Board of Equalization - April 9 and May 7, 2024 Minutes
April 9, 2024
The Board of City Commissioners met as the 2024 Board of Equalization at 7:30 o'clock a.m., Tuesday, April 9, 2024, in the City Commission Room at City Hall, Fargo, North Dakota, to consider the 2024 assessments of property in the City of Fargo for tax purposes.
Members present: Kolpack, Piepkorn, Strand, Mahoney.
Member absent: Preston.
Member Mahoney presiding.
Assessor’s Year End Report:
City Assessor Mike Splonskowski said at this meeting, any outstanding appeals will be moved into a “pending” status, which will give his office time to review the appeals. There will be no decisions today, he said, final decisions will be announced at the reconvened meeting in May and this process is similar to other jurisdictions. He reviewed the 2024 Annual Report of the Fargo Assessment Department, as well as the laws relating to the duties of the Assessor’s office and the Board of Equalization, legal requirements and professional standards. A 5-year annual reappraisal map was shown and he said his department just finished reappraising Area 5, which is south of 13th Avenue to about 76th Avenue and east of Interstate 29 to about 66th Street. Challenges this year included a strong real estate market, he stated, which makes it hard to keep up with values, requires large increases to do so and to remain in compliance. He said there have been stories of foreclosures in other areas; however, that has not been seen in Fargo. Commercial property sales in Fargo were at 185, up 4 percent from 2022, he stated, and residential property sales were at 1,662, about 580 less than 2022. The median sale price of a single-family home in Fargo in 2023 was $339,850.00, up slightly from $338,000.00 in 2022, he said, which shows a stabilizing local market. He said the Assessor’s office main goal is equalization and uniformity of value. Last year there were 6,939 properties appraised, he said, and more than 18,000 properties were adjusted, he said, with about 6,600 notices of increases mailed. Of note, he said, is 4,900 requests for review were mailed and only 1,500 properties granted access to Assessor staff, which was only about 30.5 percent of properties in 2023. The total appraised value of all property in Fargo is almost $22 billion, he said, and he shared various charts that explained historical changes in taxable value, total taxable value and taxable value by school district. The mill levee breakdown for 2023 was 53 percent schools, 19 percent City, 11 percent parks, 15 percent Cass County and 2 percent state/other/water districts, he said, and he provided information on discretionary and non-discretionary exemptions, Tax Increment Financing, homestead and disabled veteran credits and the City’s special assessments assistance program. He said total taxable value in Fargo is at $843,259,836.00 and he showed a graphic depicting the total taxable value by school district.
In response to a question from Member Kolpack asking how many applications were received for the $500.00 State property tax credit, Mr. Splonskowski said due to the fact that is a State program, he did not have any information on numbers.
In response to a question from Member Piepkorn asking that considering the size of the City and looking at the appraisal areas, is the Assessor’s office able to keep up, Mr. Splonskowski said he hires summer interns to help with data collection; yet in general, it is hard to keep up at times.
In response to a question from Member Piepkorn asking about PILOTs and other incentive programs, Mr. Splonskowski said every year, especially with PILOTs, some mature and drop off.
In response to questions from Member Strand about hotel valuations since the pandemic, Deputy Assessor James Haley said in general, most hotel/motel valuations are back to pre-pandemic levels.
Mr. Splonskowski said his office did a total inventory of hotels/motels, talked to management in order to make appraisals more accurate and there were enough sales to make appraisals more accurate.
In response to a question from Member Strand asking about mixed-use properties compared to straight commercial properties, Mr. Splonskowski said commercial and mixed-use properties are different types of properties and assessed at different levels.
Member Strand said with increased values he would have expected more appeals.
Mr. Splonskowski said the average number of appeals is about 1 percent to 2 percent and this year, the appeals are at 3 percent.
Individual Valuation Appeals:
The following people testified to appeal their property valuations:
Dale and Twila Novak – 5563 43rd Street South
Sam Jelleberg – Sterling Management (apartment buildings)
Charlie Adams – 6740 Ashwood Loop South
Barry Gruchow – Representing Prairie Farms Development
Kent Yohe – 5052 Prosperity Way South
James Johnson – 5026 Prosperity Way South
Wayne Tannenbaun – Pivotal Tax Solutions (appeal withdrawn)
Zachary Whittacre – Representing TJ Maxx Plaza/Chase Bank
List of Unresolved Appeals Moved to Pending Status:
Member Kolpack moved that the list of unresolved appeals presented by list or in person be moved to a pending status.
Second by Piepkorn. All the members present voted aye and the motion was declared carried.
2024 Valuations Approved:
Member Strand moved that the valuations of the 2024 Assessment roll be approved.
Second by Kolpack. All the members present voted aye and the motion was declared carried.
Member Piepkorn asked that at the May meeting, the Assessor’s office provide information on how many property owners allowed access to their properties.
Member Kolpack moved that the Board of Equalization reconvene at 7:30 o’clock a.m. on Tuesday, May 7, 2024 to allow the Assessor’s office an opportunity to review the appeals presented to date.
Second by Strand. All the members present voted aye and the motion was declared carried.
The time at adjournment was 8:14 o’clock a.m.
May 7, 2024
Agreeable with adjournment, the Board of City Commissioners reconvened as the 2024 Board of Equalization at 7:30 o’clock a.m., Tuesday, May 7, 2024 in the City Commission Chambers at City Hall, Fargo, North Dakota, to consider the 2024 assessments of property in the City of Fargo for tax purposes.
Members present: Preston, Piepkorn, Kolpack, Strand, Mahoney.
Members absent: None.
Member Mahoney presiding.
