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INTRODUCTION: This report was prepared to inform the Board of Review and the citizens of Ramsey on how the 1990 assessment was prepared. The total assessed value for the City of Ramsey from the 1989 assessmenl to the 1990 assessment increased a total of 8% from the value of Three Hundred Thirteen Million Six Hundred Sixteen Thousand One Hundred Dollars ($313,616,100.00) in 1989 to Three Hundred Thirty-eight Million Two Hundred Eighly-eight Thousand Four Hundred Dollars ($338,288,400.00) in 1990. This is a substantial increase and was due to several rr .... :",~'s. The first factor would be the new construction in lhe City of Ramsey which is comprised of approximately 125 new housing starts. Another cause is the increase in land value or inflation in the City of Ramsey during that period. The third reason would be stricter County and State requirements for sales ratio studies over that period. The fourlh and final reason would be the previously improper assessment zoning of the various neighborhoods throughout the City of Ramsey. The objective of this report is to discuss what was done in the 1990 assessment, when it was done and why it was done. By first identifying the problems with the 1990 assessment ant then applying a solution to those problems and when the solution was applied in 1990, we can arrive at an understanding of how the 1990 assessment was prepared, why it was prepared the way it was and what the future may hold for future assessments. IDENTIFYING THE PROBLEM: The first step in an assessment is to determine whether or not a problem exists with the previous assessment. How assessors identify that there is a problem is by the use of "sales Ratio Studies". A sales ratio study is simply a comparison of actual sales versus the assessors market value. The sales ratio study funciions as the assessor's yard stick in evaluation what is being done right, what is being done wrong and what reappraisal aclivity is necessary. The ratio is the result of division. In the sales ratio analysis, the numerator is the amount in dollars for the which the sale property is assessed. The denominator is the selling price of the property. (Assessed value + selling price = the ratio). For example: A property has sold for $75,000.00 and the assessor has an assessed value on the property of $65,000.00, by applying the formula above we have $65,000.00 + $75,000.00 = .87. What this means is that the sales ratio is 87% or 87% of the actual sale price of the property. A point worth noting is that the requirement from the State of Minnesota for such ratio studies is that State law specifies that an assessed value should be as close to 100% of market value as possible. In the 1990 assessment, this standard was set at 95% of market value. In other words, the sales ratio should be .95. Therefore, the sale described above would be unacceptable and require an adjustment of 8% for the assessed value. ASSESSED VALUE = RATIO SELLING PRICE $65.000 = .87 OR 87% $75,000 2