Governor Dayton appointed Tamar N. Gronvall to the Minnesota Tax Court for a six-year term, which began in January 2017 and will expire on January 2, 2023.

Before her appointment to the Tax Court, Ms. Gronvall was General Counsel in the Office of Legal Services at the Minnesota Department of Commerce, where she led a team advising the agency in areas of consumer protection, banking, insurance, energy, insurance fraud, contracts, and employment law. She also was a Manager of Tax Litigation, Bankruptcy and Education Division of the Office of the Minnesota Attorney General.

Judge Gronvall has an extensive history in public service, government, commerce, litigation, and tax. Here are a few of Judge Gronvall’s initial rulings as a Tax Court Judge:

Macy’s Retail Holdings, Inc. (Downtown Minneapolis Parking Ramp)-Petitioner v. County of Hennepin-Respondent and InterPark Holdings, LLC-Intervenor, File Nos: 27-CV-13-6683, 27-CV-14-6579 (Minn. T.C. June 2, 2017)

Type of Decision: Evidence, Protective Order, Procedural

Summary: Macy’s objected to parts of the County’s appraisal that included third party non-public data through a Motion in Limine The parties stipulated to allow InterPark to intervene in Macy’s Motion in Limine for the purposes of protecting InterPark’s data that it had provided to the City of Minneapolis. The Court held a hearing on the issue and encouraged the parties to work to stipulate to a protective order to protect InterPark’s information. Macy’s and InterPark were able to agree and stipulate to the protective order terms, but the County did not agree. Macy’s and InterPark filed the proposed order and the County asked for direction from the Tax Court on how to object to the proposed protective order. The Court permitted the County to submit written objections.

Comment: Judge Gronvall encouraged the parties to work together to collaborate on a solution for the protective order and was willing to provide procedural guidance to the County.

University Court LLC v. County of Hennepin, File No: 27-CV-15-07947 (Minn. T.C. June 2, 2017)

Type of Decision: Discovery

Summary: The County served Interrogatories and Requests for Production of Documents and University Court did not respond within the required 30 days. The County requested to meet and confer with University Court. University Court asked for an extension, which the County allowed. When the extension expired the County asked again for discovery responses, but received no response from University Court. The County then filed a Motion to Compel. University Court filed no response and did not appear at the hearing. The County’s motion to compel was granted with expenses and attorney fees.

Comment: This is a straight forward failure by a party to comply with discovery and Judge Gronvall handled it according to the rules. Moral of the story, if you don’t respond you will probably lose.

Macy’s Retail Holdings, Inc. (Downtown Minneapolis Parking Ramp) v. County of Hennepin, File Nos: 27-CV-13-6683, 27-CV-14-6579 (Minn. T.C. June 19, 2017)

Type of Decision: Discovery

Summary: The County sought to compel discovery of information regarding offers to purchase or sell the property. The County’s Motion to Compel was granted. Although Macy’s had received multiple letters of intent or expressions of interest, it claims that because those documents either expressly or impliedly disclaimed contractual liability they did not constitute offers. The Court found that the County satisfied the procedural requirements to compel discovery, and that the the letters of intent were responsive to the County’s request for information on all offers. In other words, in this case letters of intent are offers. In addition, even though the purchase agreement was finalized after the close of discovery Macy’s was required to supplement its discovery responses.

Comment: Judge Gronvall followed the procedural rules for considering the motion to compel and concluded in the County’s favor that the letters of intent are offers, and discovery responses must be supplemented after the close of discovery even if the information was not created until after the close of discovery.