City Assessor Mike Splonskowski said this meeting is to review and take action on the appeals of the outstanding valuations this year and to finalize and certify the 2024 assessments. The Board may make whatever adjustments it deems necessary to insure the assessment is equalized and uniform, he said. There is a list of unresolved appeals where the Assessor’s Office went out and did the analysis on the property and came back with a recommendation and the appellant did not agree with the recommendation; therefore, the Board needs to make an action on those assessments and there is a list of resolved appeals where owners agreed with the reassessment. He said there are three appeals that will be forwarded to Cass County due to the appellant not being able to meet with Assessors before this meeting. He said as he is going through the unresolved appeals the Board may change the value of any property as is reasonable to render taxation uniform. There were about 248 appeals this year, he said, which is about 3.7% of the notices sent out. He said typically about 1% to 2% of the notices sent out are appealed so this year’s percentages are a bit higher. He said he checked with a few other jurisdictions and most were down from last year and had less appeals this year than Fargo. With the appeals, he said, about half received a reduction and the average reduction was about 6%. He said the Board can make a group adjustment by motion or he can do individual adjustments per parcel or do select parcels for individual consideration or a combination of the two. He said there is only one person who wishes to speak today about TJ Maxx Plaza, Office Max and Chase Bank and no other people are in the room.
In response to a question from Member Mahoney asking if the Board wants to listen to this appeal or to approve the unresolved disputes with one motion, Commissioner Strand said the Board should listen to the appeal.
Individual Valuation Appeals:
TJ Maxx Plaza and Office Max – 4340 and 4360 13th Avenue South:
Zachary Whittacre, Invoke Tax Partners, said there was a Bed Bath and Beyond store in the shopping plaza that went bankrupt and was vacant last year; therefore, actual expenses of this property are 55% of revenue. With that vacancy, he said, the value cannot be held steady if trying to find the open market value of this property for an investor. He shared documentation on market rental rates, actual lease transactions in Fargo in the past two years and actual income and expenses of the shopping plaza as well as some comparable leases from 2022 and 2023.
In response to a question from Member Preston asking with commercial properties, people argue the income approach and do other states do it that way, Mr. Splonskowski said this is normal from a business practice to look at the income approach and is typical for sales of real estate.
In response to a question from Member Mahoney asking about the analysis and is it an average value, Mr. Splonskowski said he used the sales approach, which is the best information he has in the current local market.
In response to a question from Member Strand asking if someone sells their property and the sale is based on income and the sale price was less than the City value, how would Assessor’s look at that information, Mr. Splonskowski said he tries to make sure there are enough sales and it is not a one-off thing. He said he cannot predict what is going to happen in every situation and he tries to figure out what the market value is based on sales. He said if there are enough sales and it looks like his assessment is high, he will adjust down. He said he is not allowed to do something similar to California Proposition 13 where the sale price is the current value. What he has to do, he stated, is through a model come up with a value that makes sense in the overall market and is supported by what is happening in the sales. He said that is what he did with office space this year where there were a number of sales that were high and the valuation was higher than the sales, so he dropped the valuations.
Chase Bank – 4330 13th Avenue South:
Mr. Whittacre said Chase Bank is similar in approach as TJ Maxx Plaza and Office Max and he shared multiple income approaches. He said there is a lack of sales due to interest rates and commercial properties are not transacting much. That is why it is most appropriate to look at the income approach to see how these would transact for an investor, he stated. The current value is $1.5 million and comparable banks in the area are leasing at $18 a foot, he said, and with the standard expenses that is about $700,000.00; however, the second income approach is actual income, which is about $1.1 million.
Member Mahoney said Chase Bank bought a property for $1.7 million, tore it down and reconstructed a new bank for $2.4 million and now the value is $1.58 million so it actually seems like the City is lower than what the constructed costs were and how do you address that, Mr. Whittacre said that is a value-in-use situation and the value Chase has for the bank.
Member Strand moved the value of Chase Bank be retained for the 2024 assessment.
Second by Kolpack. On call of the roll Members Strand, Kolpack, Piepkorn, Preston and Mahoney voted aye.
No Member being absent and none voting nay, the motion was declared carried.
List of Unresolved Appeals Approved as Presented:
Member Preston moved the valuations of the unresolved appeals be retained as presented.
Second by Kolpack. On call of the roll Members Preston, Kolpack, Strand, Piepkorn and Mahoney voted aye.
No Member being absent and none voting nay, the motion was declared carried.
List of Resolved Appeals: Adjust or Retain Values as Recommended:
Member Kolpack moved the list of resolved appeals be adjusted or retained as presented.
Second by Strand. On call of the roll Members Kolpack, Strand, Preston, Piepkorn, and Mahoney voted aye.
No Member being absent and none voting nay, the motion was declared carried.
Unresolved Appeals Approved and Forwarded to Cass County Board of Equalization:
Member Kolpack moved the list of unresolved appeals be approved and forwarded to the Cass County Board of Equalization.
Second by Preston. On call of the roll Members Kolpack, Preston, Strand, Piepkorn, and Mahoney voted aye.
No Member being absent and none voting nay, the motion was declared carried.
Approve 2024 Assessment Roll Valuations as Equalized:
Member Kolpack moved the 2024 assessment roll valuations of property in the City of Fargo for tax purposes as prepared by the Assessment Department be approved as equalized and that the City Auditor's Office be directed to certify the assessments to the County.
Second by Preston. On call of the roll Members Kolpack, Preston, Piepkorn, Strand and Piepkorn voted aye.
The motion was declared carried.
The time at adjournment was 7:46 o’clock a.m.