CC Minutes 2002 05 13 BORCHANHASSEN CITY COUNCIL
BOARD OF REVIEW AND EQUALIZATION
MAY 13, 2002
Mayor Jansen called for the continuation of the Board of Review and Equalization meeting to
begin at 6:30 p.m.
COUNCILMEMBERS PRESENT: Mayor Jansen, Councilman Peterson, Councilman Boyle
and Councilman Ayotte
COUNCILMEMBERS ABSENT: Councilman Labatt
STAFF PRESENT: Todd Gerhardt, City Manager; Roger Knutson, City Attorney, Angie
Johnson, Carver County Assessor; Steven Clay, Sr., Carver County Appraiser; and Tom Scherer,
Hennepin County Assessor
CONTINUATION OF THE BOARD OF REVIEW AND EOUALIZATION.
Mayor Jansen We now have in front of us the recommendations from staff on the appeals that
were filed over the course of this review. At this point if council is comfortable with my
checking to see if there's anyone in the audience that would like to speak to their appeal, I will do
that at this time, unless you have questions specifically now for staff. Okay. Is there anyone here
tonight that would like to speak to the Board of Review about your appeal? If so, go ahead and
approach the podium and if you'll state your name and address for the record and, would you like
the PID number? Would that help you locate the, okay. Just name and address please.
Rob Olson: Rob Olson at 7700 Crimson Bay Road, and the reason I'm up here speaking tonight
is I understand that our appeal has, at least from the assessor's point of view, been denied and I
wanted to address some of the issues that we think are important at this point. We live at 7700
Crimson Bay Road. It's a 5 lot development over by the Landscape Arboretum. Southeast comer
of Lake Minnewashta. We feel that that 5 lot development is severely limited in it's ability to
appreciate in value because of 3 major factors. That would be the proximity to Highway 5. We
are literally 200 yards from Highway 5 and the congestion and noise associated with that. The
poor lakeshore quality. Technically we are considered lakeshore, but we have 200 yards of
cattails to get through to get to open water, and so our ability to use that lakeshore and enjoy it,
etc is limited. We'd have to put in approximately 200, excuse me not 200 yards. 200 feet of
cattails. We'd have to put in a 200 foot dock at this point which would be very costly. And we
have no city sewer or water services at this point. We are one of the few parts of Chanhassen that
have no immediate future for MUSA line to come out our direction. In 2002, I should make notes
in history. In 2002 the assessor's office, they, we were originally going to go up approximately
$100,000 in value in the 2002 assessment. The assessor's office was gracious enough to
examine, come out and recognize the factors that I spoke to tonight and they lowered that
assessment by $50,000 plus dollars. Steve Clay was kind enough to address that issue. It was not
me bringing it up an issue at that point. It was my neighbor that brought up the issue last year.
Steve Clay was nice enough to, in lowering my neighbor's value, to also include me in the
lowering of that value by $50,000 plus. In 2003 now we're looking at increasing the value, the
assessor's office is now, the initial projection is to raise the 2003 projection by $68,500 and my
point here is that the same factors that Steve Clay in the assessor's office last year cited as
limiting factors in the ability of our properties to appreciate in value, still exist. If nothing else
they are enhanced by more traffic on Highway 5, etc. And so I would argue that our ability to go
Board of Review and Equalization - May 13, 2002
up 16.4 percent, which is what the percentage value would be, is very limited. So what I've
talked to John Kern at the assessor's office in trying to talk through the issues is, we think our 5
lot development is unique. We feel we are the only 5 lots that are subject to these major factors.
The assessor's office has tried to provide me with other properties in Chanhassen that they think
somehow approximate the, either noise or poor lakeshore, etc but in each case that they didn't
meet, they have not been able to give me a property that has all 3 of the major factors affecting
that I am citing tonight. So what I said to him, I said I think the only way, the only fair way to
evaluate our property is to look at properties that have sold in our immediate 5 lot development.
