate facility within Revenue, or from ecrv via an enhancement. However, it will be at least one or two years before the accumulation of ecrvs warrant providing on-line access to final ecrv data fixed after a State Board cycle completes. State Processing The last stop in ecrv processing is review of the county determination for equalization study by Property Tax Compliance Officers (PTCOs). County staff transfer completed ecrvs to the state via ecrv, where they instantly become available to PTCOs, who may correct data issues or return individual ecrvs to the county for further work. The PTCOs set the final status of each ecrv as representative of a market sale based on the original recommendation by the county. When all ecrvs for the study period are ready, the equalization process is run to compare the market sales indicated from CRVs with assessment data received from Counties (via the market value by parcel abstract). It is this comparison that informs the State Board of Assessors that may issue orders to adjust county assessments. County Adoption of ecrv Version 1 of ecrv was placed into production with Dakota County in November Currently about one third of all Dakota CRVs are received via ecrv. In addition, ecrv was enabled for erecording by requesting counties beginning in August Nine counties currently may receive ecrvs in printed or erecording form: Anoka, Blue Earth, Cass, Clay, Lincoln, Lyon, Martin, Pope and Wabasha. During this time, the DOR worked to increase development resources, rewrote the application to fit the infrastructure requirements within DOR, and address issues that were learned in use by Dakota County. With the August 15, 2011, release of version 2, ecrv is now ready for state-wide county adoption. In addition to the counties listed before, counties that have testing logins include: Becker, Benton, Hennepin, Olmsted, Otter Tail, Scott, Sherburne, Stearns, Steele, Washington and Winona. Revenue will work with each county to assist them in training, testing, and scheduling their adoption of ecrv. Full adoption, including county adjustment of their internal processes, will take time however. For rapid adoption by submitters, and a consistent use of ecrv across all counties of sale, the front-end form is being made available for use by submitters to all counties of sale on December 1, 2011, regardless of whether the county has adopted the full use of ecrv. For counties yet to fully adopt ecrv, the submitter will receive an ecrv receipt that instructs them to Save and Print their ecrv, with an empty county data section at the bottom, to give to the county. The county will proceed with their current paper process using the ecrv printed and formatted form. Because it is not currently practical to declare paper CRV forms invalid, all counties will also continue to receive and process paper CRVs as they did before. For received ecrvs, the county will enter the county assigned Auditor ID number in the available field. Once ecrv is fully adopted, Fall 2011 Equal Eyes 29

30 ecrv, continued counties will be able to ditch their paper process and also the Auditor IDs. The goal of the ecrv team, counties and submitters is to adopt ecrv as completely and rapidly as possible over the next 12 to 24 months. Beginning in late September, Revenue plans to add more full use counties in advance of the December 1 date. Once a county has fully adopted ecrv, submitters need only provide the resulting ecrv ID along with the deed to the county of sale. Although the ecrv development team works on many different development activities and projects within Revenue, they hope to improve ecrv as needed and directed by the DOR ecrv steering team. The road to electrifying the multi-part paper CRV form and process has been a long and difficult one. Together, counties, industry submitters and Revenue have worked to make it possible. A special thank you is due to a number of counties, including Hennepin, Sherburne, and Olmsted for the extra effort they made in supporting the project. Special thanks also must be extended to the entire staff of Dakota County, and in particular to the tireless and comprehensive efforts of Residential Manager Teresa Mitchell, and the leadership of County Assessor Bill Peterson. Not only did Dakota County do a tremendous amount of extra-effort in working with ecrv alongside their existing paper process, but they provided continuing feedback on version after version of ecrv while keeping the needs and requirements of all counties in mind. The success of ecrv will largely be a result of their efforts. The Department of Revenue ecrv Team (left to right): Joeffrey Agpalasin (Development), Jodi Rubbelke (Property Tax Support), Sue Lutz (Dev), Dave O Neill (Dev), Jim Biggs (Technical Project Manager), Ilhami Topalogu (Dev), Ravindar Vangala (Dev), Ashish Agarwal (Dev), Manuel Quinones (Dev), and Jason Parker (Property Tax Project Manager). Not shown: Chris Dahl (Dev), Richard Sloss (Dev), John Wottrich (Dev), Lloyd McCormick (Property Tax), Larry Austin (Property Tax), the ecrv Steering team: John Hagen (Property Tax Director Revenue), Steve Kraatz (Revenue CIO Revenue), Don Friedlander (Revenue IS Director), and many others that have assisted during the project. The Dakota County ecrv Team: Dave Oien, Shannon Sailer, Brenda Carlstrom, Bev Ries (front), Lisa Otto, Colleen Broten, Teresa Mitchell, Debbie McMenomy, Dawn Klein, Joel Miller (front), Daren Belfiori, Scott Lyons, and many others that have assisted during the project. For more information about ecrv, or to test out the submitter form, please see the CRV web page of the Department of Revenue at taxes.state.mn.us/crv/. If you have questions about ecrv, or would like your county to begin the process of adopting ecrv, please contact: Jason Parker, ecrv Business Project Manager, Property Tax Division, Department of Revenue, jason. parker@state.mn.us, Join IAAO today and reap the benefits of an IAAO membership, including discounts on Conferences and Seminars IAAO Conferences, Seminars, and Meetings Event Location Dates Leadership Days Meeting Kansas City, Missouri October 14-15, 2011 Executive Board Meeting Savannah, Georgia November 11-12, nd Annual Legal Seminar New Orleans, Louisiana December 8-9, 2011 IAAO 78 th Annual International Conference Kansas City, Missouri September 9-12, 2012 IAAO 79 th Annual International Conference Grand Rapids, Michigan August 25-28, 2013 IAAO 80 th Annual International Conference Sacramento, California August 24-27, Equal Eyes Fall 2011

