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Paynesville Press - Jan. 29, 2003

Assessments increasing in Paynesville Township

By Michael Jacobson

Market values of properties in Paynesville Township continue to rise. The average market value for residential property in the township will increase 23 percent on average for the 2003 assessment, Tim Mitchell of the Stearns County Assessor's Office told the township board last week, and the average market value for lakeshore property will increase 27 percent on average.

The 2003 assessments - which will be used to compute property tax payable in 2004 - are based on actual sales. These are the preliminary numbers; the 2003 assessments will be finalized this spring.

In 2002, Paynesville Township had eight residential sales and nine lakeshore sales. The residential sales had an average market value of $108,900 but had an average sales price of $141,600. This discrepancy resulted in the increase in assessments. For lakeshore sales, the average market value of the properties was $132,300 but the average sales price was $173,400.

Because the property market has been so strong, said Mitchell, the township has seen assessments increases every year for the past few years.

By comparison, residential assessments in the city of Paynesville (based on 32 sales in 2002) will increase only five percent on average in 2003. Assessments - both residential and lakeshore - in Eden Lake Township will increase 11 percent on average in 2003.

These increased assessments are not uniform, said Mitchell. Rather than a blanket increase, the assessor's office tries to analyze the property features that are in the most demand, thus drawing the higher prices, and make appropriate assessment increases on a case-by-case basis.

Taxpayers will not feel the entire impact of the assessment increase in 2003, thanks to Limited Market Value, which caps the assessment increase. In 2003, the LMV limits assessment increases to 12.5 percent for tax purposes. But LMV is being phased out under state law and will be eliminated in 2007 for taxes payable in 2008, meaning some property owners could see a substantial hit in their taxes then.

Based on countywide sales, the 2003 assessments on commercial property will increase four percent, said Mitchell, and the increase on ag land will be 15 percent.

This ag increase is based on 42 sales in the county (none in Paynesville Township). To be classified as an ag sale, the property must be 35 acres and must be continued to be used for agriculture, said Mitchell. He admitted that the value of ag property was affected by other factors, including development pressures and sales as hunting land. But without concrete evidence of a sale being completed with nonagriculture intentions, by state law, the sale must be used in the ag computation, said Mitchell.

One way for farmers to avoid tax increases due to rising agriculture assessments is to take part in the "Green Acres" Program, said Mitchell. Information about the program was mailed last summer to all owners of property classified as agriculture.

According to the assessor's office, the "Green Acres" program is a tax deferral program that provides an opportunity for farmers to obtain a deferment from higher valuations and subsequent taxes payable on farm land that has been increased to reflect market prices paid in excess of farmland prices.

To be eligible, the property must be ten acres in size and used primarily for agricultural use (verified by either getting a third of the family income from farming or by the ag income (including rent) being at least $300 plus $10 per tillable acre). The property must be homesteaded or must have been owned for at least seven years. A "Green Acres" application must be submitted and approved by the county assessor.

According to the assessor's office, the "Green Acres" program works by having two values for the property: the higher market value and the lower agricultural value. As long as the property remains in the program, the owner pays property tax based on the lower agricultural value.

This benefit continues until the property no longer qualifies for the program, when three years of property taxes at the full amount are due, according to the assessor's office. For example, if property were in the program for ten years and then developed, the owner would receive a tax deferment for seven years and pay full taxes for three years.

In short, warns the assessor's office, if one plans to farm a property for an extended period of time, it may be advantageous to enroll in this tax deferment program. If one has plans to sell, develop, or put the property to a nonagricultural use within a reasonably short period of time, it may not be practical to enroll in this program.

"Really, what the law is designed to do is preserve farming," said Mitchell, "and that's what the law is doing."

For more information about the "Green Acres" Program, go online to:

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