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HomeMy WebLinkAbout04-23-2003 Board of Appeal and Equalization Minutes• • • MINUTES OF THE ORONO LOCAL BOARD OF APPEAL AND EQUALIZATION MEETING Wednesday, April 23, 2003 7:00 o'clock p.m. ROLL The Orono Local Board of Appeal and Equalization met on the above mentioned date with the following members present: Acting Mayor Bob Sansevere, Council Members Jim Murphy, Jim White, and Jay Nygard; Representing staff was City Administrator Ron Moorse and Recorder Kristi Anderson. Hennepin County Appraisers Kim Jensen and Kevin Wynn were present. Mayor Barbara Peterson was absent. Acting Mayor Sansevere called the meeting to order at 7:00 P.M. APPEALS Acting Mayor Sansevere explained that appeals would be heard in the order in which persons arrived and signed in at the Council Chambers. He suggested that residents who have not yet contacted the City to have a second review by the appraisers performed prior to this evening, should do so. He recommended that review of these additional properties take place prior to Council hearing them on May 12, 2003 at its reconvened Board of Appeal and Equalization meeting. Moorse asked the assessors to provide background of the appeal process. Jensen explained that the 2003 valuation year was extremely busy as the appraisers implemented a new system. Over the past year, they have strived to work out the kinks which might have caused qualities to be assessed too high. In addition, input error and numerous refinancing appraisals have put additional burden on the appraiser's office. Jensen indicated that they use the mass appraisal process which is subject to individual review. Since valuations were completed, the appraiser's office received 155 calls, performed 73 reviews, and made 53 adjustments to a lower valuation. Jensen noted that lakeshore properties' assessed value rose an average 17.7 %, while off - lakeshore properties grew 10.7 %, with commercial at 14.7 %. Sansevere asked what the review process entailed beyond the City Council level. Jensen stated that the County Board of Review was scheduled for June 16, 2003, and appeals could be heard by appointment, if received by June 9, at that time. Beyond the County, Jensen indicated that appeals could be heard by the Minnesota Tax Court. Sansevere encouraged seniors over 65 to investigate relief options via a senior property tax deferral program which entitles them to pay a portion, $450 in taxes, and defer the remainder until the property is sold. Jensen reminded the public that the board can increase, decrease, or choose to make no change during the review process. She added that, typically, valuation increases would not happen until the following year, say 2004 in this case. She requested that the Local Board make a recommendation PAGE 1 of 6 MINUTES OF THE ORONO LOCAL BOARD OF APPEAL AND EQUALIZATION MEETING Wednesday, April 23, 2003 7:00 o'clock p.m. • at the close of the meeting tonight which limits the number of reviews for appeal to those present, or documented on the sign in sheet for the reconvened meeting of May 12. 1) Kirt Woodhouse, 2 parcels, 1800 Shoreline Drive, PID #10- 117 -23 13 0023, valued at $900,000 1760 Shoreline Drive, PID #10- 117 -26 14 0017 valued at $1,450,000 Mr. Woodhouse explained that he purchased three parcels 1 %2 years ago for $2,250,000. He rearranged the lot lines and then sold the center parcel with a Philip Johnson architectural home on it for roughly the same money. Due to the fact that this was the only home in Minnesota designed by the famous architect Philip Johnson, it was the most valuable parcel of the three. Since the 0023 property was a vacant parcel, which had not changed over the past year, he questioned how the valuation could have more than doubled over the past year. In 2002, the property was valued at $400,000, in 2003 the appraisers set the value at $900,000. He felt this was inappropriate and could support no more than a 25% increase from last year. Mr. Woodhouse indicated that he was in negotiations with the Minnetonka Center for the Arts to move the home on the 0017 property, as it contains a home built by architect Frank Gehry. Sansevere acknowledged that Mr. Woodhouse inadvertently pushed the value of his remaining two parcels up by selling the middle parcel so well. Murphy asked what plans for the remaining two parcels Mr. Woodhouse had in mind. Woodhouse stated that he had intended to sell the vacant parcel, and hoped that the middle buyer • would purchase the lot to add to his property. He tried to market the parcel for $1,550,000 in order to entice the buyer of the middle parcel to buy it for half of that. He offered the vacant lot to the middle owner for half the price, but has since taken it off the market. Murphy inquired as to the size of the parcels. Woodhouse stated that the vacant parcel was 3 acres, a '/2 acre of which was wetland, with no lakeshore access. The Gehry parcel is 4.25 acres, 1 acre of which is wetland, and the lakeshore is across the busy County road. Sansevere asked the assessor's for their opinion as to why the parcel had doubled. Wynn stated that the values were based on the revised calculations taking the middle parcel into account. Sansevere asked what price is placed on the intrinsic value of a famous architect. Wynn