31 Assessor Retirements Transitions Compiled by Nancy Gunderson, SAMA City of Moorhead Editorial Committee Member Judy Hahn retired on June 30, 2011, after 23 years of service with the Sibley County Assessor s Office. She began her assessing career in 1978 as a local assessor and joined the County Assessor s Office in Judy s assessing jurisdictions included six townships and two cities and also did some local assessing in Renville County. Judy Hahn Retires from Sibley County wisdom and experience were invaluable to everyone in the office and also to the taxpayers she served. During her retirement, she will enjoy spending time with her family and relaxing at her cabin on the lake. Judy had a calming demeanor and had a way of speaking with taxpayers that most assessors would envy. Her We are grateful for her many years of dedication to the assessing field and will miss her tremendously. On behalf of the members of MAAO, we wish Judy a very happy and welldeserved retirement. Bob was born in and grew up in Chisago County. He was a wonderful child and a superior athlete in high school. Everyone loved him. Well, some people did. Fast forward Bob started his appraiser career in 1974 when he went to work in the Morrison County Assessor s Office. He left that position and was hired as the first Stearns County staff appraiser in For the old timers reading this, you can remember that a lot of the assessment work in the state was done by the Local Assessor. Bob remained at Stearns County for thirty-four years, seven months, and nineteen days. His last work day was August 19, In 2003, Bob and his wife Cindy purchased 35 acres of land in southwestern Colorado. Retirement: The Life and Times of Bob Lindvall It is located about six miles outside of the City of Cortez. The plan was to build a home and barn on the land after they both retired. They liked the climate that the high desert location (6,000 ft. above sea level) offered and really liked the idea of NO MOSQUITOES. The area is full of history and there is an unbelievable amount of things to do. Bob will continue to go elk hunting and there will be some very good reservoir and stream fishing. Bob and Cindy plan to have horses which will allow them to do some mountain trail riding. Both Bob and Cindy have some family in the Southwest and some family in Minnesota. They plan to return to Minnesota a couple of times a year to visit and enjoy the summer weather. Bob commented that he will try to attend the Stearns County Old Timers Picnic when possible. Bob and Cindy want everyone to know that their door is open and they are willing to share their view with anyone that is passing through the area. Stearns County held a punch and cookie social to celebrate Bob s retirement on Wednesday, August 17 where Bob was presented with a plaque and certificate of appreciation. Fall 2011 Equal Eyes 31

32 Revisiting the Retirees: 32 Equal Eyes Fall 2011 Dick Anderson This issue s featured retiree didn t retire in 2007, or In fact, he was retired for all of the 1990 s. Our retiree for this issue is Dick Anderson, the former Mower County Assessor, who retired from his career in assessing in And for some reason, at 22 years into retirement, I feel like Dick is just now getting warmed up with retired life! The afternoon I spoke to Dick, he was on his way to Mankato to fly to New York City to see the US Open. As a big sports fan, he was pretty excited about his upcoming trip. In fact, Dick was a star basketball player in college and was inducted into his college s Sports Hall of Fame a couple of years ago. Dick also loves to golf and enjoys following the Twins and Vikings. I m not sure how much enjoyment was had out of the Twins 2011 campaign, but let s hope Dick gets a little more real enjoyment watching the Vikes this year. Dick Anderson grew up in Austin, Minnesota, so he didn t need to venture far when he started working for Mower County in the Engineering Department right out of high school in the early 1950 s. After serving our country in the Korean War, Dick returned to employment at Mower County in 1965, when he was hired as Deputy Assessor. As one of only two employees in the assessor s office back then, Dick worked 60 hours a week, 10 hours every day, including Saturdays. Was it the money that motivated Dick to work the long hours? Probably not. He remembers getting paid $1.05 an hour at this time. Although Dick s pay undoubtedly surpassed $1.05 an hour at some point, I think it s safe to say Dick was never motivated entirely by those large assessor paychecks, but instead by a desire to always do a good job and to strive for success. Not long after getting Researched and Written by Corey Erickson, AMA Ramsey County Editorial Committee Member This issue, we catch up with Dick Anderson, the former Mower County Assessor hired as the Deputy Assessor, Dick became the Mower County Assessor, a position he held for 25 years. Dick was also very involved in MAAO, serving on many committees throughout his career. He was MAAO s legislative representative for 12 years and President of the organization in As the legislative representative, Dick dealt with many issues that don t seem too far removed from the current docket of issues, including many years of addressing the complexities of the dreaded Limited Market Value. He also recalls keeping the legislature informed