Board of Equalization - April 12 and May 3, 2022 Minutes

April 12, 2022
The Board of City Commissioners met as the 2022 Board of Equalization at 7:30 o'clock a.m., Tuesday, April 12, 2022 in the City Commission Room at City Hall, Fargo, North Dakota, to consider the 2022 assessments of property in the City of Fargo for tax purposes.
Members present: Piepkorn, Preston, Strand, Mahoney.
Members absent: Gehrig
Member Mahoney presiding.
ASSESSOR’S YEAR END REPORT
City Assessor Mike Splonskowski shared a presentation on the Annual Report. He outlined laws that govern the Assessor’s office, statutory duties of the Board of Equalization, valuation definitions, legal requirements, reappraisal timeline, professional standards, challenges, sales ratios and trends, exemptions and TIFs. The law requires values to be set at full and true value, he said; however, due to the market being unpredictable and imperfect the State allows the sales ratio to be between 90 and 100 percent. If the sales ratio does not come into compliance, the State can come in to make an increase or decrease to bring the value into compliance, he said, and this is usually done by classification. He explained the sales ratio process, which is the True and Full Value divided by the Sale price which equals the Ratio. He said besides State requirements, his department adheres to the Standards of the International Association of Assessing Officers (IAAO). Fargo’s values are within the professional standards, he stated, and they also adhere to the 5-year plan of reviewing properties for information accuracy and he showed the map of the 5 areas the City is divided into which will be adjusted in the near future due to one area having a larger number of parcels. The real estate market is strong, he said, and while interest rates have increased, they are still low but could affect how much people are paying for houses. He said there have not been strong affects seen due to COVID-19 influences although they will keep an eye on foreclosures over the next year. There was a record amount of commercial sales in 2021, he said, 189 which is 36% more than in 2020 and there have been two consecutive years of record residential sales with 12.6% more in 2021 than in 2020. The median sale price of a single family home in 2021 is $300,000.00, he said, which is an 11% increase from 2020. Over the last year, he said, the Assessor’s office has adjusted property values on 20,708 properties. 6,327 requests were sent for physical review for reappraisal with less than 1,900 properties allowing entrance to physically review their information which is only 22%, he said. The total value of appraised property is over $18.7 billion, he said, for a total increase in value of about 8% for the City. He said the 2022 projected taxable value is $714,900,052.00 and one mill is now worth $714,900.00. New growth is at 3.6% and existing market increases are 4.7%, he said, for a total increase in taxable valuation of 8.3% over the last year. Historically, he said, the average increase in taxable value has been 5.8%, this is the 5th largest change since 1980 at 8.3%. A Cass County School District map of taxable value by district for 2021 shows District 1 accounts for about 68% of Fargo’s taxable value and District 6 about 32%, he said. As far as discretionary exemptions, he said, Renaissance Zone values nearly doubled again as the result of construction and more projects being completed Downtown. Non-discretionary exemptions are in place by State Law and not controlled locally, he stated. The 2021 Increment Tax total was $1,254,877.00, he said, and the value was .68% of the total taxable base while the 2022 TIF Incremental Value was .63% of the total taxable base. There are about 658 parcels receiving residential new construction exemption, he said. The non-discretionary exemptions are those in place by State law. He shared a list of Tax Increment Financing (TIF) in place, and said the TIF on the Great Northern was paid off, he said, and a new TIF for the BrewHalla was added. He said taxes generated by increment this year is about $6,600.00 less than last year, or $1,248,210.00. There were 581 Homestead Credits applied to The Homestead Program, which provides a reduction in taxable value for qualifying homeowners, he said, and there are 546 Disabled Veteran’s Tax Credits. The Veterans credit is similar to the Homestead and a homeowner could receive both on the same property. The Legislative Tax Relief for Homestead Credit for Special Assessments requires an annual application submitted to the County, he said, and creates a lien on the property to be paid off upon transfer of property. The City of Fargo Special Assessments Assistance Program allows a reduction to qualified homeowners for special assessments, he said, and approximately 150 families yearly receive this assistance. He described the assessment appeal process which includes verifying that the data is accurate, analyzing the market, comparing to similar properties, determining whether valuation is supported or not and adjusted accordingly. He said if the property owner does not agree, they have the option to go to the County or State Boards. He said 194 appeals were received and there are about 50 unresolved. He said about 50% of those who called in have had a reduction in value.