indicated that they might place an estimated $300,000 additional value for its architectural significance and still be just at sale price. We have no real way of surmising that value. He commented that even at 84% of the sale price, impacts from the value of the middle property, the lake view, and nice setting, all play a role in evaluating the price estimated for the vacant property. Sansevere asked Wynn if he were firm on the $900,000 valuation. He pointed out that even Mr. • Woodhouse perceived the market value of that parcel at half his list price, or $775,000. PAGE 2 of 6 MINUTES OF THE ORONO LOCAL BOARD OF APPEAL AND EQUALIZATION MEETING Wednesday, April 23, 2003 • 7:00 o',clock p.m. Woodhouse argued that the City had failed to apply enough value to the architectural significance of the house on the middle parcel. He stated that the home was in superb condition and a Philip Johnson original. On the other hand, there are few lots that would be assigned as much value as his vacant parcel has next door. Although assessed at $1,450,000, Murphy questioned what value Mr. Woodhouse felt should be assigned to the parcel containing the Gehry home. Although a bit larger than the vacant parcel, and lakeshore across the busy road, Woodhouse felt that the value would more accurately support $900,000. He pointed out that the 2 acre neighboring parcels sold at $250,000 each (without lakeshore). He agreed that there were no easy answers how to apply values to these properties. White asked if the comparable properties in the neighborhood sold for a mere $250,000. Sansevere agreed that the sticker shock was enormous. He wondered how the properties could have more than doubled over the past year. Jensen noted that the lakeshore values have grown 14% in 2002 and 17% in 2003, not to mention the impact the middle parcel has made on the value. She asked who was qualified to put a value on architectural significance, and suggested the applicant determine this using his own resources. . Woodhouse stated that assigning a $350 per s.f. value was significant. Sansevere noted that the Johnson home was appraised at $437,000, while the land was appraised at $1,500,000, for a total of $1,937,000. Woodhouse argued that those values should be reversed. Woodhouse asked what other properties in Orono, off the lake, are valued at $1.5 million for 4 acres. Sansevere asked what the values were on either side of the parcel. Jensen pointed out that the Irwin Jacobs parcel next door does not help the comparison, whereas, the properties to the west are smaller sites.off Heritage Drive that have sold between $400,000- $800,000. Murphy felt there was an awful lot of subjectivity to this appraisal, he wondered if a 35% valuation was warranted over the past year and a half. White argued that valuations don't typically push a property value up over 100% as in this case. Jensen stated that the values had been too low in the past and they were just catching up after the rearrangement last year. As this was deemed an incredible jump, Sansevere asked if there was any leeway they could give to Woodhouse regarding the appraisal. He questioned whether the City could find someone who • could more accurately determine the value of the Johnson home versus land value. PAGE 3 of 6 MINUTES OF THE ORONO LOCAL BOARD OF APPEAL AND EQUALIZATION MEETING Wednesday, April 23, 2003 7:00 o'clock p.m. • White agreed that the house was spectacular and had been written up in several publications. He thought that, surely, the house alone would be worth at least $500,000. Woodhouse reiterated that, clearly, the house was worth more than the land. He felt that the values that would be appropriate to his parcels would be $775,000 and $1,000,000 respectively. Murphy asked his plans to develop the properties. Woodhouse thought he might consider building on one of the sites and had no plans for the other. Jensen stated that, generally in Orono, 2 acre sites sell for $350,000 to $450,000 in that portion of town. Wynn observed that the vacant site is a beautiful park -like setting. Sansevere suggested Woodhouse take the appeal to the next level, in the hopes that the County might have people on staff to assign more value to an architecturally significant home. Moorse was unaware whether the County had knowledgeable people on staff with regard to historical significance, and suggested the applicant get an appraisal done by his own experts as well. Sansevere was hesitant to assign an arbitrary number to the value and suggested Woodhouse • acquire a copy of the neighbor's appraisal and use that if possible. Woodhouse maintained that the other neighboring parcels have sold for roughly $500,000, which would not be an arbitrary number to assign to the values of his parcels. Murphy complimented Mr. Woodhouse for his representation of his property and felt this was too subjective a matter for them, with high values at stake, to make arbitrary judgments. He suggested that the owner pursue his own resources. Woodhouse asked, rather than going to great expense of hiring experts, whether they could come to some sort of compromise. Sansevere felt he could support the $775,000 figure. Although he felt the house was undervalued versus the lot, White indicated that he could support a compromise of $775,000 as well. Jensen suggested that they not make a decision that night and further discuss this at the reconvened meeting of May 12, which would allow her time to check for experts available at the County level that could review the home. She reminded the Council that, technically, the burden of proof lies with the owner. Sansevere indicated that it would be to the owner's advantage to pursue his own experts and appraisals. 