about the many inefficiencies of assessing personal property. That s right folks, I said personal property. Decades ago if you were doing this gig, you might have been asked to count cows, or worse yet, cans of corn in a grocery store. To a certain degree, we can thank Dick for his work as the legislative representative in doing away with the personal property tax. Dick modestly explained, It wasn t very hard to sell the idea that it was very inefficient for assessors to keep track of personal property rather than focusing on valuing real estate. Very true, but thanks anyway. Listening to Dick talk about his assessing career, it s clear he took great pride in his job and did it very well. I found it amazing that someone who has been out of our field for many years offered some tips to success in assessing that still ring very true today. Dick s number one tip when dealing with taxpayers is to be a good listener. How true that is. He went on to explain that it is very important, particularly in smaller jurisdictions, to clearly be treating everyone the same. Again, simple but true. Related to this tip, Dick explained to never treat one taxpayer differently just because they have a tendency to complain more than others. All tips that ring as true today as they did decades ago. As I mentioned, when speaking to Dick he was on his way to New York. Dick has indeed enjoyed a good amount of time away from Minnesota in retirement. Although he and his wife of 58 years, Vae, still live in Minnesota, their house is on the market, and they plan to move to California soon - to an area in the northern part of the state where they have spent a lot of time vacationing the last 20 years. I should add that when mentioning his wife, Dick was very quick to add that although she is 77, she doesn t look a day over 60! Dick and Vae have four adult children, six grandchildren and four great grandchildren. So now, after countless Minnesota winters, Dick and Vae are off to officially start their retirement near the Pacific coast, in sunny California, near where our former assessor and avid sports fan once walked Pebble Beach alongside Jack Nicklaus and Tom Watson as a spectator at a golf tournament. Enjoy the sunshine Dick!

33 The Chair s Corner: Staying Current with MAAO s Committees Sales Ratio Committee Written by Julie Gustafson, SAMA City of Maple Grove Editorial Committee Member Sales Ratio Committee Committee Chairperson: John Keefe, SAMA Chisago County Assessor Committee Members: Region 1: Wendell Engelstad, Dodge County Region 1: Mark Krupski, Olmsted County Region 2: Sue Schulz, McLeod County Region 4: Penny Vikre, Cass County Region 6: Doug Bruns, Renville County Region 9: Al Whitcomb, Dakota County Region 9: Tom Scherer, Hennepin County Region 9: Stephen Baker, Ramsey County Region 9: Patrick Todd, City of Minneapolis One may think the role of the Sales Ratio Committee is straightforward and selfexplanatory. However, it encompasses more than the name implies. The Sales Ratio Committee serves a very important role in Minnesota s property tax system that should not be underestimated or go unappreciated. According to John Keefe, Chairman of the Sales Ratio Committee, the primary purpose and function of this committee is to improve the quality and fairness of the Minnesota property tax system. As we all know, this is not an easy task. In fact, it can be quite daunting. The Sales Ratio Committee hopes to accomplish this mission through education and training and by assisting in the development, implementation, and refinement of a sales ratio system. The goal is a ratio system that accurately measures the quality of the assessment and is equally useful to both assessors and oversight agencies. By furthering the utilization and understanding of the IAAO sales ratio standards, the committee hopes to ensure equity and excellence in Minnesota s assessment. Over the years, the Sales Ratio Committee has contributed a lot to the quality of our assessments. Some of the committee s past accomplishments include the development of a joint advisory opinion with the Department of Revenue regarding how to handle in our sales ratio studies and the assessment process sales to avoid foreclosures. They also assisted the Commercial/Industrial Committee in the development of a collaborative document that details guidelines for valuing income-producing property. More recently, the committee recommended adoption of a new method for the State Sales Ratio Study. The new method incorporates specific appraisal changes into the process by comparing the new assessment values to the time-adjusted sale price as of the new assessment date. This recommendation was approved by the MAAO Executive Board and accepted by the Department of Revenue. The adopted change will take effect for the 2012 assessment. One of the primary objectives of the committee this year is to help educate Minnesota assessors on the new sales ratio study process and to help iron out some of the details for implementation. The Sales Ratio Committee will host a seminar at this year s Fall Conference in Grand Rapids towards that objective. In this seminar, committee members present and discuss issues related to the time adjustment and other sale study items. The seminar features a demonstration of the time adjustment wizard, and a discussion of other related topics. In addition to the normal discussion of pertinent sales ratio issues facing Minnesota assessors, future goals of the Sales Ratio Committee include determining a sale threshold for COD and PRD calculations. John said that he is particularly interested in the development of a method or process to properly handle extreme sales ratios or outliers for equalization. Currently, the most critical issue facing the Sales Ratio Committee is implementation of the new sales ratio and time adjustment methodology referenced earlier in this article. In a nutshell, the new method compares the forward time adjusted sale price of each qualified sale to its new assessed market value. For example, sale prices adjusted to January 2012 are compared to 2012 estimated market values. Recent declining market conditions provided the impetus for this change. There was also increasing dissatisfaction with assessors by the general public and media over increasing values while in a declining market. Although the court of public opinion did not dictate this change, it certainly precipitated the discussion. From a quality of assessment perspective, there are five main reasons for implementing this new methodology. First and foremost, it is the recommended method suggested by the IAAO Standard. Second, comparison to the new assessment will ensure all changes in the market are recognized by the assessment. Fall 2011 Equal Eyes 33

