The housing market has boomed for years in Sioux Falls and prices have gone up, up, up. But in at least one county, the assessed value of homes for tax purposes didn’t climb the way the market did.
Lincoln County has been taking steps to rectify that, but it’s causing some homeowners to have sticker shock when it comes to the tax implications. We look into how the assessed value of some property in Lincoln County has risen as much as 90 percent in just one year.
“My assessment was $100,000 a year more than I paid for my house, which was two years, about two years ago,” homeowner Craig Okken said.
A group of neighbors lives in Emerald Acres in southern Sioux Falls, just north of 69th Street and west of Minnesota Avenue.
“This is a unique neighborhood. We can’t deny that. We have very large lots and the houses are very diverse,” Okken said.
But these homeowners are taking issue with the large jump in the assessed value of their homes in just a one-year period.
“Most people in our neighborhood. I saw myself 60 percent. I know Craig, I know you saw 70 percent. Ron, yours went up almost 80 percent, almost double? 90,” homeowner Rich Siegmann said.
Ron Dahl says his assessment rose by 90 percent. By state law, county property assessments are supposed to be at market value–or at the price the home could sell. But in Lincoln County, there has always been a gap between the assessment for taxes and what the house could get on the market.
“They told us the last four to five years, they didn’t do nothing. And I said, ‘So we have got to make up for your error. You didn’t do your job and now we have to pay the price for it?’ And I don’t think that’s fair,” Dahl said.
Angela Kennecke: Why was there that gap?
Lincoln County Director of Equalization Karla Goossen: The only consistent thing I can say, the reason the gap existed is because Lincoln County has been the fastest growing county in the state for a decade or more.
Lincoln County began reassessing homes starting with Tea in 2015. Those assessments are ongoing and most owners are seeing an increase in the value of their property.
“12 percent was an average for Lincoln County. But we had very unique areas that saw a much larger increase. Some of those areas had been untouched by anybody for more than a decade,” Goossen said.
But Siegmann says in the case of his home that wasn’t the case. Siegmann spent seven years remodeling his Emerald Acres house and the county reassessed his home after each project was complete.
“So I assumed that every year we’re going to get an increase,” Siegmann said.
Over that seven-year remodeling period, Siegmann’s taxes nearly doubled. But now in just one year, the assessed value of his home has risen by another 60 percent. There is no cap in South Dakota for the percentage your home’s assessment can rise in one year.
“I don’t know what fair and what’s not fair. It just seems the rules have changed now and this is what it’s going to be,” Siegmann said.
Remember the neighbor whose home valuation went up by $100,000 more than he paid for it a couple of years ago? While Okken bought the home in a private sale, the county told him that was the market value.
“We definitely didn’t get it at a bargain basement price or anything. It was a fair sale with the buyer and I do think it was assessed more than what we could sell it for,” Okken said.
The neighbors claim that the assessments are unfair even within Emerald Acres.
“Here’s my lot sitting with a storm sewer behind me, and there’s another lot down the road sitting on a golf course on the green, on the signature course. And they’re paying less tax per square foot than I am. And that’s not right,” Dahl said.
“Our values are fair and they’re treated equally. So whether we got in or didn’t get in or who you were–we’re unbiased. We’re just looking at the data we need to collect to come up with the value,” Goossen said.
“I think the county is definitely at the advantage. They have the advantage to assess what they want to to get what they need and the homeowner does not have a lot of leverage to fight against it,” Okken said.
But how does the assessment translate into their property tax bill? That’s not as simple of a question as it sounds.
Kennecke: Are his taxes going to go up by that same percentage, 65 percent?
Lincoln County Auditor Marlene Sweeter: Probably not by that same percentage. But they’re going to go up.
Sweeter says she won’t have all the numbers to figure out the formula for 2020 taxes until October.
“It depends on where you live. It depends on what school district you’re in. It depends on if you’re in a municipality or a township. Depends on a lot of things,” Sweeter said.
In the meantime, these homeowners are bracing for sticker shock when it comes time to pay their taxes.
“To have your taxes double within such a short time frame, in a year–it makes you consider moving,” Siegmann said.
Some of the homeowners we spoke with did appeal and were able to get a reduction in their assessment, but still stay it rose too much.
There are ten appraisers currently still out in the field assessing properties for the next two years. Then they start the entire process all over again.