Minnesota Legislature
Office of the Revisor of Statutes
Minnesota Administrative Rules
8106.0800 EQUALIZATION.
Subpart 1.
In general.
After the apportionment of value referred to in part 8106.0700 has been made, the railroad property values must be equalized to coincide with the assessment levels of commercial and industrial property within each respective county receiving a share of the apportioned railroad value. This equalization will be accomplished through the use of an assessment/sales ratio.
Subp. 2.
Assessment/sales ratio computation.
A comprehensive assessment/sales ratio study compiled annually by the sales ratio section of the Property Tax Division of the Department of Revenue commonly known as the State Board of Equalization Sales/Ratio Study will be used in this computation. The portions of this study which will be used for purposes of this section are known as the "County Commercial and Industrial Sales Ratio."
This commercial and industrial (C & I) sales ratio is computed through an analysis of the certificates of real estate value filed by the buyers or sellers of commercial or industrial property within each county. The information contained on these certificates of real estate value is compiled pursuant to requests, standards, and methods set forth by the Minnesota Department of Revenue acting upon recommendations of the Minnesota legislature. The most recent C & I study available will be used for purposes of this section.
The median C & I sales ratio from the County Commercial and Industrial Sales Ratio study will be used as a basis to estimate the current year C & I median ratio for each county.
The process used to estimate this current year median ratio will be as follows.
The current estimated market value of commercial and industrial property within each county will be taken from the information reported to the commissioner under Minnesota Statutes, section 270C.85, subdivision 2, clause (4). The amount of the value of new commercial and industrial construction, ("new" meaning since the last assessment period) as well as the value of commercial and industrial property which has changed classification (i.e. commercial to tax exempt property) will also be taken from the information reported to the commissioner under Minnesota Statutes, section 270C.85, subdivision 2, clause (4). The value of new construction will then be deducted from the estimated market value, resulting in a net estimated current year market value for commercial and industrial property within the county. The value of commercial and industrial property which has changed classification will be deducted from the previous years estimated market value to arrive at a net estimated previous year market value for commercial and industrial property within the county. The net current year value will be compared to the net previous year's estimated market value for commercial and industrial property within the county and the difference between the two values noted. This difference will be divided by the previous year's net estimated market value for commercial and industrial property to find the percentage of increase, or decrease, in assessment level for each year. This percent of change will be applied to the most recent C & I median ratio to estimate the current year's C & I median ratio. An example of this calculation for a typical county is shown below.
| Current Year Estimated Market Value for Commercial and Industrial Property | $12,000,000 | |
| Less: New Construction | 1,500,000 | |
| _ | ||
| Current Year Net Estimated Market Value for Commercial and Industrial Property | 10,500,000 | |
| Previous Year Estimated Market Value for Commercial and Industrial Property | 10,250,000 | |
| Less: Classification Changes | 250,000 | |
| _ | ||
| Previous Year Net Estimated Market Value for Commercial and Industrial Property | 10,000,000 | |
| _ | ||
| Difference Previous Year vs. Current Year Estimated Market Value | 500,000 | |
| Percent of Change (500,000 ÷ 10,000,000) | 5% | |
| Previous Year Median Commercial and Industrial Ratio | 88% | |
| Current Year Estimated Median Commercial and Industrial Ratio (88% x 105%) | 92.4% |
This same calculation is performed for each Minnesota county which contains operating railroad property. If there are five or fewer valid sales of commercial and industrial property within a county during the study period, these few sales are insufficient to form the basis for a meaningful C & I ratio. Therefore, the median assessment/sales ratio to be used for purposes of the above computation will not be the median C & I ratio but will be the weighted median ratio of all property classes within the county for which a sales ratio is available. This weighted median ratio is computed in the same manner using the same procedures and standards as the C & I ratio. In addition, the computation described above will not be performed using the commercial and industrial estimated market value but will use the estimated market value for all property within the county. All other aspects of the calculations are identical except for this substitution.
The weighted median ratio is developed by multiplying the median ratio for each class of property (agricultural, residential, recreational, commercial) by the percentage of value that class of property comprises of the total county value. An example of this calculation is as follows:
| Class of Property | Amount of Value | Percent of Value | Median Ratio | Weighted Median Ratio |
| Residential | $ 20,000,000 | 20% | 85% | 17.00% |
| Agricultural | 55,000,000 | 55% | 95% | 52.25% |
| Seasonal - Recreational | 5,000,000 | 5% | 90% | 4.50% |
| Commercial - Industrial | 20,000,000 | 20% | 85% | 17.00% |
| Total | $100,000,000 | 100% | 90.75% |
Subp. 3.
Application of the estimated current year median assessment/sales ratio.
After the estimated current year median ratio has been calculated pursuant to subpart 2, it is used to adjust the apportioned estimated market value of operating railroad property to the apparent assessment level of commercial and industrial property in each county. This is done by multiplying the estimated market value of the railroad property by the estimated sales ratio to arrive at the equalized market value of operating railroad property. In no instance will any adjustment be made if, after comparing the estimated current year sales ratio to the assessment level of operating railroad property, the difference between the two is five percent or less. An example of this adjustment is as follows:
| Estimated Market Value of Railroad Operating Property* | Estimated Current Year Median Sales Ratio | Equalized Estimated Market Value of Railroad Operating Property | |
| County A | $ 100,000 | 85% | $ 85,000 |
| County B | 250,000 | 88% | 220,000 |
| County C | 300,000 | 90% | 270,000 |
| County D | 150,000 | 92% | 138,000 |
| County E | 100,000 | 95% | 100,000** |
* For purposes of this example, assume that railroad property is assessed at 100 percent of market value.
** No adjustment made because estimated current year median sales ratio is within five percent of assessment level on operating railroad property.
All railroads operating within a particular county will be equalized at the same percentage.
These equalized estimated market values of operating railroad property will be certified to the county assessor denoting specific railroads and taxing districts pursuant to Minnesota Statutes, section 270.87.
History:
11 SR 335; 28 SR 1297; L 2005 c 151 art 1 s 114; 44 SR 957
Published Electronically:
March 10, 2020
Official Publication of the State of Minnesota
Revisor of Statutes