34 Third, it will give us the ability to keep pace with our markets. Fourth, the resultant State Board of Equalization ratios should be more in line with the corresponding tax court ratios. Last but not least, it was agreed that this change can best be accomplished under current market conditions. The Department of Revenue is working on a time trend calculator to assist assessors with figuring out what their time adjustment should be. John has used this calculator and found it to be very precise. According to John, the use of such a tool is fairly straightforward in areas where sufficient sales exist within a jurisdiction, and where all the sales are known. However, there are some difficulties in the time trend calculator s use in areas where insufficient sales exist. These areas will need inter-county/district/regional cooperation to develop an appropriate time adjustment. John would like to stress the importance of timely communication to ensure that all sales used are known by all parties. While this is a topic for discussion, it certainly is not new to developing time adjustments. This issue had to be dealt with under the old methodology as well. Many issues arose as a result of the proposed change. Some of the major ones included: how to handle new improvements, educating assessors on the mechanics of the time adjustment so they can react appropriately, and addressing the importance of timely submission of data. Procedures are also needed for identifying and dealing with sale chasing and time adjustment appeals. New construction procedures under the old methodology do not necessarily apply under the new one. Consequently, they need review as well. John hopes the Sales Ratio Committee seminar will aid in understanding some of these issues. John has been a member of the MAAO Sales Ratio Committee since 2002 and has been chairman since He has been a city or county assessor since 1989, making him well prepared and experienced to deal with the issues broached by the Sales Ratio Committee. John served as the Ramsey City Assessor in Anoka County from 1989 to 1992, Becker County Assessor from 1992 to1997, and the Pine County Assessor from 1997 to He has been the Chisago County Assessor since April of Some of John s personal goals for the Sales 34 Equal Eyes Fall 2011 Ratio Committee are to someday achieve the objective of a single sales ratio study in Minnesota and to implement what he refers to as a suitable trimming procedure for outlier sales. He considers the former objective (single sales ratio study) a long term one that probably will not be realized during his tenure. However, John believes it is something that should eventually occur because it would simplify the process and make it more efficient and understandable. He believes that the recent change to adjust sales forward to the new assessment date was the first major step toward the single ratio study goal. He also believes that a good trimming procedure is needed in the process. Jurisdictions have increasingly encountered criticism over the number of outlier sales in their ratio studies. He indicated that extreme outliers only provide dramatic rhetorical fodder to property tax critics. As an appraiser, John is well aware of the fact that many sales are simply mistakes. Decisions made by people are often based on emotional or other concerns that do not fit into any logical pattern. He believes such sales should be removed from the sample even if they do not meet specific reject criteria because they do not represent decisions based on market dynamics. There are objective trimming methods available, and he thinks we should adopt one. John has claimed that the most valuable experience he has had is serving on the Sales Ratio Committee. Serving on this committee has been both an honor and a challenge. The issues that they have addressed are very complex. John recommends service on this committee to anyone willing to work hard and interested in furthering his or her knowledge and understanding of mass appraisal. Mass appraisal can truly be a science where sufficient sales exist. However, knowledge of that science is still useful even when absence of sales relegate appraisal to more of an art form. John admits that he has learned more about statistics, math, and social science than he ever wanted to, but he thinks it has made him a better appraiser and assessor. John would like to thank his colleagues on the Sales Ratio Committee from both MAAO and Department of Revenue that educated him in these areas. He hopes that the education process was of mutual benefit. John emphasized that the assistance received from the Department of Revenue members has proven to be invaluable to the Sales Ratio Committee. Their knowledge and expertise is definitely first rate. In particular, John would like to thank Director John Hagen for the Department of Revenue s help because without it they would not have achieved nearly as much as they did. The most important thing that John learned while serving on this committee is that great things can be accomplished when we all work together. An important lesson for all!

