Property taxes are one of the most important, and often misunderstood, sources of funding for local government. In Lennox, property taxes help fund essential city services such as streets, public safety, utilities infrastructure, parks, and administrative operations.
Understanding how property taxes are calculated in South Dakota can help residents better interpret their annual tax notices and participate confidently in the process. This article walks through:
How property tax growth is limited (CPI + Growth)
How the County determines the City’s allowable request
How the property tax levy is calculated
How Tax Increment Financing (TIF) works
How to appeal your assessed value
And how special assessments differ from property taxes
1. How Property Tax Growth Works: CPI + Growth (Capped at 6% Total)
In South Dakota, cities like Lennox do not arbitrarily raise property taxes each year. Instead, state law provides a structured formula that governs how much total property tax revenue a city can request.
For cities in South Dakota, the allowable annual increase in total property tax revenue is based on two components:
Consumer Price Index (CPI) – Reflecting inflation.
New Growth – Reflecting new construction or improvements added to the tax base.
Each component is capped at 3%, meaning:
CPI increase: up to 3%
Growth increase: up to 3%
Maximum total increase per year: 6%
This does not mean individual property owners automatically see a 6% increase in their tax bill. Rather, it means the total amount of property tax revenue the City can request from the County for all property owners combined in City Limits may increase by up to 6%, depending on inflation and new construction.
Why This Matters
This formula creates predictability and stability:
The City cannot dramatically increase property tax collections in a single year.
Residents and businesses can anticipate relatively modest annual growth.
Budget planning becomes more structured and transparent.
The CPI + Growth system ties tax increases to economic conditions rather than discretionary decisions.
2. How the County Determines the City’s Allowed Property Tax Request
Although the City of Lennox sets its budget and determines its funding needs, it does not independently collect property taxes. That responsibility belongs to the county.
Here’s how the process works:
The County calculates CPI and growth figures for the year.
The allowable percentage increase is determined, up to 6%.
The City is given the maximum dollar amount it may request in property tax revenue.
The City sends their request to the County and then adopts its budget using that amount.
Importantly, the city does not set the growth factors themselves. The County performs the necessary calculations to ensure compliance with state law. Once the allowable increase is determined, the city may request up to, but not exceeding, that amount.
Key Point
The City’s allowable property tax revenue ceiling is established first, and only then does the levy get calculated.
3. How the Property Tax Levy Is Calculated in Lennox
Once the City determines how much property tax revenue it will request (within its legal limit), the next step is to calculate the levy.
What Is a Levy?
The levy is the tax rate applied to the total assessed property value within the city limits.
The formula is straightforward:
City Levy = Total Property Tax Revenue Requested ÷ Total Assessed Property Value (excluding TIF base adjustments)
Let’s break that down.
Step 1: Determine the Total Revenue Needed
Suppose the City is allowed to collect $1,000,000 in property tax revenue for the upcoming year.
Step 2: Determine Total Assessed Value
The County determines the total assessed property value of all taxable properties within Lennox city limits based on the work done by the Department of Equalization.
Important:
When calculating the levy, assessed value excludes certain TIF base considerations (explained later).
Let’s assume total assessed value equals $200,000,000.
Step 3: Divide to Determine Levy
$1,000,000 ÷ $200,000,000 = 0.005
This equals a levy of 0.005, or $5 per $1,000 of assessed value (depending on the format it is presented in).
Why the Levy Changes
Even if the City’s requested revenue increases slightly, the levy might:
Decrease, if total assessed values grow significantly.
Increase, if assessed values decline or grow slowly.
In other words, the levy fluctuates based on the total value of property in Lennox; not just on the City’s spending needs.
4. Tax Increment Financing (TIF) in Lennox
Tax Increment Financing (TIF) is often misunderstood, so let’s clarify how it works in South Dakota.
Do TIF Properties Pay a Different Levy?
No.
Properties located in a TIF district pay the exact same levy as all other properties within the Lennox city limits.
The difference is not in the tax rate; it’s in where a portion of the tax revenue is allocated.
How TIF Works
When a TIF district is created:
The property’s base value is established.
As development occurs, the increase in assessed value (the “increment”) is tracked.
Taxes generated from that increment are used to pay for infrastructure or development costs within that TIF district.
