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05-09-1985 CC MIN - BOE ~ BOARD OF EQUALIZATION MEETING OF THE ELK RIVER CITY COUNCIL HELD AT TIlE SHERBURNE ADMINISTRATION BUILDING - COMMISSIONER'S ROOM THURSDAY~ MAY 9~ 1985 Members Present: Mayor Hinkle~ Councilmembers Schuldt, Williams and Gunkel. Councilmember Engstrom arrived at 9:30p.m. Members Absent: None The meeting was called to order at 7:00 p.m. by Mayor Hinkle. Mayor Hinkle introduced the City Council and County Assessors, Ty Bisc.hoff and Jerry Kritzek, to members of the audience. Ty Bischoff explained the purpose of the meeting and the procedure for reviewing the 1985 assessed valuations for property in the City of Elk River. Mr. Bischciff ~e:g,plained that it has taken four years for Assessor Jerry Kritzek, to complete the assessed valua- tions for the entire City of Elk River beginning with the 1980 legislation ordering the assessment of property on a yearly basis. Therefore, some properties that were done most recently has not been assessed for quite some time and received a more sub- standial increase in their assessed valuations. Councilmember Williams questioned whether or not surrounding properties were taken into account when establishing property valuations. Jerry Kritzek stated that generally, if the surrounding land values and zoning is the same, the assessed valuation would remain consistent, however, if a higher grade home is located in a neighborhood where the homes are in a deteriorated condition, the higher grade may be depreciated somewhat. Ty Bischoff explained that a more competitive reassessment of apartment buildings in Elk River has been completed this year at the direction of the State of Minnesota Revenue Department. Mr. Bischoff stated that the ratio between the market value and the assessed valuation for property of this type should be between 80 and 90 percent. At the present time, based on recent apartment building sales in the City, the market value versus the assessed value is approximately 58 percent. Therefore, there has been quite an increase in the assessed valuation for the apartment properties. A sign-in sheet was used for property owners that were present to discuss the assessed valuation of their property for 1985, with the City Council. The following names appeared on the list: Richard Goetz Bruce Goetz Lyman Marshall Donald and Delles Singer Ernest Toth Wilber Taylor Earl Hetrick Milo Hennemann John E. Nicholay Peter T. Rob VanValkenburg Warren Williams . . ~ Board of Equalization Minutes May .J9t 1985 Page Two 1. Richard and Bruce Goetz Mr. Richard Goetz indicated that he and his son, Bruce, each owned a 20 acre parcel in the South half of the Northwest quarter of Section 1. Mr. Goetz in- dicated that he had paid $20,000 for the 20 acre parcel and that he was being assessed for 19 acres because one acre was taken up by a county road and the assessed valuation for the 19 acres was $22,800. Mr. Goetz further indicated that his son's property was assessed for 20 acres at $24,000. The Goetz's expressed their feeling that the assessed valuation was too high, based on the sale price of the property. Ty Bischoff indicated that the sale price of one parcel of property did not determine the market value for all parcel of equal size and type in the City. He further stated that the mean is based on many sales of comparable property. Mr. Bischoff explained how agricultural property values were determined and explained the Green Acres process. The Goetz's indicated that they were not aware that they could have maintained Green Acre status on their property. Mr. Bischoff stated that the Green Acres status could have been continued by filing for the continuation within 30 days of the sale. Since this had not been done, they must homestead the property or