35 Looking Back Sears Catalog Homes Compiled by Lori Thingvold, AMA Wright County Editorial Committee Member A mail-order house Can you imagine being able to flip through a Sears Roebuck and Company catalog, choose a house, and be able to purchase it for as little as $1,500? Sears Modern Homes program provided well designed, well constructed, economical homes for approximately 70,000 American families between 1908 and It started with Frank W. Kushel, who was managing the Sears china department in He was given the task of overseeing the demise of the catalog company s failing building materials department. Sales were down, and there was too much inventory sitting in expensive warehouses. It seemed time to unload the lot. Kushel was convinced that the building supplies could be sold at a profit if storage could be centralized, the goods distributed more rationally, and if there was a little extra incentive for buying them. Instead of abandoning the sale of millwork and other building parts, why not change the way these goods were sold? What if customers could pick a plan for their dream house from a Sears catalog? Then, instead of selling building materials in random bits and pieces, Sears could market them in a coordinated package containing exactly what was needed to build a particular house. One order could include everything: nails and screws, paint and roof shingles, windows and doors, woodwork, staircases, and mantelpieces. Of course, since Sears s big general merchandise catalogs were already selling everything needed to furnish a house from beds and chairs to toilets, sinks, and kitchen Sears Roebuck promised that a man of average abilities could assemble a Sears kit home in about 90 days. No detail was overlooked, as both the manual and the blueprints instructed the homeowner; right down to the correct spacing of 750 pounds of nails. ranges, the sales of all these items would increase too! The company s first book plans, the Book of Modern Homes and Building Plans, was issued in 1908 and contained 44 pages. It brought an immediate and enthusiastic response. Most of the houses had two or three bedrooms, although some had four or even five. The majority had only one bathroom, and some especially in the early 20th century had none since many rural and even some suburban areas lacked piped-in water and sewers or septic fields. By the 1930s, though, quite a few of the larger houses had two (or even two and a half bathrooms) or a full bath and a powder room. Buyers had their choice of two different bath plans depending on their tastes and pocketbooks and on the requirements of the bathroom layout. The Sears house was often equipped with the most sought after conveniences of the time, from built-in china cabinets, mirrored closet doors, dining nooks and kitchen cupboards, to built-in ironing boards, telephone niches, and medicine cabinets. Some of these amenities came as part of the package, while others were options. Kitchen sinks were included in the specifications. The homes were made with the finest materials, including cypress for all exterior components like the window trim and clapboard, and first-growth, top grade southern yellow pine for framing. Kitchen and bath floors were solid tongue and groove maple. The kits were shipped on boxcars, to be picked up at the nearest railroad station. Each kit contained between 10,000-30,000 pieces which you could assemble yourself or hire a local contractor who would charge around $ to put it together. What a bargain! About half of the kit homes were built by professionals, but those who did it themselves saved about 30% off the cost of a conventionally built home. In theory, really handy homeowners could and did put together their own Sears houses with only the aid of the instruction manual. More often, the actual construction required considerable help from a local builder. Over the 30 year lifespan of the Modern Homes program, the various service systems within the house such as plumbing, electricity, and heating became more complex, so owners were more likely to call in trade specialists. At any rate, Sears always furnished estimates of the finished cost of the house, including labor. In 1911, Sears added an irresistible new twist. The company decided not just to sell house-building packages, but to finance them as well. The nation s booming population was straining the seams of a tight housing market, yet the huge and fast-growing middle and working classes (many members of which were recent European immigrants) had been largely ignored by a conservative banking community. If Sears could offer reasonable interest rates and low down payments, the market seemed endless. Although the financing package initially included only building materials, it soon expanded to cover the building lot. The terms were easy: a down payment of 25 percent of the cost of house and lot, and interest as little as 6 percent interest for 5 years or a higher rate for up to 15 Fall 2011 Equal Eyes 35

