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HomeMy WebLinkAbout04-20-2011 Board of Appeal and Equalization Minutes• MINUTES OF THE ORONO 2011 LOCAL BOARD OF APPEAL AND EQUALIZATION Wednesday, April 20, 2011 7:00 o'clock p.m. ROLL The Orono Board of Appeal and Equalization met on the above - mentioned date with the following members present: Mayor Lili Tod McMillan and Council Member Cynthia Bremer. Representing Staff were City Administrator Jessica Loftus, Finance Director Ron Olson, and Recorder Jackie Young. Hennepin County Assessors Nate Stulc and Michael Smerdon were present. Council Member Doug Franchot arrived at 7:08 p.m. Mayor McMillan called the meeting to order at 7:02 p.m., followed by the Pledge of Allegiance. McMillan indicated the purpose of the Board of Appeal and Equalization's meeting tonight is to provide a forum in which property owners can appeal their valuation or classification or both. Only 2011 property valuations are within the jurisdiction of the board tonight. McMillan stated any changes made by the Board must be substantiated by facts and that any value reductions must be justified since they result in a shifting of the tax burden to other properties within the jurisdiction. McMillan explained the procedure to be followed tonight by those in attendance. McMillan requested the county assessor explain the difference between the open book meeting law and tonight's format. McMillan noted the City Council is thinking about going to the open book type forum next year. Stulc stated the Local Board of Appeal and Equalization is an appointed board, which in this case is the City Council and Mayor. An open book forum would consist of the assessors meeting with the • homeowners on a one -on -one basis and explaining their valuations. It would be more informal than in the case of the local board. Stulc stated the different steps in the appeal process are to first contact your local assessor, then appear at the local board, followed by the county board, and then filing in Minnesota Tax Court. Under the local board format, in order to be able to attend the county board, a property owner would need to be on the agenda for the local board. In the case of an open book hearing, the property owner would not have to attend in order to proceed forward to the county. Bremer noted that some other local cities have already gone to the open book type hearing, such as Spring Park. Stulc indicated that Shorewood, Minnetrista, Hopkins, Golden Valley, and Rogers are utilizing the open book forum currently. In order for a city to do the open book hearing, they would need to contract with the county assessor's office, which the City of Orono does. Bremer asked if anyone in the audience has an opinion regarding whether Orono should go with the open book forum versus the local board of appeals. John Bessesen stated in his opinion it is important for the members of the city council to hear the comments of the residents and to be an advocate for them. Bremer noted the Council would be present at the open book hearing and that it is a less formal way to deal with the issues of valuation that a property owner may raise. • Page 1 MINUTES OF THE ORONO 2011 LOCAL BOARD OF APPEAL AND EQUALIZATION Wednesday, April 20, 2011 7:00 o'clock p.m. APPEALS 1. JAMES JOHNSON, 4300 WATERTOWN ROAD, MAPLE PLAIN, #31- 118 -23 -13 -0013 James Johnson stated his 2011 valuation is $728,000 and that he is here tonight basically because their agriculture credit was taken away. On October 7, 1997, they were notified that a portion of their land was to be taken by Hennepin County for the reconstruction of County Road 6. On November 24, 1997, an offer to purchase the property came from the right -of -way agent for Hennepin County. Johnson indicated they felt that price was below the fair market value and they fought for what they felt was a fair price for that portion of land. On February 4, 2000, a final decision was issued by Judge Tom Carey. They accepted that decision. Johnson stated Lisa Berg was the assistant county attorney at the time and was opposing counsel during this process. Once the final decision was made, Ms. Berg moved over to other projects and Gail Henley was appointed to finalize the process of payment. Johnson indicated their attorney was former state senator Jerome Blatz. In a side letter /agreement, Ms. Henley agreed that the minimum acreage for agricultural credit would be waived and they could continue with their farming practice and ag credit. Johnson stated in his opinion that she must have checked with Freeman or Klobuchar or someone to be able to state that. is This letter has somehow gotten lost at Hennepin County. Johnson indicated he never received a copy from his lawyer. When he received the notification of this year's taxes, he called Mr. Blatz and was • informed that he had passed away. Johnson stated Kathleen Blatz, his daughter, agreed to look through her father's files. Ms. Blatz informed him that all the files with our names on them have been shredded, as had a lot of his clients. Johnson indicated he then called Ms. Henley to see if she would attest to the letter but was informed she is no longer at Hennepin County. Johnson stated after that he called Louis Robartz who also indicated he looked through