January 20, 2016 Dave Kubik, Dubuque County Assessor and Rick Engelken, Dubuque City Assessor

What changed since last year? A shorter answer would be “What didn’t change?” 2015 was a re-assessment year and as such, Residential, Commercial, and Agricultural parcels were subject to across the board value changes.

Tax Cycle Timing 1/1/2015 Assessed value established (The market value as estimated by the assessor. Agricultural land and outbuildings are based on a productivity value) October 1, 2015 – Iowa Department of Revenue issues equalization order for those classification outside of the 5% tolerance October 23, 2015 – rollback established for each classification Rollback is applied and Taxable Values are now known 7/1/2015 through 6/30/2016 – ownership and accrual period Jan-Feb-March of 2016– Budget hearings determine revenue needs Revenue needs will determine the levy rate July - August 2016 – tax bills are calculated and mailed to owners Tax bills are due in Sept 2016 and March 2017

Residential parcels (and agricultural dwellings) The market value of homes increased over the prior assessment and we were outside the 5% tolerance allowed under Iowa law, therefore some revaluation was required. Inside Dubuque the assessment level was 94.6%. Assessed values were increased by an average of 1.5% to bring the assessments within state requirements. Building values were increased between zero and 5%. The amount of change was based upon the sales that occurred in that area of the city. Outside Dubuque the assessment level was 91%. Assessed values were increased around 5%. Properties were revalued using our appraisal software (and not an across the board equal increase), so some parcels saw increases larger than 5% and some saw increases less than 5%. The area of the county and the age of the home were primary factors in the amount of change. This year, Residential parcels will receive a 55.62% rollback factor. Last year the rollback was 55.73%. This relatively unchanged factor indicates a 3% growth statewide in residential assessed values.

Agricultural parcels - (Based upon a productivity value – 2009 through 2013 crop years) There were wide swings in assessed value from county to county, but on a statewide average, the value stayed almost unchanged. Among the 99 counties in Iowa, Dubuque County had the highest increase in productivity value from the prior calculations. We also implemented the new IDR required land use adjustments. The new method typically increased the assessed value of non-crop areas higher than our previous in-house method. We also moved from using CSR points to CSR2 points, which affected some parcels more than others. Inside Dubuque, we were able to “marry” the Dubuque County and Dubuque City jurisdictions in the productivity calculations. Prior to this year, these separate calculations caused ag parcels inside Dubuque to be valued 10% higher than ag parcels outside Dubuque. Now they are valued the same. Outside Dubuque, assessed land values increased by 8%, and assessed building values decreased by 16%. The rollback factor on Agricultural parcels will go to 46.10% (from 44.70%). This increase in the rollback in conjunction with the assessed value changes above will cause taxable land values to be higher.

Multi-Residential parcels – (a new classification) Consists of apartment buildings, manufactured home parks, and nursing homes properties. Also includes areas in commercial buildings used for apartments (typically the second floor of a downtown retail building.) Last year these were part of the commercial classification and received the 90% rollback factor. The 10% reduction in the rollback from previous years was reimbursed by the state. This year, Multi-Residential parcels will receive a 86.25% rollback factor. The state is not reimbursing this rollback. Effectively this amounts to a 13.75% reduction in the taxable value of this property between this year and last year. The rollback will continue to go down 3.75% each year until it is the same as the Residential classification. There was no widespread assessed values changes on this class of property. (Any value changes are most like due to structural changes to a property)

Industrial parcels and Railroad property On industrial parcels, there were no widespread assessed value changes, only parcel specific changes. Like last year, the rollback factor remains at 90%, with the state reimbursing the difference between the 90% and the historical 100% factor. We have been hearing rumblings from the statehouse about the cost to the state of the rollback reimbursement. There will most likely be discussion about scaling back the amount of the rollback reimbursement to local government in this year’s legislative session. Recent reports state that 2016 state revenue will be 4% higher vs estimated 6% increase

Commercial parcels In prior years, this classification included apartments, nursing homes, manufactured home parks which are now part of the Multi-Residential classification. Like last year, the rollback factor remains at 90%, with the state reimbursing the difference between the 90% and the historical 100% factor. The reimbursement discussion for this classification is the same as Industrial which was covered on the previous slide. Inside Dubuque, this classification saw a 12% increase in assessed value. (Due to an Equalization Order issued by the Department of Revenue.) Outside Dubuque, there were no widespread changes, only parcel specific changes.

Commercial and Industrial - BPTC The Business Property Tax Credit (BPTC) was set up to tax the beginning amounts of commercial/industrial value the same as residential property. For the 2013 assessment the value amount was near $60,000. For the 2014 assessment the value amount was near $184, % increase in covered value even though the funding went up only 200%. The BPTC has been larger than original thought. It was estimated to be worth near $1,000, last year in Dubuque it was worth over $2,000 Funding for the BPTC will increase from $100 million to $125 million for the 2015 assessment year. We expect this credit to go up well more than the 25% increase in funding due to factors used in calculating it.

Assessed Value added for 2015 due to new construction (Partially Exempt and properties in TIF Districts are included) 2012 Net Change = 100,631, Net Change = 123,180, Net Change = 90,594, net change = 98,427,173 Dubuque CityOther CitiesRural Agricultural002,399,650 Ag Dwellings64,430170,6703,768,760 Residential 20,723,22025,023,59518,106,171 Multi-Res88,723464,84045,970 Commercial17,466,5642,312,1402,262,560 Industrial2,549,400 2,806, ,720

2015 Overall Assessed Value Changes… Agricultural - Dubuque City: -11% Agricultural – Rest of the County: +6.2% Residential - Dubuque City: +2.3% Residential – Rest of the County: +6.6% Multi-Residential – nothing to report as there was no 2014 year to compare to. Commercial - Dubuque City: -0.9% ($ 181 million moved to Multi-Res) Commercial – Rest of the County: -11% ($ 34 million moved to Multi-Res) Industrial – Dubuque City: +3.98% Industrial – Rest of the County: +2.0%

4 Year review of taxable value changes 2012: billion 2013:4.564 billion+4.9% 2014:4.619 billion+1.2% 2015:4.875 billion+5.5%

How much is re-directed to TIF? 2012: billion 428 million 2013: billion 496 million+15.9% 2014: billion 475 million-4.2% 2015: billion 519 million+9.3%

Looking forward.. What to expect for real estate changes… Agricultural land and outbuildings are assessed on a productivity approach and are not directly tied to market value changes (increases or decreases). The 2017 assessment will remove the 2009 and 2010 crop year and add in 2014 and 2015 crop years. It is too early to predict what these changes will make.

Looking forward.. What to expect for real estate changes… As a whole, residential market values have continued to gain strength between 2014 and The Dubuque area MLS reports that the number of homes sold in 2015 has increased by 6% from the previous year (from 1,161 to 1,232). Currently the average sale price is running around 6% more than the assessed value in both the city and the rest of the county. For the 2016 assessments, no widespread changes to residential assessed values will be made, but 2017 assessed values will mostly like need to be changed to keep assessments within the 5% tolerance.

Looking forward.. What to expect for real estate changes… Inside Dubuque the number of commercial sales has increased. The average commercial property sale is selling for 3% more than the assessed value. Outside Dubuque is a much more clouded picture. There were 7 commercial sales in They show a 75% assessment level and a 33% increase in assessed values is needed. We don’t believe that these limited number of sales properly represents the assessment level and we are continuing to push the Iowa Department of Revenue for better ways to measure assessment levels. We would ask for your support as we pursue better methods of measuring our assessment level with the IDR. Without changes, large increases in assessed value loom on the horizon.

Questions??