In response to a question from Member Piepkorn about high value properties paying similar rates to low value properties, Mr. Splonskowski said they work to make sure to look at vertical and horizontal equity to avoid a regressive type assessment where high value properties are treated differently compared to low values.
Member Preston said she shared a survey with Mr. Splonskowski that indicated Fargo’s assessments may be a little regressive.
In response to a question from Member Preston asking about a fourth measurement tool, Mr. Splonskowski said it has only been out about four months and national standards have not been set for it by the national organization. It is interesting information, he said; however, not usable at this point.
In response to a question from Member Preston asking about the jumps in total taxable values, Mr. Splonskowski said it also has to do with inflationary or market increases, properties coming out of exemptions and new properties without exemptions.
Member Mahoney said the continued and accelerated growth of the City contributes to taxable values. He said the population is increasing and there is great commercial and exponential growth in the City, coupled with inflation.
INDIVIDUAL VALUATION APPEALS
No one was present at the meeting to appeal their valuation.
Member Strand asked that the staff of appraisers working in the Assessor’s Department be acknowledged and applauded for what they do. He said some of the circumstances they face is not fun and he suggested that perhaps hand-me-down body cams be considered for assessors as the second highest level of risk.
Member Piepkorn acknowledged the professionalism of the staff and the important service they do.
Member Mahoney stated the Board of Equalization will reconvene at 7:30 o’clock a.m. on Tuesday, May 3, 2022.
Member Piepkorn moved to adjourn.
Second by Preston. All the Members present voted aye and the motion was declared carried.
The time at adjournment was 8:02 o’clock a.m.

May 3, 2022
Agreeable with adjournment, the Board of City Commissioners reconvened as the 2022 Board of Equalization at 7:30 o'clock a.m., Tuesday, May 3, 2022 in the City Commission Room at City Hall, Fargo, North Dakota, to consider the 2022 assessments of property in the City of Fargo for tax purposes.
Members present: Piepkorn, Strand, Mahoney (via conference call).
Members absent: Preston, Gehrig
Member Piepkorn presiding.
City Assessor Mike Splonskowski said the meeting is to review and take action on the appeals of the valuations this year, and to finalize and certify the 2022 assessments. The Board may make whatever adjustments it deems necessary to insure the assessment is equalized and uniform.
Individual Valuation Appeals
3737 44th Avenue North – Amazon
Amazon Real Estate Tax Manager James Poliyanskiy said the property is a million square foot building on 107 acres and this is the first year the new property is being fully assessed. He said the racking system in the building being classified as real property is the primary point of contention and should not be part of the square footage. There is substantive difference in the land value opinion, he said, it should be the amount their developer paid for the land.
Member Preston present at 7:46 a.m.
Mr. Splonskowski said an adjustment was made to the building grade to change it to a step between average and good. He said the rack shelving would be a major operation to remove and is considered part of the real estate. Although attached to the building, adjustments were made for the vertical reciprocating conveyors portion and that was removed from the assessment roll. He said he feels the value of the land is accurate, improvements were made to the land to make it suitable for building. He said the adjustment reduction suggested is to reduce the valuation from $123,627,000.00 to $119,401,800.00.
Member Mahoney moved the value on 3737 44th Avenue North be reduced and certified from $123,627,000.00 to $119,401,800.00 for the 2022 assessment.
Second by Strand. On call of the roll Members Mahoney, Strand, Preston and Piepkorn voted aye.
Absent and not voting: Member Gehrig.
The motion was declared carried.
1211 47th Street South - Bergseth Brothers
Jaycee Parrett, Ducharme, McMillen & Associates, Inc. (via conference call), shared documentation of assessments of other warehouses in proximity and using the income approach arrived at a value average of $73.00 per square foot or $7,450,000.00 which is closer to market value.
Mr. Splonskowski said they do not have much information for the income approach to be able to verify whether it is market or not. He said the valuation is based on sales and with information with the median at $95.00 per square foot on that type property throughout the City.
