MINUTES LOCAL BOARD OF EQUALIZATION AND REVIEW HEARING CITY OF LINDSTROM APRIL 26 th, 2011 6:30 P.M. CALL TO ORDER: Mayor Carlson called the meeting at 6:30 p.m. A Quorum and Trained member of the Board were present. CALL OF ROLL: Those Present: Mayor Carlson, Council members Flug and Wishy, City Administrator Olinger, Administrative Assistant Barnes, Chisago County Assessors Larry Sandberg and Patrick Poschek Others Present: Vince Charles, Al Wahlgren, Gary Gerke BOARD OF APPEALS HEARING: Mayor Carlson stated this is the Local Board of Equalization meeting for Lindstrom. The purpose of this meeting is to address the 2012 Payable Property Taxes and established Values. Chisago County Assessors Sandberg and Poschek were present for questions and answers. Chisago County Assessor Patrick Poshek stated everything that is done tonight and the Valuations, etc., are mandated by the State of Minnesota. The Valuation Card is sent out ahead of the Board of Appeals meeting, and does have phone # s on it to allow persons to call ahead of time and talk with their Assessor. This meeting is held before a Local Board regarding those cases where they cannot reach a mutual understanding. It is up to the Local Board to mediate or resolve the issues. Assessment Class and the Estimated Market Value as of January 2, 2011, and are the only items the Council/Board can deal with tonight. Everything is about equalization, and the Local Board can make changes if they so feel. Residential Appraiser 1
Larry Sandberg and Commercial Appraiser Patrick Poshek were present from Chisago County for questions and answers. Assessor Poshek stated there were no major changes in Commercial; everything in the area has pretty much stayed the same. Between October 1 st, 2009 to October 1 st, 2010, there were only (4) sales in Commercial property. These did not involve a Bank or Foreclosure; they do not include Short-Sales, Contract for Deeds, etc. Vince Charles approached the Local Board of Appeal members. He stated he owns the building in which Snap Fitness is located (15.00198.00). He provided the Board with his own property comparisons. Charles stated everyone was here regarding equalization, and from his standpoint he is overvalued. He felt his building was overvalued compared to the neighboring businesses in his area. Vince Charles stated his comparisons were done with land only, and then some with land and building combined. His property on his Hand-out was listed as item A, and it was shown compared to the Helberg Building, the Hardware Store, the Stein Agency Insurance building, the Mother Goose building, the Bakery, and the Dinnerbel. He added his land value was dropped in last year s valuation, so this valuation shows the building must have gone up by $5,000. He referred to his chart of comparisons, and stated that most of the properties either went down or stayed the same, with the exception of the Helberg (Antique Mall) property. He added he had calculated the square footage off of the County Tax Records, divided it into the Value, and had come up with a figure per square foot for each of the comparables used. There figures ranged from $19.18 to $38.58 per square foot. Charles building came out to be $49.10 per square foot. Charles added this is a big difference when compared to the figures on his building. Mayor Carlson stated the Stein Building was remodeled recently. Assessor Poshek stated this building is very old, has leakage, uneven floors, etc. Poshek also added the Antique Mall (Helberg building) is also a very old building, which is good for the ambience of an Antique Mall, but it is not a good building to use as a comparison. Carlson agreed it was a very old building. Vince Charles stated he had averaged out all of his figures per square foot, which came out to be $27.52. If you use that figure in calculating his 2
building s square footage, the Value comes out to be far less than the Assessor s figures. ($177,000 vs. $408,000). Mayor Carlson stated the Dinnerbel is also a very old (100+years) building, and may not be comparable to Charles building. Vince Charles stated the construction of his building is also different; he has a stick-built structure. Assessor Poshek reviewed the figures and information that the County used for comparables. He explained they take the total value, divided by the gross square footage of the building to come up with a per square foot figure. Mr. Charles s building comes out at $71.00 per sq. ft. If you use the Dinnerbel, and remove all the depreciation and say it is fairly new, it would come out to be $90.00 per sq. ft. If you go to the Stein building, it is at $63.08 per sq. ft. If you remove all of the depreciation as if it were new, it would be at $92.00. If you go to the Lindstrom Hardware building, it is at $42.00 per sq. ft. It has minimal windows, minimum height, etc. If you remove the depreciation and make it new, it would be at $63.00 per square foot. Assessor Poshek stated the building that is most comparable to the Snap Fitness building, is the Many Voices building. It is currently valued at $76.00 per square foot. The Land Value Schedule, Size, Age, and Street Location, all affect the Value also. If you are located facing Hwy. 8, the Value would all be in the store front. If you are on a controlled intersection on Hwy. 8, the Value is higher, etc. Poshek continued the new Nabpco Store is valued at $9.18 per square foot. Energy efficiency, economic life, etc. will affect figures also. Typically, a Doctor or Dentist Office will be worth more because of the partitions inside, the wiring, the plumbing, etc. They try to use everything when establishing a Value. They also use the Land Value, condition, and age of the building. Mayor Carlson questioned the Value of the Many Voices building, which was at $441,000; (the land being at $87,100 with the building valued at $353,900). The land size is at 7,081 sq. ft., with the building at 5,760 sq. ft. Vince Charles stated it is built out of block, and added you cannot put up a block building for the same costs as a stick-built. Poshek stated this building Value is higher than that of the Snap Fitness building. Assessor Poshek stated there is a comparable property that recently sold in Shafer, the Shafer Saloon. It sold for the same price per square foot as the 3
Snap Fitness building. The Real Estate sold for $390,000 which included the personal property valued at ($20,000). The Business was sold separately. Vince Charles stated it is not comparable as it was a working Bar. Also, one should never value a property at land combined with the building per sq. ft. Mr. Charles brought up a building in North Branch (16.00380.00). The building was Commercial, and was located in the Downtown area. It sold for $215,000, but the Value was $386,500. Poshek stated it is the old Library building. The Seller was a Bank, and the property was in Foreclosure. Poshek stated he verified the sale. Charles added the Market is the Market, and it should not matter if it is a Bank or Foreclosure sale. The purpose of this meeting is equalization, and his building is not being treated unfairly. He felt common sense should also be added to the equation. Assessor Poshek stated his recommendation to the Local Board is No Change in the Valuation of the Snap Fitness building. Mayor Carlson questioned what Charles bought his building for. It was sold at $440,000 minus the personal property. Charles stated he could not get his money back if he sold it today. He felt the total Value should be $300,000. He purchased the property two years ago. Again he went to the figures per sq. ft. that he had estimated on his Hand-Out sheet. Mayor Carlson stated he did not feel that the properties that Mr. Charles used on his estimates/sheet were credible comparisons. He felt the buildings such as the Helberg building were far too old. He added the City has purchased property, in which there were two Appraisals. One was high, the other was low. Just because there were two different figures on the Appraisals did not mean the property Value was arrived at by averaging out the Appraisals. Mayor Carlson questioned what the Lindgren building sold for. Poshek stated it sold in April of 2008 for $205,000. It was then remodeled. The building Value is $223,900, with the total Value of land and building being $274,900. The square footage is 4,879, and it is located next to the Helberg building (Antique Mall). Assessor Poshek stated we are currently beginning to see a downward trend on Commercial in small towns. We did not see that in these figures between October 1 st 2009 & 2010, but should start to see it reflected next 4