Macy’s Retail Holdings, Inc. (Downtown Minneapolis Parking Ramp)-Petitioner v. County of Hennepin-Respondent, and InterPark Holdings, LLC-Intervenor, File Nos: 27-CV-13-6683, 27-CV-14-6579 (Minn. T.C. July 28, 2017) 

Type of Decision: Evidence and Protective Order

Summary: Macy’s Motion in Limine to exclude portions of the County’s appraisal that included third party nonpublic data was denied. The expert reports were temporarily sealed and if InterPark alleges that the parties’ expert reports include proprietary or sensitive information it may file a motion to permanently seal the relevant portions. In short the County redacted nonpublic information in its discovery responses, but included the information in its appraisal. Macy’s objected on discovery grounds. The Court found that, among other things, Macy’s was not prejudiced, so its motion to exclude portions of the County’s appraisal was denied. The Court also protected InterPark’s third party information and provided an avenue for further protection for InterPark if any is needed.

Comment: Judge Gronvall decided this issue in favor of the County, but did place significant weight on the whether Macy’s was prejudiced by the failure to disclose in discovery, which Judge Gronvall found it was not. This is consistent with many decisions of the Tax Court to include evidence rather than exclude. In addition, Judge Gronvall’s willingness to protect third party information is a positive sign for taxpayers that provide information to assessor.

Final Thoughts

Judge Gronvall has shown in her early rulings that she follows discovery rules closely, has preferred to include more evidence rather than less, encourages parties to work together, and protects third parties. The decisions can be found here.


Nick Halter and The Minneapolis/St. Paul Business Journal have launched a new tool called Crane Watch (Business Journal Crane Watch) that tracks new developments of over $25 million in the Twin Cities. All of this new development presents the great question of what happens with the property taxes during a new development project?



In Minnesota, when a project is partially complete the market value on the assessment date is equal to the value of the completed project multiplied by the percentage complete. There are four primary considerations for forecasting the assessed value of partially complete project, they are: the as complete market value; the percentage complete; classification; and timing.

As Complete Market Value

Occasionally the value as complete is the same as the cost to build, but that is often not the case. All new developments will have an as complete forecast of value. If the forecast value as complete is the fee simple market value, then the as complete value is already estimated. If the as complete value is a leased fee value, such as in a build-to-suit scenario where the value will be based on the long-term lease in place that amortizes improvements, then the developer should run a fee simple market value to determine the market value as complete. The fee simple value will very likely be less than the leased fee value based on the build-to-suit demands of the end user, since the specific needs of that end user may be very different than what the market wants.  Certain build-to-suit improvements may be functionally obsolete upon completion such as a high tech fully automated manufacturing plant designed to manufacture a specific product. If no other user in the market can make use of those improvements then the building has functional obsolescence even though it is new, and the user of that build-to-suit building will be paying higher than market rent based on the amortization of the costs.

Percentage Complete

The tax court generally relies on the percentage of costs expended, but other considerations may be useful as well. For example, lets say a development is 50% complete in terms of dollars spent, but due to environmental, legal, or other external circumstances the time complete is only 33.33%, then an argument can be made that the percent complete is not limited to dollars spent alone.


Sometimes a new development will change the classification of a property as well. The Opus project pictured above, 365 Nicollet, was classified as commercial land at the beginning of the project and reclassified to apartment after construction began. Commercial land carries a tax rate close to 4%, while the apartment classification will be closer to 2%. Securing the correct classification early in a development like this will save additional money during the course of the development.


The timing for the taxes based on partial completion is often overlooked. Minnesota taxes in arrears, meaning that in any tax year the taxpayer is paying taxes on the value from the prior year. Lets say a development starts on January 1, 2017. On this day the building is leveled and the site is cleared. Then on January 2, 2017 the value should be based on the market value of the land only, because there are no improvements. The tax for the land only value is not due until 2018. Fast forward a year, the project is 75% complete on January 2, 2018. Now the value should be 75% of the as complete fee simple market value. The taxes on this partially completed project will be due in 2019. Finally, the project is completed sometime later in 2018, and because the project is fully complete by January 2, 2019 the taxes on the completed building will be due in 2020.

All together, a project started at the beginning of 2017 will not have taxes on the full market value until 2020. With tight construction budgets these partial value taxes can be a great benefit if monitored. In addition, the benefits of the partial value tax can be sold as a concession or bonus to early tenants because their 2019 taxes will not be based on the full market value.

