In a recent case, Lindholm-Nelson v. Crow Wing County1, a dispute arose over the assessed value of a vacant land property with lake frontage on Cross Lake in Crow Wing County, Minnesota. The property is surrounded by government-owned land to the west, northwest, and the north. Public access to the land is only available from the lake. The petitioner contended that the county assessor’s valuation method was flawed, leading to an overestimation of the property’s true market value for the assessment years 2021 and 2022.
The court’s analysis delved into the statutory framework governing property valuation for tax purposes in Minnesota. According to Minnesota law, all properties must be assessed at their market value, defined as the typical selling price at the time and location of assessment. The assessment process must consider all factors that influence the property’s market value.
At the heart of the disagreement was the concept of highest-and-best-use. Appraisers are required to factor in the property’s highest-and-best-use when determining its market value. This involves identifying the most profitable use of the property while considering legal constraints, physical limitations, financial feasibility, and maximum productivity.
The petitioner, who also owned an adjacent improved parcel to the north, argued for a valuation method that assessed the subject property in isolation, excluding any potential combined value with the northern parcel. In contrast, the county advocated for valuing both parcels together, emphasizing their historical use and interconnected benefits. The court agreed with the county and affirmed the assessor’s estimated market value for 2021 and 2022, reasoning that “Minnesota courts have long recognized that a subject parcel’s practical relationship with other parcels can affect the subject’s market value.”2
This case highlights the intricacies of valuation for property tax assessment purposes in Minnesota. A thorough application of highest-and-best-use appraisal principles identifying the limited marketability of the subject may have resulted in a favorable outcome for the petitioner.
Our local experts have extensive experience in navigating Minnesota’s property tax system. We can provide valuable insights into exemptions, classifications, property valuation challenges, and various strategies to reduce your tax obligations.
1 Lindholm-Nelson v. Cnty. of Crow Wing, No. 18-CV-21-1458, 2024 WL 481476 (Minn. Tax Feb. 5, 2024).
2 Id.
TECHNICAL INFORMATION CONTACTS:
Alan Heichman
Principal
Ryan
312.980.1129
alan.heichman@ryan.com
Lane Thor
Director
Ryan
763.445.4200
lane.thor@ryan.com
The material presented in this communication is intended to provide general information only and should solely be seen as broad guidance and not directed to the particular facts or circumstances of any individual who may read this publication. No liability is accepted for acts or omissions taken in reliance upon the content of this piece. Before taking (or not taking) any action, readers should seek professional advice specific to their situation from Ryan, LLC or other tax professionals. For additional information about this topic, please contact us at info@ryan.com.