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Capitalization Rate Study

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The Minnesota Department of Revenue assesses utility, pipeline, and railroad operating property. We measure the present value of anticipated future benefits of property ownership to determine unitary valuations of State Assessed Property in Minnesota.

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How does the department complete the study? [+]

We determine the following rates:

Yield capitalization
Direct capitalization
Implied growth

Short-term growth
Long-term growth
Implied inflation

For each of these market segments:

Electric
Gas distribution
Gas transmission pipeline

Fluid transportation pipeline
Class I railroads
Other railroads

Yield and direct capitalization rates: combined rates of debt and equity components using capital structure indicated by the market.

Implied growth rate: difference between the yield and direct rates, by market segment.

Short-term growth rate: estimates of growth by market segment.

Long-term growth rate: long-term growth rate of the United States Economy.

Implied inflation rate: market indicators of expected inflation.

How can I view the study? [+]

Questions?

If you have questions, email us at sa.property@state.mn.us or call 651-556-6091.

Contact Info

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Last Updated

April 24, 2020