the files and could not locate the letter. Johnson stated he has also called Gen Olson, who is looking into the matter and that it is becoming a habit with Hennepin County of trying to pull people's ag credits. Johnson noted they had settled the land issue in 2000 and they have been farming or on CRP ever since. It seems strange that it is now an issue. The original Green Acres Law was passed in 1967 and as a result of some major changes to the law in 2008, all or some of the nonproductive enrolled in Green Acres before 2008 may either be redrawn or grandfathered into the program. Through no fault of our own, we came below the minimum because our land was taken. Johnson requested that his ag credit be restored until they no longer farm the land or are not part of the CRP program. McMillan asked whether he has spoken with the assessor. Stulc indicated they would be more than happy to follow legal precedence if they are able to find that letter, but the current law states that in order to qualify for an ag credit you need to have ten acres. Following the law that they have, they are not able to change the classification unless some new information is submitted. Bremer asked whether it was the state attorney or the county attorney that they dealt with on this matter. Anderson indicated that Lisa Berg was the assistant Hennepin county attorney. When the case was • resolved, she moved on to other projects and had Gail Henley finalize it. Page 2 MINUTES OF THE ORONO 2011 LOCAL BOARD OF APPEAL AND EQUALIZATION Wednesday, April 20, 2011 • 7:00 o'clock p.m. Bremer asked where that file is supposedly located. Bremer commented it obviously must not have been recorded in the court system but was in someone's working file. Anderson commented he was remiss in not obtaining a copy of the letter from his attorney at the time. Bremer noted that attorneys are only required under the statutes to keep documents for six years and that she would not be surprised the document does not exist in hard copy anymore. Bremer noted if Mr. Anderson is able to locate the document, the county assessor's office would take that into consideration. Anderson stated he has looked through everything. Gen Olson is looking into precedent for what she calls special circumstances. McMillan asked how much land was taken as part of the road project. Anderson indicated it was two and a half acres but it cut across three platted lots. There were six lots when they originally purchased the property consisting of 14 acres. Anderson indicated he does have more land that he can put into CRP, but the assessor has indicated he does not think they will be able to get enough land for what the state would require. Anderson stated they could be grandfathered in. Bremer asked if this is the first time that it has happened to him. • Anderson indicated it is. Stulc noted that the statute changed with the 2009 assessment, which created a number of new categories. Hennepin County relooked at all properties that had the ag credit, and at that time it became known that this property did not qualify under current state statute. Anderson noted there is a property up the road that has more acreage than they do, as well as a nicer house, which sold for less than what their property is valued at. McMillan asked whether it recently sold or is currently for sale. Anderson indicated it recently sold. McMillan asked what the cutoff date is for sales. Stulc stated they only look at sales from October I" of 2009 to September 30t" of 2010. If Mr. Anderson would like him to look at a sale, they would be willing to look at that. Anderson asked whether they look at comparables. Stulc indicated they do and that a person's valuation is determined by looking at comparable sales. Bremer encouraged Mr. Anderson to speak to the assessor. Anderson stated he would speak with the assessor about that. • Stulc indicated they would be more than happy to look at that sale. Page 3 MINUTES OF THE ORONO 2011 LOCAL BOARD OF APPEAL AND EQUALIZATION Wednesday, April 20, 2011 7:00 o'clock p.m. Anderson stated his letter does reference the state statute he has been referring to. Bremer requested the assessor speak with Mr. Anderson. 2. ROBERT MACK, 1650 NORTH FARM ROAD, #27- 118 -23 -44 -0009 Robert Mack indicated his first valuation was at $849,000 and that he then received a letter from Mike Smerdon that they were going to reduce it to $785,000. Mack stated in his view his valuation should be approximately $600,000. The reason for that valuation is that his next door neighbor sold his house last September. It was on the market for approximately a year and a half and it was an actual outright sale and not a foreclosure. The property owner had to reduce the price until the house sold. Mack indicated he has compiled a comparison of his house to his next door neighbor's house. Mack distributed that information to the Board. Mack indicated that in 2007, he experienced moisture and mold damage to his house. Some of the stucco and windows needed to be replaced at a cost of over $50,000. That repair will need to be declared when he sells the house, which will be a big negative. The repair work was only performed on a portion of the house. Mack commented the average buyer will question what else is wrong with the