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County Connections: New construction in Cook County

Jan 21, 2022 08:44AM ● By Editor
Photo: KHAK

By Bob Thompson, Cook County Assessor from Cook County MN - January 21, 2022

Cook County Tax Assessor Bob Thompson. Photo: Cook County MN

The Cook County Assessor’s Office recently completed the process of inspecting permitted new construction that has occurred over the last twelve months. Each year the Assessor compiles permits issued by the city of Grand Marais as well as County-issued permits and County Appraisers visit these properties near the January 2nd assessment date to determine what has been completed. Typically, a new house or cabin requires two or three annual visits before completion and many projects are delayed for one reason or another, meaning the Assessor’s Office might visit 400-500 projects in a year where only 200 permits were issued.

A lot of interesting stories come out of this process, some from property owners, others from contractors, and some stories are simply conclusions the Assessor draws based on observations of market transactions.

Adding the new construction to the tax rolls is extremely important and it helps reduce the tax burden on other existing properties, this is commonly referred to as new tax capacity. Some areas of Minnesota see so much new construction that levy increases can be completely absorbed by the new construction properties. Over the last few years in Cook County, our new construction has offset about one percent of our total levy each year. Over that time, Cook County has been adding about $15 million of new construction each year.

If you or someone you know is looking for a home or cabin in Cook County, new construction has likely been considered. At the time of writing this article, there were only five properties listed for sale in Cook County that have some type of structure built. Cook County vacant land listings have also become scarce, roughly 65 vacant land parcels were available that could potentially be built on.

One trend occurring is premium lots which already have a structure on them being purchased for demolition. Buyers are often seeking a specific setting for their new construction and tearing down older buildings is becoming more common as land becomes more scarce.  One example is a 3,300 square foot Tofte home that was built in 1989, it was demolished in spring of 2021 to make way for a brand new 3,200 square foot home. A high-end project, this property owner will invest at least $1.5 million by the time their project is completed. Just three miles away in Tofte a similar project was just completed in 2021, there the new 2,400 sf house currently has an assessed value of over $1.4 million.

Sticker shock and wait times for contractor availability might discourage some who wish to build in Cook County. I’m personally aware of a few poured concrete foundations that exceeded $150,000 to install. Additionally, contractors often have a lead time of more than a year from initial contact to working on the project.

All of this has played a role in another trend we’re seeing in Cook County, tiny homes. Often, we see shed kits being converted into bunkhouses and used as living space. There is a lot of demand for these tiny homes too. Some sales of these properties have been occurring and when you add up the cost of the components that make up these small rustic properties, it rarely amounts to the sales prices they can achieve in the market. We refer to this as the “entrepreneurial profit” portion when the sale price of a property exceeds the cost of the sum of the components.

Manufacturing and shipping delays are also affecting certain stages of construction projects. Custom window orders are typically taking much longer than they were just a couple years ago and garage doors are apparently all on a ship somewhere. Across the county this was a common theme, getting a garage door is not easy right now and you may notice some projects where that’s all that’s left to complete.

Being able to get out and see the new construction that is occurring is arguably the most enjoyable part of this job and it is a very important part in creating equity in the tax burden imposed on property owners. I hope you’ve found this article interesting and maybe you’ve even learned something from it.

If you are a Cook County Resident, several options may provide financial relief from rent and/or property taxes. Talk to your tax professional or visit the Minnesota Department of Revenue’s website for more information on the ‘M1PR’ form. 

County Connections is a column on timely topics and service information from your Cook County government. Cook County – Supporting Community Through Quality Public Service

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