they must own it for 7 years before they could apply for Green Acres. Mr. Bischoff indicated that the valuation had already been dropped from $1,500 per acre to $1,100 per acre. Councilmember Williams questioned the actual dollar amount of difference in taxes payable in 1986, if the property were assessed at $22,800 versus $20,000. Mr. Kritzek indicated that the amount of difference was $75,00. Mayor Hinkle indicated that he felt the $1,200 per acre was a fair valuation when compared to other 40 acre parcels within the City of Elk River. COUNCILMEMBER GUNKEL MOVED THAT THE VALUATION FOR THE PROPERTIES OWNED BY RICHARD AND BRUCE GOETZ REMAIN THE SAME. COUNCILMEMBER SCHULDT SECONDED THE MOTION. THE MOTION PASSED 5-0. 2. Lyman Marshall Mr. Marshall indicated that he was the owner of a 24-unit apartment building on Baldwin Avenue named Bal-Moral Apartments. Mr. Marshall stated that he had received a 47 percent increase in assessed valuation over 1984. Mr. Marshall stated that the assessed valuation for his property in 1984 was $427,000 and that 1985 assessed valuation was $632,000, a difference of $205,000. Mr. Bischoff indicated that all the apartment properties in Elk River had been reappraised after prodding by the Department of Revenue for the poor sales ratios. Mr. Bischoff further indicated that a certificate of real estate sales had to be filed with the State of Minnesota Revenue Department when a piece of property was sold. The Certificate of Real Estate Sale shows the purchase price of the property. The sales ratio was approximately 58 percent and should be between 80 and 90 percent. . --.., Board of Equalization Minutes Mafl"1985 Page Three Discussion was carried on regarding the size of the apartment building in question and the market value. Ty Bischoff explained the formula used in calculating the assessed valuation, that is; the average rent is taken times the number of units in the building, times 12 months in a year, times a capitalization rate. The capitalization rate used previously was 15 and that it had been lowered to 11. Councilmember Williams questioned the impact of the increase in assessed valuation on Mr. Marshall's taxes. Mr. Kritzek indicated that the tax impact would be an increase of approximately $7,600 for 1986. Mr. Marshall stated that this would force him to apply a $30.00 increase per month per unit. Councilmember Williams indicated that it was his feeling that this was quite a severe increase and ques- tioned the possibility of spreading the increase over several years. Mr. Bischoff indicated that if the City Council were to decrease the amount of the assessed valuation in any way, he felt that the Department of Revenue would override the Council's decision and leave the increased assessed valuation as it stands. Mr. Bischoff advised Mr. Marshall that he felt the Council's hands were tied at this point, that he will have an opportunity to present his case to the County Board of Equalization at their meeting. Mr. Bischoff stated that he felt that the County Board of Equalization Board would not be able to act on the valuation either, but that he may then proceed to the State Board of Equalization for an adjustment. If that failed, his final option would be a tax court appeal. COUNCILMEMER SCHULDT MOVED THAT THE ASSESSED VALUATION FOR THE LYMAN MARSHALL PROPERTY REMAIN AS ASSESSED. COUNCILMEMBERGUNKEL SECONDED THE MOTION. THE MOTION PASSED 5-0. 