house since only part of the house was repaired. • Mack noted the property next door sold for $787,500. His property has no lakeshore but the neighbor has is 180 feet of lakeshore. He also only has two acres versus three for the other property. His finished square footage is 3,600 and the neighbor's is 4,979. His house has an asphalt single roof and no swimming pool versus cedar shake and a swimming pool. Mack stated he also has less privacy. Stulc noted Mike Smerdon did personally visit the property and agreed to make a reduction from the $849,000 down to $785,000. Bremer asked what his valuation was the previous year before the $849,000. Stulc indicated it was $852,000. Bremer asked whether the property on North Farm Road was brought up to the assessor. Smerdon indicated it was. Smerdon stated he is not sure about the square footage listed by Mr. Mack but that the other property has a higher land value with a less attractive house. Mr. Mack has a lower land value but a nicer house. McMillan asked whether the assessor would like to take another look at Mr. Mack's property. Smerdon indicated they could do that. Smerdon noted the interior of Mr. Mack's house is nicer than the neighboring property. McMillan asked whether moisture and mold damage is taken into effect. • Smerdon stated he did consider it but noted the problem has been resolved. Page 4 • MINUTES OF THE ORONO 2011 LOCAL BOARD OF APPEAL AND EQUALIZATION Wednesday, April 20, 2011 7:00 o'clock p.m. Mack indicated he does not know whether there will be any other moisture problems since it takes a number of years for the problem to show up. Mack stated the fact that he did have water and mold danger will be a detriment even though it is has fixed because he has to disclose that there was a problem. Bremer commented she owns a stucco house and that they had their stucco house water tested before they purchased it. Bremer stated there is also a sensor that can be utilized, which tests the water content of the gypsum board. Bremer suggested Mr. Mack consider having his house tested if he feels there is still a problem and then provide that information to the assessor's office. McMillan noted the assessor's office will take another look at Mr. Mack's property Stulc noted that Friday will be the earliest that he will be able to call the residents in attendance. 3. JOHN BESSESEN, 4500 NORTH SHORE DRIVE, PID #07- 117 -23 -31 -0030 Bessesen stated he has resided at this house since 1976 and that his family originally constructed the house. The house, with the land, cost approximately $120,000 at the time it was constructed. Bessesen indicated his wife is a former school teacher and that she is now currently retired. The house has been paid off for approximately 15 years. The taxes were more than the mortgage and PIP since about 1982. • The property sits on County Road 19 and is located below the road. The assessor says that there is a little more than an acre of land, but about two- thirds of that land extends out into Lake Minnetonka. Bessesen questioned what his FAR would be since it is not an acre. Bessesen indicated he does have some discomfort due to the fact that if he sells the house, which is valued at $169,000 and the land at 145,000, that he has quite a bit of money sitting in real estate that cannot be developed. Bessesen indicated he would like to speak to the assessor about this situation. Bessesen showed the Council an aerial view of the property depicting the lakeshore. Franchot asked if the concern is that the effective land that is usable has become overvalued. Bessesen indicated his concern is that his acreage is under the City's minimum and that he may not be allowed to rebuild in the event that became necessary. The property is already over the City's hardcover limits. Bessesen indicated he appeared before the City Council in 2002 when a developer had built a series of houses up the street on Tonkaview. At that time no one ever bothered to get a permit for the water runoff that might come on to his property. He had approximately two feet of water coming into his yard every time there was a one inch rainfall. The City said they would fix it and they bought a piece of property up on the corner. A drainage pond was created so it would not drain into his property. Bessesen indicated it cost him $35,000 to fix the damage to his house because he had mold everywhere and had to replace half of his house. The City said they would give him $5,000 and that he would have to sue if he was not satisfied with that amount. Bessesen indicated his house is on the tax rolls for $169,000, which is a pretty fair price. The land is not an acre, sits below the road, and there is a guard rail located further down on the property. Occasionally Page 5 MINUTES OF THE ORONO 2011 LOCAL BOARD OF APPEAL AND EQUALIZATION Wednesday, April 20, 2011 7:00 o'clock p.m. • cars come into his yard. Bessesen indicated the taxes he has to pay are a hardship for them because he is semi- retired and his wife is retired. Bessesen stated he is not sure why the property taxes are so high. McMillan asked whether Mr. Bessesen has spoken with the assessor's office. Bessesen indicated he left a message but has not heard back. Stulc noted he was unable to return the phone call since no phone number was left. Bessesen provided his phone number to the assessor. The Board directed the assessor contact Mr. Bessesen. 