year. There are also still sales out there that are indicating a strong sales price. They have an Industrial building up by Harris, and a new Nabpco building that are proving to hold those values. Vince Charles stated he would at least like to be comparative to surrounding properties/businesses in his area. Mayor Carlson stated he would like to use the comparables of Many Voices, Lindgren s sale, and Dinnerbel if you want to. He added the Value was already reduced last year by 10%. If Mr. Charles bought the property in 2009 for $440,000, and it is now valued at $408,000 which is less than he paid for the building. Assessor Poshek stated we want to be at 95% Value, or the State of MN will come in and set the Value themselves. They set the Value by an evaluation system. Mayor Carlson questioned Board members as to what they thought on this situation. He felt there may be a slight reduction, but not by much. Board member Flug agreed that the Value has already been lowered. In 2010 the Value was set at $403,140. In 2011, it is Valued at $408,000. If he were to lower it at all, he would not lower it below the 2010 Value, or leave it just as it is. Wishy questioned if Charles had complained about the Value in 2010. Charles stated he had gone to the State Tax Appeals Court and won. Assessor Poshek stated it did not go to Court, but rather the County and Mr. Charles reached a decision regarding the classification, and what amount was Valued at Commercial and what amount was Valued at Residential. Vince Charles stated the Value went from $10,928 to $9,810 in 2010. Mayor Carlson stated the City s portion of taxes has gone up minimally. The land Value has also been dropped by $15,000. Vince Charles requested that if each Board member feels that they cannot reduce the Value of his building, then they individually need to tell him why. Mayor Carlson stated if he thought the City was just going to reduce the Value to $300,000 he was blowing in the wind. It is not personal but is unrealistic. This figure is not even close to the real Value. Flug added the figures used by Mr. Charles are not calculated according to the correct buildings. He building is the newest building and not comparable to the very old buildings without adjustments. We need a justifiable reason to make a reduction. Mayor Carlson agreed. 5
Motion by Carlson, second by Wishy, to lower the Value from $408,000 to $388,200; land value at $91,400 and building value of $296,800. Motion carried 3-0. Vice Charles questioned if he still had the right to appear at the County Board of Appeals. Assessor Poshek stated yes, as he is registered on the Sign-In Sheet for this meeting of the Local Board. Al Wahlgren appeared before the Local Board members. He stated he felt his property Value was too high (15.00198.00). He had been researching Residential Lake Properties in the Chisago Lakes Area. There have been (181) Sales in the last couple of years that one could use for comparables in according to the Department of Revenue. There were a total of (352) sales including non-arms length sales. Out of the (352) sales, there hasn t been one property that has sold at the Tax Value of his property. If a person wishes to sell their property within a reasonable amount of time (3-4 months) it must be priced at a reasonable price. The closest two sales to his property, were sold for $100,000 less than his current Tax Value. His question was why is he paying taxes at a higher Value than any of the sales. Mayor Carlson questioned what the Assessed Value is for Mr. Wahlgren s property. Assessor Sandberg stated $595,300. Wahlgren stated the two sales were at $496,000; one sold in 2009, with the other sale in 2010. Assessor Sandberg stated there was one in Chisago City that sold for $700,000, but it probably was before 2009. Wahlgren stated if you look at that property, it was not considered a good sale and involved the Bank. Assessor Sandberg stated there was a new rambler on the Lake, which sold for $775,000. There was also another that sold on the Lake for $722,000 in 2010. Wahlgren stated that was also not a good sale as it was a trade, or a gift, or some type of Estate sale. Sandberg stated the Kirvida property information was not available to use yet in determining the Value, but it did sell for $575,000. Wahlgren stated that property was on the Market for a very long time, and it was a private sale which occurred within the last few months. Assessor Sandberg stated on Lakeshore, they use sales right up until the time of assessing in their comparables. They also use as much of the data available as they can. Mayor Carlson stated it is harder to sell a top-end home, as there are much fewer potential buyers. 6