Just like all property taxes, partially complete values for tax purposes can be negotiated informally or appealed.






Minnesota’s deadline to file an appeal for taxes payable in 2017 is April 30, 2017, which means it’s time for commercial property owners, tenants, managers, etc., to decide if a tax appeal is appropriate. This post answers a few questions that I am frequently asked.

  1. My taxes are really high, should I appeal?

Property taxes are based on the real estate value, so the first question before deciding to file an appeal is actually, is my value too high? If you don’t have a good sense for the value of your property then you should have a property tax professional take a look at your situation. I provide free reviews for any commercial property taxpayer, and so do many other property tax professionals.

If you are well versed in the market for your property and have a good understanding of the value, or have a recent appraisal, then compare your analysis against the assessed value on your tax statement. If your analysis or appraisal, is similar or higher than the assessed value, then you probably don’t want to appeal. If it is lower, you may have a case for an appeal. At this point you should contact a property tax appeal attorney to discuss the potential for a successful case.

Additionally, most commercial properties are owned by LLC’s or another class of entity. It is important to note that Minnesota only allows individuals to personally file an appeal on property they own in their own name. So, if your property is owned by a company you will need a property tax appeal attorney to handle the filing.

  1. Is a tax appeal litigation?

Technically, a tax appeal is litigation. However, in most cases traditional litigation actions, such as discovery, motions, hearings, etc., never occur. Most appeals have a more transactional process. For example, an appeal is required in order for the assessor to adjust the value, but the matter may still be entirely resolved through negotiations and can be very friendly. In my practice, one of my core philosophies is to maintain quality respectful, and when possible, friendly, relationships with assessors. A good working relationship with the assessor is important for working through the challenging issues of the appeal.

In short, while an appeal can lead to a trial, it generally does not require full blown litigation.

  1. Will an appeal now cause higher taxes in the future?

Assessors have a duty to value real estate at its market value. As a result, any retaliatory increase to a non-market value would be illegal. I have never experienced an assessor raising values in response to an appeal being filed. However, the legitimate concern is whether or not an appeal will reveal information to an assessor that could cause a value increase in the future. For example, let’s say an assessor believed that the average market rent for a specific property was $10 per square foot, but then during the appeal they find out that the average market rental rate for the property is actually $15 per square foot. The assessor may not be able to ignore this fact going forward, and the result could be a higher valuation based on the higher rent. In fact, this is one of the many things that I look for when I conduct preliminary reviews for potential appeals, and it is one of the reasons that I always recommend talking to me or a property tax professional before filing an appeal.

In conclusion, if you feel your commercial real estate taxes are too high, ask me or a property tax professional to take a look.


Real estate buyers who purchase property from banks sometimes get the property for a price that seems below market. Assessors frequently dismiss these sales as “bank sales” and therefore irrelevant for property tax valuation. However, these apparent discounts can be the result of actual distress or market influences, rather than because the bank was under duress to sell.

The Minnesota Tax Court squarely addressed this issue in Zephyr Group LLP v. County of Washington. The subject – a former Denny Hecker car dealership – was acquired by a financial institution after the bankruptcy of the previous owner. The property was then listed and marketed for almost four years with offering prices incrementally dropping from $1,800,000 to $600,000. The subject finally sold for $600,000. Since the assessed value was approximately $2,300,000, the buyer filed an appeal.

Subject Property
Subject Property

On appeal, the county disregarded the sale because it was “lender mediated.” The court however, disregarded the county’s analysis because of its failure to consider the sale.

A long standing rule in Minnesota Tax Court is that a sale of the subject property near the date of assessment is the “best indicator of value” and it should be “given great weight, especially when [it] was an arm’s length transaction.”

Nonetheless, the tax court is always cautious to use only the sale price of the subject, because “one sale does not make a market” and other evidence may show that the sale price is above or below market.