36 years. The application form contained no questions about race, ethnicity, gender, or even finances. Thousands of formerly ineligible buyers were absorbed into the new home market. Modern Homes catalogs were issued most years (apparently sometimes twice a year) from 1908 until 1940, although there are a few years for which no catalogs are presently known. In the beginning, Modern Homes designs were assigned numbers rather than names, but soon titles such as The Hathaway, The Valley, and The Cresent to name a few began to accompany the attractive illustrations. Sears knew its audience well and its designs were those most popular at the time. The styles were deliberately conservative rather than innovative. Beginning with a simplified Queen Anne, Modern Homes styles ranged from Arts & Crafts bungalows and Foursquares in the 1910s and 1920s, through the various European revivals of vaguely French, English, and Spanish (usually Mission) styles in the 1920s, to the Colonial Revivals, Cape Cods, and Dutch Colonials found mostly in the 1920s and 1930s. Modern Homes catalogs often carried designs well past what is generally considered their peak years. Bungalows, for instance, were among the most frequently built of all of Sears house types (and along with the Colonial Revival and the Cape Cod cottage the longest-lived), appearing in every catalog from 1908 onward. Although most designs were conservative, there were some large and elegant surprises. One of the most elaborate (described in the 1918 and 1921 catalogs as bearing a close resemblance to Henry Wadsworth Longfellow s Cambridge, Massachusetts, residence) is the three-story, eight-room neo- Georgian Magnolia, with its two-story columned portico and sleeping porches. Later catalogs from Sears included a number of Sears-built exhibition houses, including two reproductions of Mount Vernon, a reproduction of New York City s Federal Hall, the first capitol of the United States, a dream home for Warner Brothers (erected 36 Equal Eyes Fall 2011 in Pittsburgh, Pennsylvania), and a fully furnished model house exhibited at the 1933 Century of Progress World s Fair in Chicago. Sears houses were often built in multiples, creating entire homogeneous neighborhoods. A number of these still exist, many in industrial towns. One of the best known Sears house locations is in Carlinville, Illinois, where Standard Oil of Indiana built a million-dollar development of 192 houses for employees of Schoper coal mine (156 intended for miners and other workers, an additional 28 nearby and somewhat more deluxe meant for supervisors). The five- and sixroom houses of what became known as the Standard Addition, which included many bungalows and foursquares, cost roughly $3,600 to $4,600 and were regarded as unusually fine examples of worker housing. On the other end of the socioeconomic scale are places like Cheverly, Maryland, or Crescent Hills in Hopewell, Virginia, both affluent neighborhoods of strictly high-class [Sears] homes built by private developers in the 1920s. (Hopewell also has a large group of Aladdin houses built during World War I for workers at the DuPont Corporation s gun-cotton factory there.) The Modern Homes mortgage program peaked in the late 1920s but showed increasing signs of strain as the full effects of the Great Depression hit. Sears withdrew from the Modern Homes and mortgage loan market in 1934, but was selling houses again a year later, after the establishment of the Federal Housing Administration and its federally insured mortgages fueled a brief upsurge in the housing market. The Modern Homes program was finally defeated by tens of millions of dollars in mortgage defaults, as well as pre-world War II shortages of building materials. The last Modern Homes catalog was issued in By the time the Modern Homes project folded for good, Sears houses were a staple of the American landscape. Frank Kushel continued to head the Modern Homes program until the end. Identifying a Sears home It is difficult to find proof of a Sears house. Sometimes the origins of a house that nearly or even exactly matches a catalog illustration can t be traced beyond all doubt. In more than 32 years of catalog sales, Sears offered 447 different designs, according to the Sears Archives. Because most of the houses are small and simple in style, they often resemble those found in the catalogs of other ready-cut companies or even from local builders. Sears encouraged potential buyers to customize their designs with the aid of the Sears architectural department: flip a floor plan; change a roofline; add or subtract a room; a porch, or a window; use a different entry detail, etc. The houses may have been altered during construction, either inadvertently or by the owner. Because these were often small starter houses, many were altered and added to long after construction. While many Sears precut and fitted wood pieces (rafters, beams, sills, lintels, woodwork, and mouldings) are stamped with the Sears name and/or numbered for ease of assembly, sometimes there are no markings to be found. This could be because Sears encouraged customers to buy lumber locally if it was cheaper than shipping from a Sears mill. Sears door and cabinet hardware, lighting and plumbing fixtures, and other building parts were also marked but might have been bought for a non-sears house. Finally, although Sears houses consistently display certain construction details (fivepiece eaves brackets, front porches, and small attic windows, for instance) so do other well-designed ready-cut and conventional houses of the period. So unless the paperwork (mortgage agreement, floor plans, materials list, building permits, and correspondence, listing Sears as the architect ) or a credible family member or neighborhood history exists, it may be hard to know where the house originated. The next time you re out reviewing an older neighborhood, look for the classic signs of a Sears kit house, although it may be difficult to ascertain its true identity!