Assessor Poshek stated in regards to the larger parcels you are talking about, one has to remember, the front (300) feet are lakeshore. The rest of the acreage is classified as agricultural. The lakeshore changed a lot, while the agricultural did not change much. This would affect the total Value. Wahlgren stated he did studies on the Land Values. There is a large property on North Lindstrom Lake. The estimated Market Value was reduced by 32% from the year 2007 to 2010 in the Market Value. It is classified as Agricultural land. There is an approximate (4+) acre lot on South Lindstrom Lake that has gone down by 24% during the same time period. His Lakeshore property has only gone down by 16% during this time. Mayor Carlson mentioned a property on South Center Lake that has (6) lots, which are approximately (98) foot lots. This is relatively close to Mr. Wahlgren s footage, and they sold for $300,000. Assessor Sandberg stated the last two lots sold for $340,000. Mayor Carlson stated this was at the peak of the Real Estate Market. Wahlgren added that the Department of Revenue is showing that Agricultural land is now going out of sight pricewise. Mayor Carlson stated recently in the paper, it stated that in history this is the best market for farmland prices ever within the State of Minnesota. Assessor Sandberg added Real Estate is a local Market. If you are in prime farmland country or down in Iowa, this may be true but it is not true for Chisago County. We have small fields, and different soils. They get $300 per acre rent, where we only get $50-$60 per acre in this area. They have much larger farms, Ethanol Plants, etc. Our Values have dropped dramatically, and our records show it. Assessor Sandberg explained that if Lakeshore land has a buildable site, the site Value is the same whether or not it is (50) or (100) feet. After that, the Value is determined at a dollar amount per foot of additional shoreline. On these large parcels, you can only put a site Value on it, plus the front footage calculations. The balance of land is taxed as Agricultural. Until it is developed, it is not taxed at the same Value as a regular Residential Lakeshore Lot. Wahlgren stated that he felt this system is unrealistic and unreasonable. The Statutes say it should be valued at Market Value. It needs to be based at a reasonable Market rate. He could not sell his home at the Assessed Value. 7
Assessor Sandberg stated it was lowered by ($50) to ($60) last year. Wahlgren stated there are no comparables to use when determining the Value. How does one conclude then, that the figures assessed are reasonable? Assessor Sandberg stated their Residential Sales Ratio is 93.4% The Values must be no less than 90.4%, or the State of Minnesota will step in and make them raise the Value. The target range they strive to meet is 95% to 100%. Mayor Carlson and Board member Flug agree that Mr. Wahlgren does have a good point and argument. The Board has nothing solid to use as a comparable at this time, and the Local Board will look at this property and comparables in the future years against these sales. Motion by Flug, second by Wishy, to leave the Value as is on the Wahlgren property (15.00198.00). Motion carries 3-0. Assessor Sandberg stated there have been a few property owners that did approach the County prior to this meeting. They were not in attendance this evening, but Assessors will review their findings and recommendations. 15.00825.17 Beckman This is a Twinhome on Neal & Newlander. After viewing the property, it was a case of having bad data. The basement was not finished, and there was no walk-out as stated. The County recommended lowering the Value from $157,000 to $139,600. 15.00840.33 Reller This home is located behind the Free Church. The quality factor was changed. The County recommended lowering the Value from $187,600 to $177,700. 15.00803.03 Tessling This home is located in the Neal Ave. area. It has mold issues in the basement, and is very outdated. The County is recommending lowering the Value from $297,300 to $271,600. 15.00813.22 Selicar/Muske Equity Homes This property is a middle Unit townhome, located off of Olinda Trail and 295 th. Assessor s agreed to equalize the Middle Unit compared to the two 8
outside Units. It is not a very functional design. The County is recommending lowering the Value from $151,500 to $128,500. 15. 00336.00 & 15.00334.00 Bank Owned The property is located by Pleasant Hill. It is separated by a lot in between the house and Street. The two lots should be combined into one PID. They valued the property as if they were combined lots. The building has no basement. The building is in very poor shape. It has very old wiring and electrical, the floors are slanted, there are odors in it, it is a very poor layout, etc. It is for sale for $64,000. The County recommends lowering the Value from $103,300 to $75,300. Motion by Wishy, second by Flug, to approve the changes as recommended by Chisago County Assessors for the above (6) properties. Motion carried 3-0. Motion by Flug, second by Wishy, to adjourn the meeting. Motion carried unanimously. Meeting adjourned at 8:45 p.m. Respectfully, Barb Barnes Administrative Assistant 9