4. BRUCE BIRKELAND, 1298 WILDHURST TRAIL, #07- 117 -23 -31 -0027 and #07- 117- 23 -31- 0026 Birkeland stated this property has been held in trust for the past couple of years and has been on the market as well. Birkeland indicated he recently had Edina Realty out to visit the property and they came up with a valuation that was a lot lower than the county's valuation. The market value on the house is $1,210,000. Edina Realty says it is worth $675,000. The other lot is listed at $1,000,042 and Edina Realty says it is worth $742,000. • Birkeland stated he has some similar issue to John Bessesen in that a portion of the property is now under water. The adjoining lot has a small garage on it and they are not sure whether that is a buildable lot. Birkeland displayed an aerial photo of his property to the Board. Birkeland stated he and his family have been paying taxes on the lots since 1965. They want to be able to sell it and have someone be able to build on the lot. There is a property that just sold down the street for $800,000 but had been listed at a $1.2 million for a couple of years. Birkeland indicated he is not familiar with the whole process but is trying to get his foot in the door and have someone look at the property. Stulc requested Mr. Birkeland provide a copy of the appraisal completed by Edina Realty to the assessor's office. Birkeland stated they have been, watching the property valuations going up now for three years while the sale prices for properties in the neighborhood have been dropping. Birkeland indicated they have been paying $26,000 a year in taxes, which is a hardship. Franchot noted the county's valuations tend to lag behind sales prices by about a year and asked whether that is starting to flatten out. Stulc stated in comparing sales since October 1, 2010, to the beginning of March 2011 with the 2011 assessed values, the sales show that the valuations are still down. • Page 6 r • MINUTES OF THE ORONO 2011 LOCAL BOARD OF APPEAL AND EQUALIZATION Wednesday, April 20, 2011 7:00 o'clock p.m. Birkeland noted he also owns a property in Independence that has been reduced from $600,000 down to $260,000. Birkeland stated he would like to sell the property but it is going to be difficult due to the valuation. Stulc stated he would be in contact with Mr. Birkeland. 6. MATTHEW BURNS, 1180 LOMA LINDA, #08- 117 -23 -23 -0002 Matthew Burns stated his 2011 valuation was $825,000, and that in his view the closer valuation is $700,000, which is based on an independent appraisal that was completed in October of 2010. Burns indicated he paid $600 for the appraisal as part of a refinancing. There was also an appraisal done in June of 2009 by Bank of America which valued the property at $627,000. At the end of 2007, the property was evaluated for an estate matter. That valuation was within one percent of what the market valuation was at that time. Since that time the market has fallen but his property valuation has continued to go up. Burns indicated he did not provide this information to the assessor because the last time he spoke with the assessor's office he was told that his valuation is that high because it is located on the lake. • McMillan requested Mr. Burns provide the appraisal information to the assessor. Burns requested it be reduced to $700,000. 8. BILL WYATT, 4235 SIXTH AVENUE NORTH, #31- 118 -23 -12 -0013 Bill Wyatt stated he appeared tonight so he would be able to appear at the county board level. 9. DAVE LINDBERG, 2440 NORTH SHORE DRIVE, #08- 117 -23- 430019 Dave Lindberg stated his 2011 valuation is $1,013,000. Lindberg indicated he has had the house for sale for $899,000 and it has not sold. Another realtor suggested listing it at $850,000 and stated it would probably sell for $810,000. Based on the comparables, the valuation should be lowered. Lindberg commented that he found it funny that farther down the street to the west the lots are smaller, down to a quarter acre, but the price per acre works out to be quite a bit higher. The property next to his property drops $200,000 an acre. Lindberg commented that he also finds it funny that the houses behind him, which are not located on CR51, are $200,000 less per acre and also have had their valuations drop anywhere from 13 to 17 percent but yet his property dropped only 7 percent. Lindberg indicated his valuation went from $1,015,000 down to $1,013,000. His neighbor dropped $34,000. Lindberg commented it does not make sense. • McMillan asked if he has spoken to the assessor. Page 7 MINUTES OF THE ORONO 2011 LOCAL BOARD OF APPEAL AND EQUALIZATION Wednesday, April 20, 2011 7:00 o'clock p.m. Lindberg indicated he has not. Stulc indicated he would be in contact with Mr. Lindberg. LETTERS OF APPEAL RECEIVED Jan Graser, PID#33 - 118 -23 -11 -0060 Dan Crear, 3701 Shoreline Drive, PID #20 - 117 -23 -21 -0033 Beth Paulson, 2695 Shadywood Road, PID #21 - 117 -23 -24 -0056 ADJOURNMENT Franchot moved, Bremer seconded, to adjourn the Orono Local Board of Appeal and Equalization at 7:59 p.m., and to reconvene the meeting on Monday, May 9`h, at 6:45 p.m. VOTE: Ayes 3, Nays 0. ATTEST: Linda S. Vee, City Clerk Lill Tod McMillan, Mayor Page 8 • 0 •