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922 percent tax increase? Really?

I moved to Duluth 18 months ago to take a great job with a great company and raise my family in a great city. I bought a modest house that sits on three very small lots within the city limits of Duluth. (My three lots would equal one “Hermantown” sized lot).

Well, the city raised the property tax on the two vacant lots by 922.2 percent! I now have to come up with an extra $752.26 per year in taxes.

Now I know why everyone kept telling me not to buy within the city limits of Duluth! Between the insane tax increase and the bizarre school redistricting red plan nonsense, I would have been better off in one of the surrounding suburbs.

Thanks. Rant over.

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12 Comment(s)

  1. You sure there was not a mistake made? Have you contacted the city to determine what the deal is? Perhaps there were some assessments?

    There has to be a reason behind it, otherwise there would be more than just you complaining about such an exorbitant increase.

    Dorkus | Dec 5, 2012 | New Comment
  2. Wanna Trade? Property? Rants? I spent over 10 years of my 25 year career trying to relocate (within in my career) to the Northland’s climate and terrain. But, admittedly I have given up stuck here with no career mobility and a house in a town where no houses sell. Surrounded by people who are certain I invented skiing (both DH & XC) and kitesurfing just to anger them.

    Sorry to flame your rant, but I wanted to put some perspective on your $752.26, an amount which I easily spend on just gas each year in order to head to the big lake or just to get on snow in forests. There are worse things; there is Stearns County.

    Windnpine | Dec 5, 2012 | New Comment
  3. That does sound pretty unlikely. Was the increase actually due to reclassification or the loss of the homestead credit? Not that it’s my business, but what was it before the $752.26 increase? Contact the assessors office for sure.

    TimK | Dec 5, 2012 | New Comment
  4. Joel, please contact me directly and we can figure out what happened and what might be done. My e-mail is dness at duluthmn.gov.

    There is always an appeal process if you believe that your property is over valued in the appraisal process.

    Often times when I’ve seen large percentage increases like this it is almost always the case that the property was severely under valued previously. When a property is sold, it provides the most accurate market value possible (i.e. the actual sale price).

    For example, I’ve seen lots that had a taxable value of $1000, but then they sell for $20,000 because that is what the buyer was willing to pay for it. So is that a 2000% valuation increase or is it a correction of a valuation that proved to be 95% too low?

    The final point that I will make is that there is no financial benefit to the corporate city in changing property values -- the city does not receive more taxes.

    Instead, the city (and county and school district) establishes the set amount of taxes that will be collected next year and will apply that amount against the total tax base which then creates the tax rate applied to the value of each property.

    If properties are under valued, the city still receives the same taxes, however, other property owners who are correctly assessed would be paying more than their fair share because others are under assessed.

    This is way too much detail to share here and much too little detail to accurately describe it. I think I just found a good Nerd Night subject.

    The final comment is of course Duluth is not unique in this — all of those magical suburban communities deal with the same assessment issues. The rule is the same; property must be assessed at it’s fair market value — if not, someone else is making up the difference.

    Don Ness | Dec 5, 2012 | New Comment
  5. Widnpine, I feel your pain, I really do!

    In 2002 I bought a nice modest home in Tecumseh, MI. I put 25 percent down on a 30-year fixed mortgage I could easily afford. I loved living there! In January of 2010 my company laid off half of its U.S. workforce. I got my less-than-wonderful parting gifts and made an ill-fated turn to Utah to take a job. I tried to rent out my house in Tecumseh, but all that happened was the house got trashed. In 2011 I was lucky enough to land a job in Duluth. This is truly a great place to live! I raided my 401K for a down payment on my modest house in Kenwood. I still could not sell the Michigan house, and a short sale fell through. I lost my down payment, and the eight years of payments that I made. All I got in return is a trashed FICO score.

    Yes, I can afford the extra ~$700 the city wants from me, but this will mean that I’ll be spending ~$700 less supporting the local economy.

    But no worries, retirement is overrated anyway!

    Joel | Dec 5, 2012 | New Comment
  6. Don, thanks for your reply! It’s great knowing that the mayor actually cares! Yes, my property was reassessed at what I paid for it. It’s a shame that the city/county did not bother to do a reassessment sometime in the past 10 plus years. What is happening is that newer residents, like me, are now paying more than long-time established residents. Is this fair? I’m not sure. On one hand the longer-term folks have been paying longer, but us newcomers have not been receiving city and county services as long. There should be a fairer way to do this. One that doesn’t jump up and surprise your newer residents.

    Thanks again for being involved!

    Joel | Dec 5, 2012 | New Comment
  7. Damn, we have a cool mayor.

    Hot Shot | Dec 5, 2012 | New Comment
  8. Dude.

    Don. Ness.

    johnjaundice | Dec 5, 2012 | New Comment
  9. Joel, you’re right -- it would be best if all property were accurately assessed, for the sake of fairness. Unfortunately, that’s not an easy task -- we could hire more assessors, but that would raise your property taxes.

    Normally there is not this drastic of a change -- since most property have taxable value somewhere in the 80-100% of market value. If a property has not been sold lately -- it is a very subjective undertaking. Only when a property is sold do we see what the actual market value is.

    Again, feel free to contact my office any time.

    Don Ness | Dec 6, 2012 | New Comment
  10. I do know that our property taxes went up as well, because we have a double lot (one with a house, one with not). Lots without a building on them went up a much higher percentage than lots with buildings. So that probably explains the increase on two of your lots. However, 922% still seems like a big increase -- you should check on that.

    BadCat! | Dec 6, 2012 | New Comment
  11. 922 percent does sound like a lot but if my math is correct, for the tax to increase $752.26 the tax before was only $81.57 … a year … for two lots.

    The assessed value is available when purchasing a lot. If you purchase property for any amount considerably over the assessed value you have to assume the City will eventually catch up with you.

    I speak from experience. Due to a visit from the assessor’s office my 2012 property taxes increased 125 percent which equates to a $1,485 increase and a total bill of $2,655. Not complaining … in fact I feel guilty it took them as long as it did to reassess the property.

    I did question the new value they assigned to the house and I contacted the assessor’s office. The assessor was very understanding and provided an explanation for how he determined the value including addresses for the comparable properties he used.

    jsmith14 | Dec 7, 2012 | New Comment
  12. Thank you for pointing that initial figure out, JSmith14.

    rhetoricguy@gmail.com | Dec 8, 2012 | New Comment

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