Member Mahoney moved the value of $11,159,700.00 on 1211 47th Street South be retained for the 2022 assessment.
Second by Preston. On call of the roll Members Mahoney, Preston, Strand and Piepkorn voted aye.
Absent and not voting: Member Gehrig.
The motion was declared carried.
1602 45th Street North - Ferguson Distribution
Jaycee Parrett, Ducharme, McMillen & Associates, Inc. (via conference call), shared an income approach valuation and competing assessments and said she is requesting a reduction to $5,630,000.00 or the upper range of $76.00 per square foot.
Mr. Splonskowski said sales support their valuation and much of the value is land value.
Member Preston moved the value of $7,837,800.00 on 1602 45th Street North be retained for the 2022 assessment.
Second by Mahoney. On call of the roll Members Preston, Mahoney, Strand and Piepkorn voted aye.
Absent and not voting: Member Gehrig.
The motion was declared carried.
4014 17th Avenue South - Candlewood Suites
Mayur Dasai, O’Connor & Associates (via conference call), shared recent revenue using a three-year income stabilized approach, P&L statements and other analysis. He said his opinion of value is $3,820,426.00.
Member Piepkorn said the last few years have been difficult for hotels; however, they are doing better.
Mr. Splonskowski said a 15% reduction for market was done for hotels and motels in Fargo last year, acknowledging valuations were high at that point. He said that has not been increased, there have only been foreclosures and transactions that cannot be used by State law to set an assessment. They do not have market evidence for the income approach, he said, only investment value and he feels the value is supported and uniform.
Member Strand moved the value of $4,961,500.00 on 4014 17th Avenue South be retained for the 2022 assessment.
Second by Preston. On call of the roll Members Strand, Preston, Mahoney and Piepkorn voted aye.
Absent and not voting: Member Gehrig.
The motion was declared carried.
1632 42nd Street South - Delta Hotel
Mayur Dasai, O’Connor & Associates (via conference call), said since it is a hotel the income approach is the best indicator and he shared analysis and 3 years of income. He said his opinion is that $12,590,00.00 is the value of this property based on the profit and loss.
Mr. Splonskowski said there are uniform, comparable sales which support the value.
Member Mahoney moved the value of $13,946,800.00 on 1632 42nd Street South be retained for the 2022 assessment.
Second by Strand. On call of the roll Members Mahoney, Strand, Preston and Piepkorn voted aye.
Absent and not voting: Member Gehrig.
The motion was declared carried.
4300 20th Avenue South - Staybridge Suites
Mayur Dasai, O’Connor & Associates (via conference call) said the best way to value an income producing property is the income approach and he outlined various analysis. He said he feels the value based on the actual P&L is $3,850,000.00.
Mr. Splonskowski said the appraisal theory says the best way to value income producing properties is the income; however, in the absence of that information, sales is the best indication. He said the sales approach supports the value and the property is uniform and equalized.
Member Preston moved the value of $4,227,100.00 on 4300 20th Avenue South be retained for the 2022 assessment.
Second by Strand. On call of the roll Members Preston, Strand, Mahoney and Piepkorn voted aye.
Absent and not voting: Member Gehrig.
The motion was declared carried.
5064 23rd Avenue South - Four Points by Sheraton
Wayne Tannenbaum, Pivotal Tax Solutions (via conference call), said actual income and expenses have been provided. There are still affects of COVID-19 and the property value is still lower as of 1/1/22, he said, and he does not know what other evidence is needed for a hotel property.
Mr. Splonskowski said no comparable sales were given as evidence for a reduction in value. The property sold in 2019 for $9 million and the appellant is asking for a value $3.2 million and the valuation by the City is $6 million. He said the property is being treated uniformly and the value should be retained.
Member Strand moved the value of $6,134,500.00 on 5064 23rd Avenue South be retained for the 2022 assessment.
Second by Preston. On call of the roll Members Strand, Preston, Mahoney and Piepkorn voted aye.
Absent and not voting: Member Gehrig.
The motion was declared carried.
4773 32nd Street South - Residence
Member Strand moved the value of $749,400.00 on 4773 32nd Street South be retained for the 2022 assessment.
Second by Preston. On call of the roll Members Strand, Preston, Mahoney and Piepkorn voted aye.