In Zephyr, the court found that the subject was an arms’ length transaction, because it was sufficiently exposed to the market, sold between two unrelated parties, and the lender was not under any regulatory or other pressure to sell for a below market. Because it was arms’ length and took place near the date of assessment, it was the best indicator of value.

Accordingly, a bank sale can be an arms’ length, market transaction; and therefore, the best indicator of value entitled to great weight in property tax valuation.


Home improvement retailer, Menard’s, successfully lowered the value of its Moorhead store in tax court. When it pressed its position based only on sales of similar properties, the court replied that valuation is not that narrowly focused.  The appeal covered years 2011 through 2014 and the original value was $11,200,000 for each year. At tax court, Menard’s sought a value as of $4,000,000. The tax court’s final value decision was as follows:

Appraisal Year County Assessor County’s Appraiser (Vergin) Menard’s Appraiser (MaRous) Tax Court Order Tax Court Amended Order
2011 $11,200,000 $12,000,000 $4,000,000 $7,432,100 $7,516,600
2012 $11,200,000 $12,300,000 $4,000,000 $7,585,800 $7,681,300
2013 $11,200,000 $12,500,000 $4,000,000 $7,219,000 $7,331,300
2014 $11,200,000 $12,700,000 $4,000,000 $7,393,600 $7,556,200

Menard’s appealed the tax court’s decision because it wanted the Minnesota supreme court to rule that only the sales comparison approach should have been considered, instead of the sales comparison and cost approaches to value.

Menard's Moorehead - Entrance

The court has long held that review of the tax court’s decisions is very limited and it will only overturn a valuation if is clearly erroneous. Menard’s contended that the tax court’s job was done when it determined that the sales comparison approach provided a reliable indicator of market value. However, the court has already ruled that approach out when it said some years ago,

“appraisal is an inexact valuation determination” and an “estimate of value”

Lewis & Harris v. Cty. of Hennepin, 516 N.W.2d 177, 180 (Minn. 1994) (emphasis added). The court has also stated that whenever possible the tax court should apply at least two of the approaches to value, and value indications derived can serve as useful checks on each other. Overriding weight can be given to one approach over another and the tax court has the discretion to determine what weight it will assign to each approach.

Finally, the court emphasizes that none of its decisions narrow the view of the inexact science of real estate appraisal to such a degree. As a result, for property tax valuation, the methodology should try to avoid being so narrowly focused.

The court also weighed in on the highest and best use determination and the depreciation analysis for the Menard’s property. If interested in the finer points of the valuation issues, here is the full November 9, 2016 decision for Menard, Inc. v. County of Clay.

Commercial property taxpayers have a lot to worry about and focus on to keep their properties running well, and aside from payment due dates, property tax dates probably are not on the radar. However, if a valuation is too high or taxes are a major concern, knowing important dates might be useful. Most lists provide the dates in a chronological order based on the calendar year, but because Minnesota taxes are paid in arrears, that order can create confusion. The following is a list of important property tax dates in order from the initial valuation/assessment to the appeal filing deadline.

Minnesota Property Tax Dates from Assessment to Appeal

Description Date Notes
Date of assessment January 2 Each assessment is the basis for the property taxes payable in the following year. For example, the assessment on January 2, 2016 is for taxes payable in 2017.
Valuation notices March – April Counties mail notices of valuation in the year of assessment. For example, valuation notices sent in March and April 2016 are for the 2016 assessment payable in 2017.
County Boards of Appeal and Equalization June Boards of Appeal and Equalization hear informal/administrative appeals of assessments in the year of assessment. For example, a 2016 Board of Appeal and Equalization is for the 2016 assessment payable in 2017.
Truth-in-taxation notices November 10 – 25 Truth-in-taxation notices provide taxpayers with the proposed taxes based on preliminary budgets. They are mailed in November for the taxes payable in the following year. For example, the November 2016 truth-in-taxation notices provide the proposed taxes payable in 2017.
Truth-in-taxation meetings After November 25 Truth-in-taxation meetings are held by the taxing authorities to present the budgets and hear comments from taxpayers. After the comment period is complete the taxing authorities will finalize the budgets, and therefore, the taxes.
Property tax statements March 31 (last day) This is the date for the year taxes are payable. For example, March 31, 2017 is the last day for counties to mail the statements for property taxes payable in 2017.
Property tax appeal deadline April 30 All property tax appeals must be filed by April 30 in the year the taxes are payable. For example, April 30, 2017 is for the 2016 assessment for taxes payable in 2017.*
First Half Taxes Due May 15 First half property taxes are due.
Second half taxes due October 15 Second half property taxes are due.