37 What s New on the MAAO Website: New & Exciting Technology......At Your Fingertips! Everyone knows technology is going smaller and faster, with an eye on whatever is convenient. The latest technology gains have been with handhelds, smart phones, and smart books, with less emphasis on laptops and bulky desktops. Today s customers demand access to information on their handheld and smart phone devices and thus applications and software written for these compact devices has exploded in our society. Written by Kelly Baillet, SAMA Dakota County Information Systems Committee Some of these applications - or Apps as we refer to them - attempt to take all the information found in a full-size website and break it down in to smaller menu formats to make it easier for consumers to use. Have you ever found yourself in need of information on the MAAO website away from the office? We can now deliver key information to you on your iphone and ipad virtually anywhere anytime with a new app. Our vendor, Memberclicks, just released an app for the iphone or ipad (2X Zoom). We are super excited at what our vendor is doing to make our website more userfriendly and look forward to bringing all these tools to you! Here s the scoop on how you can use our new iphone app to give you access whenever and wherever you may need MAAO! You can download the app by searching in itunes for Memberclicks. The app is free, so take advantage of it! Once you have it loaded, start the app and you will see the logon information. Enter the organization ID maao in lower case followed by your user name and password. Once logged in you will see four icon/ menu selections. The selections right now are: My Profile, Events, Articles, and Directory. Say you arre at Summer Seminars and need to know your license number for registration No problem, you can find it quickly under My Profile. Now you are away from the office and you forgot the date of an upcoming event or failed to register while at your desktop You can access all the latest MAAO events through your iphone, including access to all active links for registering. Ever wonder what the latest Job Postings are? Forget the bulky computer, pull out your iphone and access Articles. This will Fall 2011 Equal Eyes 37

38 carry you straight to the MAAO landing page where you can quickly access jobs, expanding at the touch of your fingers to get the information you want. So you are out an MAAO function, you are busy networking, and agreed to exchange information but forgot to get your new contact s or phone information Just grab your iphone or ipad and go to the Directory. This is formatted easily for the user by having an index key to the right and easily moves through the directory to find what you need. iphone and ipad users should catch up with the MAAO times. Log onto your itunes account now and get the Memberclicks app today!!! For those of you that may have an andrioid device, stay tuned for the release. If you have any questions, feel free to ask any member of your IS Committee! REMINDER - Request For Web Resources: The Research and Planning Committee sent out a note to all members requesting resources to share on the MAAO website. There are helpful tools that many offices use that could assist other assessors. The Executive Board thought that it would great to have a location to share these tools/data with each other. The type of information we are looking for includes: applications, survey forms, spreadsheets/guides used in calculations, form letters, and any policy/office procedures. Please send all documents to one of the following members: Michelle.moen@co.isanti.mn.us Paul.sandvik@co.hennepin.mn.us Joshua.hoogland@co.hennepin.mn.us 38 Equal Eyes Fall 2011

39 Tax Scam? Lake Minnetonka Dream Home Update Reprinted with permission from the Star Tribune Originally published August 18, 2011 Written by Jennifer Bjorhus, Star Tribune Feds say mansion housed tax scam In the Summer 2011 issue of Equal Eyes. We published a Classif-Eyeds listing for 5560 Maple Heights Road. The home, which had been a vision of then owner and developer Jeff Wirth, was never completed. It quickly became a headache for the local community and subject of an ongoing IRS investigation. The following is intended to provide an update on the property. Prosecutors say Jeffrey Wirth s Lake Minnetonka home was at the heart of a scam that cost the IRS millions.from Wirbusiness without paying tax. Twin Cities developer Jeffrey Wirth, known for creating large hotel water parks and for turning the old Minneapolis Athletic Club into a luxury hotel, had at least one project he never finished: his mega-mansion, a tile-roofed villa that has become a weedy eyesore on Lake Minnetonka. Now, federal prosecutors say the unfinished albatross was the focus of a deliberate effort to siphon millions from Wirth s companies in a multi-year scheme to dodge taxes. Wirth, his former wife, Holly C. Damiani, and their tax preparer, Michael J. Murry, were indicted Thursday, charged with tax-evasion conspiracy. Wirth and Damiani were also charged with filing false tax returns, and Murry was charged with procuring false tax returns. The tax scheme ran from around early 2003 to early 2010, costing the Internal Revenue Service millions of dollars, according to the indictment. Wirth heads the Wirth Cos., a real estate company in Brooklyn Center. He developed the Waterpark of America near the Mall of America and the Grand Rios Hotel and Waterpark in Brooklyn Park, which have since been sold, and owns and manages other buildings, including offices, apartments and hotels. Reached on his cellphone, Wirth said, I just don t have any comment. Lawyers for both Damiani and Murry said their clients deny the charges and intend to fight them. Wirth s lawyer, Chris Madel at Robins Kaplan Miller & Ciresi, could not immediately be reached for comment. In recent years, Wirth has seen several properties go back to lenders or be put on the market. Last year the luxury Grand Hotel Minneapolis in downtown Minneapolis, which Wirth spent tens of millions of dollars renovating, went back to the lender in a deed in lieu of foreclosure. It was later sold. The house the Wirths were building on Lake Minnetonka has been on the market since June 2010, the price slashed from $5.9 million to $3.95 million. According to the indictment, Wirth and the others funneled more than $2 million from Wirth s companies to buy the land and build the mansion, and didn t report the money as income on either personal or business tax returns. The abandoned villa, with its tile roof and arching doorways, sits on a private island connected to the mainland by a bridge in St. Albans Bay. A Coldwell Banker