M
inneapolis' property tax landscape is undergoing a seismic shift, with commercial values plummeting and residential values rising. The city's total property value dropped 1% this year, marking the second consecutive decline, according to City Assessor Rebecca Malmquist. This trend has significant implications for homeowners, who will bear an increasingly larger share of the tax burden.
The new assessments, mailed out earlier this month, signal a shift in the tax burden towards residential properties. Commercial property values, particularly in downtown Minneapolis, have fallen 9.5% from last year, with office buildings in the urban core experiencing a staggering 22% decline. In contrast, residential values have grown 2.6%, driven by single-family homes, duplexes, and triplexes.
This shift is partly due to the rise of remote work and a turbulent housing market, which has led to increased demand for residential properties. As a result, homeowners across the metro are facing a double whammy: a shifting tax burden and increasing levies. Unlike many communities, Minneapolis lacks growth that could cushion these impacts, setting the stage for potentially difficult budget conversations in the coming months.
Under the new assessments, commercial and industrial properties make up 16% of Minneapolis' total value but comprise nearly 27% of the city's tax capacity due to their higher tax rate. Homeowners now shoulder more than 53% of the city's tax capacity, a 6% increase since 2020. Apartments account for the remaining 20% of the tax capacity.
The city's levy for 2025 was 6.8% higher than in 2024, driven by factors such as inflation, the end of federal pandemic aid, and mandated police reforms. Assessors like Malmquist act as historians, looking back at property sales and other data to estimate values. While they're hearing optimism from market players, it's not reflected in the latest assessments, which are based on sales that occurred between October 2023 and September 2024.
Property owners who disagree with their assessments can appeal them through a process that involves contacting the assessor listed on their valuation notice, resolving issues through conversation, or appealing to the Local Board of Appeal and Equalization or state tax court.
