Opinion ID: 1829637
Heading Depth: 2
Heading Rank: 3

Heading: Department of Revenue Sales Ratio Study

Text: Next, the county argues that the tax court applied a sales ratio figure for 1996 that was not adjusted for time, as required under Minn.Stat. § 278.05, subd. 4(b) (2000). Therefore, the county argues, the court erroneously adjusted the value of the subject property. The county does not challenge the sales ratio study for the 1997 assessment. A sales ratio compares the sale prices of recently sold properties with the assessed value given those properties for tax purposes. Minn.Stat. § 270.12, subd. 2 (2000). The ratio is designed to measure how close assessments are to market value and to measure the inequality of assessment practices. Id. The Department of Revenue (DOR) conducts a sales ratio study that may be used as the basis to reduce property value under certain conditions. Id.; Minn.Stat. § 278.05, subd. 4 (2000). The tax court may grant a reduction in property value if (a) the study's sales prices are adjusted for the terms of the sale to reflect market value, (b) the sales prices are adjusted to reflect the difference between the date of sale and the date of assessment, (c) there is an adequate sample size and (d) the median ratio of sale price to assessed value of property of the same classification in the same tax district is lower than 90 percent. Minn.Stat. § 278.05, subd. 4. In this case, the court determined that the subject property met the criteria for a reduction since the study included 51 sales in Wayzata and the median ratio was 87.2 percent for 1996. The tax court interpreted the statute to not require a time adjustment if the DOR does not report one. When the county claimed that the tax court applied a sales ratio figure that was not adjusted for time, the court agreed to hear testimony from a DOR senior research analyst supervisor. The analyst testified that, at a 95-percent confidence level, the DOR did not find a statistically significant rate of inflation. The analyst did acknowledge that, at an 88 percent confidence level, the department found between 3½ and 4 percent inflation. The analyst did not recall using a confidence level of less than 90 percent when assessing inflation, however. In essence, the analyst's testimony supports the conclusion that there was no significant difference in the date of sale compared to the assessment date. Minn.Stat. § 278.05, subd. 4. As such, the evidence reasonably supports the tax court's conclusion that a time adjustment to a sales ratio study was not appropriate where the DOR reported no statistically significant rate of inflation during the study period. The court explained its findings for each element necessary for a reduction in property value, including the time adjustment, under Minn.Stat. § 278.05, subd. 4. Therefore, the court's decision to reduce the property value based on the sales ratio study was not clearly erroneous. See Marquette Bank, 589 N.W.2d at 305.