Infrastructure may include:
Streets
Utilities
Drainage systems
Site improvements
Important Clarification
The Municipal levy is identical citywide. The City of Lennox’s current Levy is $6.529 per $1,000 of assessed property value
· School District levies vary based on whether the property is Ag or Owner-Occupied
TIF properties are not taxed at a higher or lower rate.
The portion of taxes generated by new growth helps pay for the improvements that enabled the development.
Having a TIF within a city does not increase the other residents’ property taxes
Once the TIF obligations are paid off, or 20 years has passed, the full assessed value becomes part of the general tax base.
5. Special Assessments in South Dakota
While property taxes fund general city services, special assessments are different.
They are frequently confused with property taxes because they appear on the same statement, but they serve a separate purpose.
What Is a Special Assessment?
A special assessment is a charge applied to properties that directly benefit from a specific public improvement.
In South Dakota, cities commonly use special assessments for projects such as:
Street paving or reconstruction
Curb and gutter installation
Water and sewer line improvements
Storm drainage systems
Unlike property taxes, which are ongoing and based on assessed value, special assessments are temporary and tied to a specific project.
Why Cities Use Special Assessments
Special assessments promote fairness.
Instead of spreading the cost of rebuilding one neighborhood street across the entire city, the cost is assigned to the properties that directly benefit from that improvement.
If your street is reconstructed, your property will likely become:
Safer
More accessible
More attractive to buyers
Potentially more valuable
Because the improvement benefits specific properties, those properties help fund it.
How Special Assessments Are Calculated
Assessments are often based on:
Front footage (how much of your property borders the project)
Lot size
Property type (residential vs. commercial)
Property owners are notified before projects move forward and are given opportunities to attend public hearings where costs and timelines are discussed.
How They Are Paid
Property owners typically have two options:
Pay the full amount upfront (typically with a 2 to 3 year notice)
Finance the amount over several years (typically 10 years) on your property tax bill
If financed, the special assessment appears as a separate line item on the property tax statement. Once the cost of the project is fully repaid, the assessment ends.
6. Appealing Your Assessed Property Value
Property taxes are based on assessed value, which is determined by the Department of Equalization with the County. If a property owner believes their property has been overvalued, there is a formal appeal process.
When Can You Appeal?
Residents may appeal their property assessment at the local equalization meeting, which is held on the third Monday of March each year. Residents must first submit an application to get on the agenda for that meeting by the Thursday preceding that Monday (March 12th, 2026 this year) at the following URL: https://appeals.lincolncountysd.gov/
This is an important date for property owners in Lennox.
What Is the Equalization Meeting?
The equalization meeting is a formal setting where:
Property owners can present evidence.
The local review board reviews valuation concerns.
Recommendations from the local review board may be sent to the county for adjustments to be made.
Valid Reasons for Appeal
You may consider appealing if:
Comparable properties are assessed at a lower value.
The property’s condition has deteriorated.
There are factual errors in square footage or features.
Market value does not support the assessed value.
What You Should Bring
Strong appeals typically include:
Comparable property sales.
Independent appraisals.
Photos showing condition issues.
Documentation correcting factual errors.
If the equalization board agrees that the property is overvalued, the assessed value can be lowered, resulting in a reduced tax burden the following year.
Putting It All Together
When reviewing your annual property tax statement in Lennox, you may see:
City property taxes
County property taxes
School district taxes
Special assessments
Possibly TIF-related allocations
Each plays a different role.
Property Taxes
Ongoing
Based on assessed value
Limited by CPI + Growth (max 6%)
Fund general government operations
Special Assessments
Temporary
Project-specific
Based on benefit
End once paid off
TIF Districts
Same levy
Portion of increment pays development infrastructure
Once the increment is paid off, the total assessed value for that TIF is added to the general tax base, which in turn lowers the total property tax levy for all properties
Important Perspective
If Lennox experiences substantial new construction:
The tax base increases.
The levy may decrease.
Individual homeowners might see smaller increases than expected.
Conversely, if assessed values rise across the board due to market conditions, individual tax bills may increase even if the levy declines.
Final Thoughts
Property taxation in Lennox operates within a structured and transparent framework. The CPI + Growth cap limits overall increases. The County determines the allowable request. The levy is calculated mathematically based on total assessed value. TIF districts redirect incremental growth to infrastructure. Special assessments fairly assign project costs to benefiting properties, and residents retain the right to appeal assessments each March.
Understanding these components transforms a confusing tax statement into a logical system; one designed to balance fairness, growth, and fiscal responsibility within the community.