3. Donald and Delles Singer Mr. Singer indicated that he and his wife had recently purchased the 12-unit apartment building on School Street from Gene Kreuser. Mr. Singer indicated that the assessed valuation had gone up over 1984 by $102,600, which was a 43.7 percent increase. Mr. Bischoff reviewed the reasons for the increase in the assessed valuation for Mr. and Mrs. Singer and also explained the procedure that was used in determining the assessed valuation. Mr. Bischoff advised the Singers that their options were in pursuing an adjustment to the assessed valuation. COUNCILMEMBER GUNKEL MOVED THAT THE ASSESSED VALUATION FOR THE DONALD AND DELLES SINGER PROPERTY REMAIN UNCHANGED. COUNCILMEMBER WILLIAMS SECONDED THE MOTION. THE MOTION PASSED 4.0. -.., Board,of Equalization Minutes May,!,!; 1985 Page Four 4. Ernest Toth Mr. Toth indicated that in 1983, the taxes on a 33 owned were $1,666 in 1983, $26.34 in 1984 and were indicated that the valuation had increased $10,000 with $30,000,$40,000 in 1984 and $50,000 in 1985. acre parcel of property he $1,135 for 1985. He further each year, beginning in 1983 Mr. Bischoff indicated that the 1984 tax amount was an error and that it appeared that the property has been given Green Acres status. It was the consensus of the City Council that no action was necessary on the Ernest Toth property. 5. Wilbur Taylor Mr. Taylor questioned how the assessed valuation for his property has been determined. Mr. Kritzek indicated that Mr. Taylor had a 44 acre parcel of property in Section 6 in the northwest corner of the City. lIe indicated that 43 acres has been assessed as agricultural property at $300.00 per acre with the Green Acres credit. Mr. Kritzek further indicated that the wooded portion of Mr. Taylor's property had been assessed at $140.00 per acre. Mr. Kritzek further indicated that the 1 acre which had been split from the property which contained a house and a 12' by 18' foot garage was assessed at a higher rate because it was rented and not homsteaded. Mr. Taylor indicated that he was not there to protest his assessment but merely wished to understand how the valuation was determined. It was the consensus of the City Council that no action was necessary on Mr. Taylor's property. 6. Earl Hetrick Mr. Hetrick explained that he wished to protest the increase in the grade of his house from a 6~ to a 7 grade which represented a $250.00 increase in the total amount of his taxes for 1986. Mr. Kritzek indicated that he had assessed Mr. Hetrick's property in 1983 and determined the grade to be 6~. Prior to that, it had not been assessed for quite some time and was at a 5~ grade. Mr. Kritzek reviewed for the Council the criteria used in determining the difference between a 6 grade and a 7 grade home. Mr. Hetrick also discussed problems he was experiencing due to the commercial zoning in the Barrington Place Planned Unit Development and the Barthel Planned Unit Development with regard to noise, traffic, dust, etc. He further requested that the City Council send a letter to businesses in the Barrington Place Planned Unit Development restricting delivery hours. Discussion was carried on regarding raising the nuisance adjustment on Mr. Hetrick's property in 1984 and whether or not an additional adjustment was in order. Board of Equalization Minutes Mad1985 Page Five COUNCILMEMBER WILLIAMS MOVED THAT MR. IIETRICK'S PROPERTY VALUATION BE LOWERED BY AN ADDITIONAL $5,000 OVER 1984 IN CONSIDERATION OF THE NUISANCE FACTOR CAUSED BY THE BARRINGTON PLACE AND BARTHEL PLAZA PLANNED UNIT DEVELOPMENTS COMMERCIAL BUSINESSES, SPECIFICALLY, THE NOISE, DUST AND TRAFFIC. COUNCILMEMBER ENGSTROM SECONDED THE MOTION. THE MOTION PASSED 4-1. COUNCILMEMBER SCHULDT OPPOSED. 