listing describes the house at 5560 Maple Heights Road in Greenwood as nearly 19,000 square feet with six bathrooms and seven fireplaces. Work on the house stopped around 2006, and it became a local eyesore. The city has gotten a lot of phone calls complaining about the situation, said City Clerk Gus Karpas. Karpas said Greenwood passed an ordinance in January requiring the exterior finishes of buildings to be completed within six months of a permit being issued, and Wirth was given until July 19 to finish the exterior. They did put some siding on it. They didn t do the stucco. That was a point of discussion, Karpas said. Damiani and Wirth divorced in Damiani was a vice president at the Wirth Cos. from 1988 to 2006 and was the company s chief financial officer from 2003 to Prosecutors said the two understated their wages for some of those years, each claiming incomes from the Wirth Cos. of $12,000 a year or less. They also allegedly failed to report millions of dollars in fee income during development of the water parks and fraudulently eliminated income that should have been taxed by creating false management fee entries. The couple also allegedly used at least $100,000 of company money on personal expenses such as a trips to Hawaii and Canada, dry cleaning and private school fees for one of their children, recording them as business expenses. Murry s lawyer Bill Mauzy said Murry properly prepared the tax returns based on information supplied by the clients and didn t intend to violate tax laws. Mike Murry is an accountant who has honestly and properly prepared thousands of tax returns on behalf of hundreds of clients in the past 38 years, Mauzy said. An initial plea hearing for the trio is set for 2 p.m. Monday in St. Paul before Magistrate Judge Steven Rau. Jennifer Bjorhus Fall 2011 Equal Eyes 39

40 A Letter From the Editor Technology and Equal Eyes... Written by James Haley, AMA Polk County Equal Eyes Managing Editor Greetings from the Editor! What a fantastic fall we are having. The weather has been great for farmers and busy appraisers alike. I know that I am certainly thankful for the extra time to get out and collect data this fall. The fall is also a busy time for those of us on the Editorial Committee. During August and September, the Fall Conference, Abstract deadlines, property viewing, and education all come together. This makes for some long days for those of us chasing down stories for Equal Eyes. When the final product is finished, all the time spent in front of a key board certainly seems worth it. I am exceptionally proud of our new committee members. They have picked up right where their predecessors left off. On the subject of our publication, I want to say thanks for reading. We hope that you are enjoying the new content. This issue provided for some very interesting topics. Our creative and curious committee members continue to impress me. We have made it a goal to provide timely information about MAAO, appraisal, and assessment in Minnesota. In addition to this, we want our publication to be interesting and informative. I also wanted to discuss the format in which you receive Equal Eyes. Much has been made regarding the electronic vs. print debate. While electronic publications save plenty on printing and postage, they can also be impersonal. It is one of our goals to constantly explore ways to make the electronic file more convenient and accessible. This issue, we have implemented more interactivity within the document. If you hadn t notice, you are also able to click on the table of contents and you will be directed to the place you 40 Equal Eyes Fall 2011 want to go. Also, you will notice that you can now use Equal Eyes as a spring board to other web pages and resources. Please send suggestions of how we can make our publication more useful to editor@ mnmaao.org. In the future, I have dreams of our readers sitting down to read Equal Eyes on their Ipad or other touch device. Or referencing our magazine in the field on their smart phone to explain a procedure to a tax payer. Who knows maybe even contributing to a fluid magazine through MNMAAO.com. With rapidly changing technology and print media trends, it is hard to say what our publication will look like in five or ten years. However, our goals must remain the same: provide our readers with up to date and relevant information. Perhaps my favorite part of my position is incorporating new ideas into Equal Eyes and MAAO. In order to property implement these ideas in a meaningful way, it is pivotal that we know where our fellow members want us to go. This is where our MAAO member survey came in. We did receive a great deal of feedback through this questionnaire, however it remains rather incomplete. Please, if you have not yet, go here and complete our short survey. By doing so, you will be helping us compile meaningful information about our audience and its desires. It is critical that we understand our audience and cater to their tastes. What better way to find out what our readers want than going straight to the source? You will also be assisting in generating useful ideas for future articles. By giving information on you and your office, we can better steer our content towards relevant material. Of course, our survey also provides a few opportunities for an human interest piece or two. Finally, you will be helping the executive board make informed decisions on the needs of our organization. As our workforce turns over, it becomes more important for our leaders to understand who our new members are. Great benefits will come from having this information at our disposal. So, please, tell us about yourself. Take a few minutes to let us know who you are and what you want from MAAO and Equal Eyes. You may even win some prize money along the way! We will continue to welcome any contributions to our publication. Should you desire to write a full length feature article, you may be rewarded for your work. Stipends are awarded to outside contributors of Equal Eyes, provided that the author meets certain requirements surrounding length, professionalism, and content. A good rule of thumb to follow is around 2000 words of originally created content, cited and well written. However, stipends may be given out at the editorial board s discretion (budget restrains considered). If you have any questions, feel free to contact me personally. Putting together this publication is proving to be a rewarding and (at times) a learning experience. I continue to be impressed by the talent and drive of MAAO s members around the state. I also feel quite privileged to be able to work with these gifted members on a daily basis. Thanks for again for reading.