The following was written by Eden Prairie Mayor Ron Case. It originally appeared earlier today, March 24, on the city’s website.
Earlier this month, Eden Prairie homeowners began receiving their 2022 valuation notices, which include the assessed values of their properties as determined by the yearly assessment process.
As noted in a recent communication from the City, the valuation notices for most homeowners indicated significant increases in home values over the past year.
I am writing today to clarify the parameters around the assessment process, to note how the value increases are not tied to the City’s budget, and to outline how annual property taxes are determined.
State law requires cities to assess all properties to fall within 90% to 105% of the actual amounts homes would sell for on the open market.
As local and national media have highlighted, the real estate market is extremely hot. Home prices nationally are up close to 20%, statewide prices are up approximately 15%, and Twin Cities suburban homes in our region are up in the high teens. It is for this reason that assessed home values went up so considerably this past year.
Though the value increases may be startling for homeowners, it is important to realize the City’s overall budget and the percentage of the budget which is funded by property taxes does not increase as values increase.
The City’s budget is based solely on the needs of the community; it is not based on the value of property. In other words, if the value of all Eden Prairie properties suddenly doubled, but the City’s budget did not increase, homeowners’ taxes would stay exactly the same, even as their homes would be worth twice what they are today.
Though annual property taxes are determined by several factors, the strongest driver of City-related property tax increases is City Council-directed budget increases which drive the tax levy, or the total amount of taxes collected from across the City’s tax base. Here in Eden Prairie, our typical annual budget increases for municipal services over the last several years have consistently been around 3% to 4%.
This rate is significantly lower than many of our surrounding cities, and it indicates a very healthy government and financially sound community.
Eden Prairie home prices and subsequent assessed values have risen because demand is exceeding supply.
Our reputation as a high-quality community with well-maintained parks, schools and infrastructure, along with a phenomenal record of public safety is a credit to decades of City Council decisions reflecting the will of our residents. Rising home values is a good thing! It means our assets are worth more and validates we are on the right track as a community.