Department of Revenue review finds counties generally use sales-comparison approach to value lakeshore and shoreline acreage

The Senate Taxes Committee received a Department of Revenue review of county assessment methods for lakeshore and shoreline acreage on Jan. 16.

Property Tax Director Sean Kloxien (Department of Revenue) said the 2023 law directed the department to report how assessors value shoreline and lakeshore acres on DNR-administered and county-administered natural resources lands. Kloxien told members counties overwhelmingly reported using the sales-comparison approach, and that lakeshore parcels were commonly measured and compared on a price-per-front-foot basis or a combination of site value plus front-foot adjustments.

Kloxien cautioned the committee about interpreting statewide summary figures because the dataset includes heterogenous parcel sizes: two parcels can have the same reported shoreline feet but vastly different total acreages, which introduces ‘‘noise’’ into statewide averages. He reported the department’s appendix shows about 9.64 times as many non-lakeshore acres as lakeshore acres in the commissioner- and county-administered inventory, while the non-lakeshore acreage’s total appraised value is roughly 3.94 times the lakeshore total — suggesting assessors are making value adjustments for shoreline presence when they set exempt values.

Kloxien also explained administrative process details relevant to exempt-valuation timing: assessors revalue exempt natural-resources lands on a six‑year cycle (the last revaluation affecting the report was completed in 2022 and the next is scheduled for 2028), and counties may update values between reappraisals if they enter revised values in their mass-appraisal systems. The report noted that, as changed in 2023, certain exempt land classes are paid at specified per-acre amounts (for example, some classes currently receive $3 per acre; earlier the rate had been $2 per acre) and that changes to assessed-value rules will not take effect until the next reappraisal cycle is paid.

Senators pressed how resort properties and highest-and-best-use tests are handled; Kloxien reiterated assessors are expected to apply the highest-and-best-use analysis in appraisals and perform both vacant and improved tests where appropriate. Committee members expressed concern that rising valuations can pressure family-owned resorts to sell, a policy concern raised in committee discussion but not resolved at the hearing.

Ending: The committee accepted the review and asked staff to be available for follow-up; no formal action was taken.