7. Milo Hennemann Mr. Hennemann stated that the assessed valuation on his property had gone up by 19 percent which created a 44.8 percent increase in his taxes. Mr. Hennemann in- dicated that the 1984 assessed valuation was $106,700 and had gone up $20,900 for 1985. Mr. Jerry Kritzek indicated that the increase in valuation was due to an upgrade in his home from a 7~ to an 8. Mayor Hinkle indicated.that he did not feel the Council could make an adjustment on the upgrade of the house, but wished to address the nuisance factor on his property caused by the Barthel and Barrington Place PUD's with regard to noise and traffic. COUNCILMEMBER ENGSTROM MOVED TO AUTHORIZE THAT MR. HETRICK'S PROPERTY VALUATION BE LOWERED BY $5,000 DUE TO THE NUISANCE FACTOR CAUSED BY THE BARTHEL AND BARRINGTON PLACE PUD'S WITH REGARD TO TRAFFIC AND NOISE. COUNCILMEMBER WILLIAMS SECONDED THE MOTION. THE MOTION PASSED 5-0. Mr. Hennemann indicated that he also owned an additional parcel of property behind the parcel previously discussed which was approximately 3.5 acres in size. He indicated that the assessed valuation increase created a 100 percent in the amount on his taxes. Jerry Kritzek indicated that the increase in the valuation was due to a change in classification; that the parcel has previously been agricultural and had been rezoned to commercial in 1984 and was assessed the commercial rate of $5,000 per acre. Discussion was carried on regarding the value of this parcel of property and the fact that there was not adequate access to the property in question. COUNCILMEMBER ENGSTROM MOVED THAT THE VALUATION FOR THE HENNEMANN PROPERTY BE LOWERED TO $2,500 PER ACRE RATHER THAN $5,000 PER ACRE. COUNCILMEMBER SCHULDT SECONDED THE MOTION. THE MOTION PASSED 4-0. Mr. Nicholay and Mr. Peter T. did not appear before the City Council. 8. Rob VanVaulkenburg Mr. Rob VanValkenburg indicated that he was present to discuss the square foot values that had been placed on the Sunshine Depot, Sneaky Pete's and the Pizza Station properties. Mr. VanValkenburg indicated that in his discussions with Mr. Ty Bischoff, he learned that the three properties were at the top of the list Boar1v9f Equalization Minutes May e;t 1985 Page Six of square footages for businessess in Elk River that he and Mr. Bischoff had compiled. Mr. VanValkenburg indicated that the Pizza Station and Sunshine Depot were valued at $30.00 per square foot and SneakylPete's at $35.00 per square foot. Discussion was carried on regarding the market value of the properties, the impact of the valuations per square foot on the second level apartments of the Sunshine Dopot and the age of the buildings. COUNCILMEMBER ENGSTROM MOVED TO REDUCE THE SQUARE FOOT VALUATION ON THE SUNSHINE DEPOT FROM $30.00 PROPERTY TO $25.00 PER SQUARE FOOT. COUNCILMEMBER SCHULDT SECONDED THE MOTION. THE MOTION PASSED 4-0. COUNCILMEMBER ENGSTROM MOVED TO REDUCE THE SQUARE FOOT VALUATION ON THE SNEAKY PETE'S PROPERTY FROM $35.00 PER SQUARE FOOT TO $30.00 PER SQUARE FOOT. COUNCIL- MEMBER WILLIAMS SECONDED THE MOTION.. THE MOTION FAILED 0-4. COUNCILMEMBER WILLIAMS MOVED TO REDUCE THE ASSESSED VALUATION ON THE SNEAKY PETE'S PROPERTY FROM $35.00 PER SQUARE FOOT TO $25.00 PER SQUARE FOOT. MAYOR HINKLE SECONDED THE MOTION. THE MOTION PASSED 4-0. COUNCILMEMBER.SCHULDT MOVED THAT THE ASSESSED VALUATION FOR THE PIZZA STATION AT $30.00 PER SQUARE FOOT REMAIN THE SAME. COUNCILMEMBER WILLIAMS SECONDED THE MOTION. THE MOTION PASSED 4-0. 9. Warren Williams MAYOR HINKLE MOVED THAT THE ASSESSED VALUATION FOR THE WARREN WILLIAMS PROPERTY REMAIN AT $136,000 BECAUSE OF THE LOCATION OF HIS PROPERTY AND THE FACT THAT HE WAS OVERBUILT FOR THEAREA~ COUNCILMEMBERENGSTROM SECONDED THE MOTION. THE MOTION PASSED3~1. COUNCILMEMBER SCHULDT OPPOSED. Discussion was carried on regarding the valuation of properties in the Industrial Park and concerns of the Elk River Associated Investors. COUNCILMEMBER SCHULDT MOVED TO CONTINUE THE BOARD OF EQUALIZATION MEETING FOR THE SPECIFIC PURPOSE OF DISCUSSING THE ASSESSED VALUATIONS OF PROPERTIES IN THE INDUSTRIAL PARK. COUNCILMEMBERWILLIAMS SECONDED THE MOTION. THE MOTION PASSED 4-0. The meeting was concluded at 12:00 midnight. Respectfully submitted, ~aA- 'Ijh-~ Deborah Kleckner Administrative Assistant sm