Absent and not voting: Member Gehrig.
The motion was declared carried.
5427 University Drive South, Unit D - Residence
Member Preston moved the value of $259,100.00 on 5427 University Drive South, Unit D be retained for the 2022 assessment.
Second by Strand. On call of the roll Members Preston, Strand, Mahoney and Piepkorn voted aye.
Absent and not voting: Member Gehrig.
The motion was declared carried.
3301 Broadway North - Apartment
Member Strand moved the value of $2,164,400.00 on Segment 1 and $2,098,400.00 on Segment 2 be retained for the 2022 assessment.
Second by Preston. On call of the roll Members Strand, Preston, Mahoney and Piepkorn voted aye.
Absent and not voting: Member Gehrig.
The motion was declared carried.
3501 Broadway North - Mini Storage
Member Preston moved the value of $1,654,400.00 on 3501 Broadway North be retained for the 2022 assessment.
Second by Strand. On call of the roll Members Preston, Strand, Mahoney and Piepkorn voted aye.
Absent and not voting: Member Gehrig.
The motion was declared carried.
201 35th Avenue North - Apartments
Member Strand moved the value of $8,786,400.00 on 201 35th Avenue North be retained for the 2022 assessment.
Second by Preston. On call of the roll Members Strand, Preston, Mahoney and Piepkorn voted aye.
Absent and not voting: Member Gehrig.
The motion was declared carried.
4034 3rd Avenue North - Warehouse
Member Preston moved the value of $386,900.00 on 4034 3rd Avenue North be retained for the 2022 assessment.
Second by Strand. On call of the roll Members Preston, Strand, Mahoney and Piepkorn voted aye.
Absent and not voting: Member Gehrig.
The motion was declared carried.
4840 23rd Avenue North - Gamma Building
Member Preston moved the value of $17,275,000.00 on 4840 23rd Avenue North be retained for the 2022 assessment.
Second by Strand. On call of the roll Members Preston, Strand, Mahoney and Piepkorn voted aye.
Absent and not voting: Member Gehrig.
The motion was declared carried.
4837 Amber Valley Parkway South - Former PRACS
Member Preston moved the value of $13,229,000.00 on 4837 Amber Valley Parkway South be retained for the 2022 assessment.
Second by Strand. On call of the roll Members Preston, Strand, Mahoney and Piepkorn voted aye.
Absent and not voting: Member Gehrig.
The motion was declared carried.
4340 18th Avenue South - Trustmark Building
Member Strand moved the value of $8,413,000.00 on 4340 18th Avenue South be retained for the 2022 assessment.
Second by Preston. On call of the roll Members Strand, Preston, Mahoney and Piepkorn voted aye.
Absent and not voting: Member Gehrig.
The motion was declared carried.
3510 Park Avenue South - Residence
Member Strand moved the value of $384,400.00 on 3510 Park Avenue South be retained for the 2022 assessment.
Second by Preston. On call of the roll Members Strand, Preston, Mahoney and Piepkorn voted aye.
Absent and not voting: Member Gehrig.
The motion was declared carried.
List of Resolved Appeals: Adjust or Retain Values as Recommended:
Member Strand moved the 2022 assessment roll valuations of property in the City of Fargo for tax purposes as presented by the Assessment Department be adjusted or retained as recommended by City staff.
Second by Preston. On call of the roll Strand, Preston, Mahoney and Piepkorn voted aye.
Absent and not voting: Member Gehrig.
The motion was declared carried.
Approve and Forward Unresolved Appeals to County Board of Equalization:
Member Preston moved the list of properties submitted by the City Assessor’s Office be approved and forwarded to the County Board of Equalization for consideration.
Second by Strand. On call of the roll Preston, Strand, Mahoney and Piepkorn voted aye.
Absent and not voting: Member Gehrig.
The motion was declared carried.
Approve 2022 Assessment Roll Valuations as Equalized:
Member Preston moved the 2022 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 Mahoney. On call of the roll Members Preston, Mahoney, Strand and Piepkorn voted aye.
Absent and not voting: Member Gehrig.
The motion was declared carried.
The time at adjournment was 8:55 o’clock a.m.