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County Blinks Over Duluth Tax Assessments

St. Louis County Assessor Dave Sipila and his team went big this year, jacking up the assessed market valuations on scores of mostly commercial properties in Duluth essentially overnight. But his numbers were so far over the top that the long-time county taxman touched off a backlash among businesses that prefer to maintain a low profile but decided to fight back instead.

Dave Sipila
St. Louis Co. Assessor

Here’s one example we wrote about that’s been designated as the “poster child”  for just how far off the mark the county tax assessors turned out to be.

The valuation of one building sold last year bears no resemblance to the price the recent buyer was willing to pay. The Board of Trade Building was purchased for $850,000, but just months later was assessed at $2.9 million for property taxes.

In fact, the county has so overpriced the market value of one of I.F. Salter’s properties that Hoff has offered to sell it to the county or city government for 50 percent of the newly assessed value. He’s not kidding either.

Since then, the tables have turned on Sipila even faster than his valuations shot up. The county was swamped with appeals to reevaluate the market value of more than 600 properties, prompting unprecedented backpedaling according to the Duluth News Tribune.

St. Louis County took over assessment duties for the city of Duluth five years ago, and County Commissioner Frank Jewell said the uproar to proposed property values in Duluth’s downtown commercial district is completely understandable.

“The thing that I think that all of us in leadership are clear about is that a mistake was made. I’m not blaming any of our assessors, but this was a mistake that was blatantly obvious. It had to be fixed, and it had to be fixed fast. So that’s what we’re doing,” Jewell said.

But there’s a catch. The city staff reviewing appeals doesn’t have much leeway to adjust the millions of dollars in over assessments that bear little relationship to actual market prices.

The city’s Board of Appeal and Equalization has authority to make adjustments to a limited extent — up to 1 percent of the city’s total property value.

The scope of the overall adjustments to be made is still coming into focus, yet Sipila said: “It’s probably in the vicinity of $50 million, but that is less than 1 percent of the total value of the city, which is essentially $6.5 billion.”

Property owners also have the right to follow up with the county assessors who now admit they blew it.

“So after that occurred, like we always do, we did research. We double-checked our numbers and we determined that we were off the mark,” she [Mary Garness, St. Louis County public records and property valuation director] said.

“So we immediately started reviewing and determining where changes needed to be made, and that’s what we’ve been working hard to do up until this point,” Garness said.

When the process wraps up, someone needs to assess the assessors–and whoever else might have been involved. It seems unlikely county assessors decided to go rogue and escalate tax valuations so drastically on their own. While they’re at it, how about an apology to commercial property owners and others who’ve been subjected to this nightmare? And a pledge not to let it happen again.

“We’re in the process of reviewing our organizational structure, staffing levels and quality control measures. So we’re doing a number of things,” Garness said.

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