There is one property that has sold twice in a period of 8 ½ years. That is the property directly to
my north. It's our next door neighbor. That property sold in 1991 for $540,000. It sold in 1995
for $680,000 and it sold in May of 2000 for $709,277. Over an 8 ½ year period that's a
compounded growth rate of 3.25 percent. It's a much larger house than mine. It is 6,000 gross
square feet. Excuse me, it's 7,000 gross square feet. It is 6,000 finished square feet. I am at
3,200 finished square feet and maybe 3,300 gross square feet. It's got a 6 car garage. It has a
pool. It has a dock. It has a deck. I do not have a dock. I do not have a deck and I have a 2 car
garage. I would, in general I would say that property's ability to increase in value is substantially
over mine because of the amenities that I have cited. It's a big house. It's a beautiful house. I
have told the assessor's office that I am willing to go up the cited 3.25 percent increase that that
property has seen over the 8 ½ years. I said I'm willing to take my last year's 2002 property
value, or assessed limited market value and/or estimated market value. I said I'm willing to take
that and increase it by 3.25 percent because I have an actual sale, a record of sales in my
neighborhood that I feel is under the same conditions as me and I'm willing to go up the 3.25
percent. In that case, my case I'm at 417 and I'm willing to go up by 3 1/2,3.25 percent up to
$431,000. And I thought in my mind that would be fair and that evidently has not, is not what the
assessor's office is willing to accept at this point. I will say today in my conversations with John
Kern, the last time I spoke to him was 2 weeks ago. He had come out to my house. He had
examined the house. We welcomed him to look at our house, etc. The last conversation I had
with him, he gave me 4 properties to go look at, etc, and at that point he was willing to, through
our conversation, the course of our conversation, to lower the building portion of my property by
approximately $25,000. That was his proposal to me at that point. I did not accept it right at that
moment but I said I wanted to look at the properties you've talked to and I'll get back to you. I
was not able to get back to him until this morning, and he informed me that they had done some
type of study, etc and that the original proposal to lower my value my $25,000 was no longer on
the table. I received no phone calls over the last 2 weeks that they had done additional studies.
That the $25,000 proposal to lower, it was suddenly off the table, etc. I found out that today and
if nothing else, in good faith I think that's an unprofessional thing to do. To lead a homeowner
thinking that there would be some type of negotiation possible, when in fact given the
conversation we had today, I think that was not the case. So I obviously feel very strongly. My
neighbors have brought this periodically over the years. We will continue each year to bring up
the case. When they continue to try to increase us by 16 percent a year, all we can do is look at
the sales that have occurred right in our neighborhood and say that 16 percent is not realistic. In
this case I'm saying 3.25 percent, I can accept that. I can live with that. I can move on from
here. That's basically my comments.
Mayor Jansen: Okay, thank you.
Councilman Boyle: May I have a, Mr. Olson? Is your property the first property up behind 5?
Rob Olson: It is the second off of the highway.
Councilman Boyle: It's the second.
Board of Review and Equalization - May 13, 2002
Rob Olson: Yes. Last year our neighbor, directly on the highway, he brought, I think he, and
Steve Clay can clarify this. I believe he talked to Steve Clay last year, which caused Steve to
examine the property and subsequently lower my value as well. He lowered the first property and
then he lowered mine, citing the factors that we both have poor lakeshore. We have tough
proximity to Highway 5, etc.
Councilman Boyle: Thank you.
Rob Olson: Thank you.
Mayor Jansen: Mr. Clay, or Angie, whichever would like to address this. Where's the confusion
coming in between Mr. Kern and yourself as to?
Steve Clay: There really isn't any. The last year when I called, looked at the property just south
of him, closer to the highway and made a reduction on, is his name Anderson? Johnson?
Rob Olson: Hanson.
Steve Clay: Hanson. One of those Swedes. On his property based mostly on the quality of
lakeshore. On our aerials the subject, it looked, the quality of lakeshore looked a lot better than it
actually was when you got out there and walked it. Made a reduction in his neighbor's value and
since his was the same, also contacted him and suggested that we should lower his also in order to
have a good equity in the neighborhood with values. Those changes that we made in the land,
because of the quality of lakeshore, have stayed the same in our estimating system. I didn't go
back in arbitrarily and raise them back up this year again. The same factors that we used last year
to calculate values there are the same ones that we used to calculate values this year. The
property, well do have the sales comparison grid I assume that...
Mayor Jansen: Yes, but I guess my question was specifically as to why he would have
communicated that there might be a $25,000 reduction coming out of the building.
Steve Clay: When he, when John looked at the house initially he thought that the quality of the
house was marked a little bit high in our system, from what he actually saw. It was the first time
he had gotten inside it to review it in a while, and was willing to make an adjustment based on
that at the time. I called him up and gave him that information. He was going to get back to us
and never did. We don't tend to call people back a lot for fear of them thinking that we're being
overly aggressive or trying to bully them in coming to a decision. Not having heard from him, we
went ahead to prepare for this meeting tonight and did the sales comparisons which would tend to
tell us that our values is not too high.
Mayor Jansen: So the initial reduction of $25,000 came before you did your appraisals and
comparisons of the other 3 properties?