* Minnesota’s property tax appeal deadline is a hard deadline.  If an appeal is not filed by April 30 for that tax year, neither the tax court nor the county can go back and change the value.

The Minnesota Department of Revenue has a more lengthy list that includes additional dates, such as homestead and exemption application deadlines.  The Department of Revenue’s list is chronological based on the calendar year and can be found here.

Institutional investors may expect an increase in real estate taxes when they acquire assets for historically high prices, but do those sales represent market value for property tax purposes? Moreover, should they be used to value more normal properties for property tax purposes?

Twin Cities commercial real estate has been experiencing substantial investment by real estate investment trusts (REITs), insurance companies, and other national investors. There can be many reasons for this: good market fundamentals, low unemployment, high quality of life, number of bike lanes, the list goes on and on. However, many of these investors are paying near-record and record-high prices for assets in the Twin Cities.

For example, Ameriprise Financial Center sold to a Florida investment firm for $200,000,000 ($163 per square foot); Norman Point II in Bloomington sold to a Chicago investment firm for $52,500,000 (also $163 per square foot); and Excelsior and Grand sold to an Ohio investment firm for $317,589 per unit. Meanwhile, many average office properties sell for less than $100 per square foot, and many apartment complexes sell for less than $150,000 per unit.

Ameriprise Financial Center
Ameriprise Financial Center

There are many reasons national and international investors are acquiring commercial real estate in the Twins Cities and these sales should be analyzed very carefully if they are to be considered for property tax purposes. However, it is not surprising to see many market values below the values indicated by high-priced investment sales, because those sales potentially traded based on investment value.

Sales that garner the attention of national investors will often be institutional-grade properties.

Institutional-grade property is defined as “real property investments that are sought out by institutional buyers and have the capacity to meet generally prevalent institutional investment criteria.”[i]

Investment value is “the value of a property interest to a … class of investors based on the investor’s specific requirements. Investment value may be different from market value because it depends on a set of investment criteria that are not necessarily typical of the market.”[ii]

Institutional investment criteria include considerations such as high-credit tenants, low historical vacancy, long-term leases, premium locations, etc. However, the criteria can include more subjective considerations, such as being a 300-plus unit apartment building to balance risk in a portfolio; or, being an office building occupied predominantly by government tenants, because the investment plan defines government buildings as the primary asset type. As a result, when properties that fit certain criteria become available institutional-grade investors may willingly overpay to secure the asset for their portfolios. Accordingly, purchase prices of institutional-grade properties are usually determined based on the investment value rather than general market value.

In Minnesota, all property shall be valued at its market value when being valued for property tax purposes.

“Market value is objective, impersonal, detached; investment value is based on subjective, personal parameters.”[iii]

When subjective parameters come into play, an institutional investor will outbid and out pay traditional investors that are focused on strictly on market-based criteria. Thereby creating a substantial difference between investment value and market value.

Therefore, assessed values should not be based on investment sales, except in the rare situation where the investment sale actually represents market value.

[i]               The Dictionary of Real Estate Appraisal, p. 102 (2010 5th Ed.).

[ii]               Id., p. 104.

[iii]              Simonson v. County of Hennepin, 1997 WL 45311 (Minn. Tax) (quoting The Appraisal of Real Estate, p. 23 (10th ed. 1992)).