0 PAGE 4 of 6 MINUTES OF THE ORONO LOCAL BOARD OF APPEAL AND EQUALIZATION MEETING Wednesday, April 23, 2003 7:00 o'clock p.m. • Moorse suggested the two parties gather their information to present at the May 12, 2003 meeting, where a final recommendation could be made. Woodhouse questioned what the purpose of the review board was and to what end a homeowner must go to get some relief. He asked who had the official say in the appeal process. Moorse indicated that the appeal board makes informed decisions based on facts. The presentation of new facts warrants review and potentially appeal. The Board tabled the appeals for 1800 and 1760 Shoreline Drive. 2) Loren Butterfield, 3925 Watertown Road, PID #32- 118 -23 33 0006, 0007, 0008, 0009, 0010 Mr. Butterfield voiced concern with regard to the assessment he had received. Since that time, he had his own appraisal performed in February, 2003. Sansevere asked what the assessed versus new appraisal indicated and how many buildings were on the property. Butterfield stated that his 21 acres had been assessed at $1,130,000, whereas, his recent appraisal indicated that the value was closer to $570,000. He indicated that the parcel consists of greenhouses, a home, and many outlots. • Jensen stated that the property is part of the green acres program with a total estimated market value of $1,155,000 for parcel — 0006; $220,000 for — 0007; $25,000 for — 0008; $10,000 for — 0009; $100 for — 0010. • Having not had his review, Butterfield stated that, in his opinion, the property was worth $70,000 an acre that has access to a road, 12 of which do have road access. White asked if the property was zoned agricultural and encouraged Wynn to review the property soon. 3) Big Island Inc., 526 and 530 Big Island, PID #22- 117 -23 42 0020 and 0019 — will be reviewed. 4) Cathy Lee, 1965 Fagerness Point Road, PID #18- 117 -23 14 0009 will be reviewed. 5) George Torkelson, 670 Tonkawa Road, PID #05-117-23 33 0009 to be reviewed. 6) Scott Goldsmith, 225 N. Old Crystal Bay Road, PID #33- 118 -23 310007 Mr. Goldsmith questioned his appraised value of $287,000, after a 2002 value of $218,000. He acknowledged that a recent review changed the value to $225,000 but he still questioned the rationale for the increase. He believed the valuation was based on $200,000 for the land and $25,000 for the buildings. He pointed out that the buildings are unusable and unlivable since 1998 and questioned why any value was attributed to them at all. PAGE 5 of 6 MINUTES OF THE ORONO LOCAL BOARD OF APPEAL AND EQUALIZATION MEETING Wednesday, April 23, 2003 7:00 o'clock p.m. • Jensen indicated that she had reviewed the property and the minimum assigned value that can be given to residential buildings is $1,000, which she did. She pointed out that the land value was $224,000 in her estimation and the buildings at merely $1,000. Since the site next door is industrial, Mr. Goldsmith felt the land was worth only the 2002 estimate of $200,000. He pointed out that it will cost him $15,000+ to remove the buildings from the site. Based on his experience with the Mn/DOT buy out process, Murphy was surprised that the property was only given a value of $200,000. In contrast, many similar properties of 3 -5 acres have been selling for $350,000- $500,000. Sansevere stated that he supported the $200,000 appraisal. Goldsmith noted that, just one year ago, he could have sold 13 acres for $750,000. He suggested that the mass valuation process does little to take into consideration the grading process. He questioned why and how parcels are compared to other parcels on a mass appraisal. Murphy pointed out that all of the properties subject to mass appraisal can also be redefined by individual review. In regard to selling his property, Murphy suggested that the owner might be better served by dividing it up into smaller palatable parcels. Sansevere moved, Murphy seconded, to approve the appraisal for $225,000 for the property located at 225 N. Old Crystal Bay Road. VOTE: Ayes 4, Nays 0. • 7) Beverly Silberman, 465 S. Brown Road, PID #03- 117 -23 310002 and 0001 to be reviewed. 8) Natalye Chernerskaya, 2490 Casco Point Road, PID #20- 117 -23 210036 to be reviewed. 9) Marcia Hickey, 4640 Tonkaview Lane, PID #07- 117 -23 32 0043 to be reviewed. 10) Charles Hommeyer, 465 Linden Avenue, PID#06 - 117 -23 410109 to be reviewed. 11) James Suddendorf, 1070 Tonkawa Road, PID #08- 117 -23 13 0020 to be reviewed. The board moved to accept the reviews. put into record, with no additional appeals being noted, for the reconvening of the Board of Appeal and Equalization Meeting on May 12, 2003, at 6:00 P.M. VOTE Ayes 4, Nays 0. h-1 -1 �IR" SeI it 1 White moved, Nygard seconded, to adjourn the Orono Local Board of Appeal and Equalization Meeting of April 23, 2003 at 8:47 P.M. VOTE: Ayes 4, Nays 0. ATTEST: Linda S. Vee, City Clerk Barbara Peterson, Mayor PAGE 6 of 6