Big construction projects fuel Winona's growth


(4/13/2021)

By ZACH KAYSER

 

It’s a hot time in town tonight: Construction values for property in Winona nearly doubled over last year, reaching $34.6 million.

Winona County Assessor Steve Hacken presented the news to the City Council on April 5. Hacken also announced he is retiring as of April 30 after 23 years as assessor in Winona County.

Total new construction value accounted for an 176-percent increase over last year, more than $22 million over last year, which Hacken said was due mostly to a handful of properties: the Kmart being converted to Gundersen Health System Winona Campus, the first phase of Main Square, and Bluff View Estates on Mankato Avenue. However, subsequent phases of Main Square, as well as the new Fastenal office building will not hit the tax rolls until later, Hacken said. 

Although the spike in construction value may not last long term, it still means that for the moment, things are looking good for the city, Lucy McMartin said Thursday. “It’s great for the city, county and school [district],” she said. 

As to the reasons behind the uptick, McMartin pointed to two things: the initiative of private developers, and a variety of efforts by the city to make the downtown area more appealing to those developers. “They must have a comfort level with their investment,” she said. “So, hopefully we’re doing the right things here to help promote development.”

Specifically, McMartin mentioned Opportunity Winona, a project the Port Authority began several years ago to make downtown more amenable. For example, the city has invested in the gateway to Levee Park, and aims to invest in a riverfront trail, she said. 

Sharing tentative figures with the Post, Hacken said county-wide, another $49 million in new construction will go on the tax rolls in 2022. The city of Winona’s share of that is $25 million, a decline from the record numbers posted this year. While the bulk of the new Fastenal office building will go on the tax rolls in 2023 and help boost new construction values, Hacken was skeptical that the numbers will keep going up in the future, describing some of Winona’s big projects as once-in-a-decade-or-longer developments.

 

The housing games

The vast majority of the city’s tax base, more than 65 percent, is composed of residential property. Residential value went up by more than $52 million, the largest gross growth out of any sector. Hacken noted an extreme lack of supply in the housing market: a normal year might see some 200 houses in the 55987 zip code up for sale at any given time, he said. But now? “As of last Friday, I believe there were 16 active listings of houses,” Hacken said. 

What’s more, there was no foreseeable reason why the market would relax in the future, he said. “My successor is going to have to figure this out, but I see nothing that’s going to cause houses to not continue to go up in value,” Hacken said. Basement-low interest rates combined with that high demand were behind the trend, he said. 

Public utility value has actually gone down, more than $6 million, which represents about a 25 percent reduction. Hacken explained that last year, the Minnesota Department of Revenue changed an administrative rule, saying that the city utility distribution lines such as water are not taxable by the city itself, but rather their value goes to the school district and the county. 

Hacken said that the city could have waited a year to implement it, but did it for this year since he’s retiring. 

“It’s plenty, but for a city like Winona, it’s not the worst thing,” Hacken said. 

For taxes payable in 2021, the overall tax base in the city of Winona has gone up just under a million dollars, or 4.64 percent, compared to 2020. The total tax base is now $22,363,222. However, as of 2021 the total market value of property in the city is just under two billion dollars — that’s “billion”, with a “B.”

So council member Steve Young was curious — why the big disparity between the value of property within city limits, and the amount that property is taxed?

“The taxable value that’s listed on a property tax statement seems — in my opinion — to be significantly less than what the market would bear if you were to sell that property,” Young told Hacken. “Do we just typically do that? Do we do that to prevent arguing on valuations?”

The gap is due to several factors, Hacken replied — first, the numbers assessors use as taxable value lag behind the valuation of the actual property. 

“By the time you see your value, the data we use is already a year old,” Hacken said. 

Then there is the Homestead Exclusion — one of many tax breaks offered to Minnesota property owners. Hacken said 40 percent of the property’s value is excluded to $76,000. 

Then, there is the simple fact that assessors rely on mass appraisal, where they don’t necessarily inspect each and every house they’re assessing. In some cases, county staff have never actually been inside the house. 

Hacken related one anecdote where a Winona County homeowner kept insisting the county was over-valuing his home, which looked ritzy based on the exterior. However, when the county finally sent someone inside the house to do an inspection, she was nearly overwhelmed with the smell of pet urine, Hacken said. 

“We would have never been aware of that if we hadn’t walked in the house,” he said. “So, sometimes we know, sometimes we don’t. But, big-picture wise, we do really well.”

Local@winonapost.com

 

Post Editor Chris Rogers contributed to this story. 

 

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