Angie Johnson: Usually what happens when somebody contacts us, they'll go out and do a
physical inspection. If they feel that maybe there should be an adjustment.., might go ahead and
do it and if the property owner is satisfied, we'll go ahead with that amount. Going through all
the work that we do put into it when somebody does you know really go forward with their
appeal, that's when we do go to the extent, extensive research to research sales and things like
that.
Board of Review and Equalization - May 13, 2002
Mayor Jansen: Okay. Alright. That answers my question. Any other questions for staff on this
one?
Councilman Ayotte: In the comps that you reviewed, were those other 3 properties, did they have
water and sewer?
Steve Clay: Yeah. Well excuse me, the first comparable and the third one do. The second
comparable is actually the house immediately next door to Mr. Olson to the north of him.
Councilman Ayotte: I can't hear you. You've got to speak up.
Steve Clay: I'm sorry. The comparable number 2 is next door to Mr. Olson. The next house to
the north.
Councilman Ayotte: They do have water and sewer?
Steve Clay: No. Those 5 houses there.
Councilman Ayotte: They do not?
Steve Clay: Do not have water and sewer.
Councilman Ayotte: But they do have lake access.
Steve Clay: Well they are on the lake but the quality of the lakeshore is, especially for those first
2 southern lots is pretty marginal. As he was saying, there is quite a lot of cattails that you'd have
to go through before you get to water.
Councilman Ayotte: But analytically if one takes a look at access from the criteria that you
employ versus I'll use the word reality of really having access, is there disparity between the
lakeshore properties?
Steve Clay: His and his neighbors?
Councilman Ayotte: Yeah.
Steve Clay: We did adjust the neighbors sale price down $30,000. It has more shoreline. It's
about the same size. The quality of the lakeshore might be a little bit better. A few, little bit less
distance of cattails to get to the water. We did make a $30,000 reduction in the sale price of that
comparable sale to adjust for the difference in the two lots.
Rob Olson: Could I address, ifI may please.
Mayor Jansen: Certainly.
Rob Olson: My, the methodology they're using, that John took me through. They used, and
please correct me if I'm wrong. They took the sale of my next door neighbor, and John said that
they then adjust it. It sold for $709,000. They said okay, we'll adjust $30,000 for the lot and
we'll adjust, we'll make an adjustment for the square footage. You know there's 6,000 finished
square feet versus my 3,200 square feet. And they, if I'm not mistaken, they took out $47,000
only for the square footage. So when they started at 709 and they took out 30 and they took out
Board of Review and Equalization - May 13, 2002
40,000 and whatever and the bottom line is, as John told me, given the factors.., and we adjust it
for your house, you're at about, somewhere in the $650,000 range and I almost fell off my chair.
Because I said, you've got to be kidding. Mine is 3,200 square feet. That house is 6,000 square
feet finished. It was a parade house in 1991. It has a pool. It has 6 car garages. It has a deck. It
has a dock. It has extensive landscaping, and you're only going to take off approximately
$70,000 for all that difference. I said, I'm in the building business. I work with Keith Waters and
Associates. We build 2 to 4 million dollar homes. At the very minimum we're at $200 per
square foot. That's the minimum that we build for. But if you want to go down to more realistic
things and what average person, let's go down to Puke. Puke probably can build a square foot for
$100 per square foot. That's $200,000 difference in this case. That makes a lot more sense to me
than $67,000. He's trying to tell me my house is worth $600 to $650,000. It just isn't, I will
entertain anybody to come out and stand between these two properties and look at my house. My
house is nice, but it's 3,200 square feet. It does not have the amenities that this house has. This
house is huge compared, it's twice the size of my house. They come up with $67,000 difference.
I don't buy it. I just don't see it. It does not make sense to me so they're trying to tell me that
they've done comparable sales, and things like that and it just isn't adding up to what I feel the
value of my house is. IfI could sell my house for 650, I'd sell it right now. In fact I'd take a
discount, I'd sell it to anybody for $625,000, ifI could get that much. It ain't going to sell for
that much. It's never going to sell for that much.
Mayor Jansen: Using actually the 3 comparables, the price that they came up with was $593,000.
Rob Olson: Yep, I agree with you. He did mention that figure when you mention them
altogether. Now I would, as I said before, I would argue about the other two properties they
threw in there. That they are not comparable to my lot in that they do not have the 3 major
factors that we cite in our neighborhood. They do not have Highway 5.
Mayor Jansen: Understood.
Rob Olson: They don't have lakeshore and they don't have, as they noted, they have city sewer
and water which our's doesn't. Only the property next door did not have city sewer and water.
These all have. So I would, I've argued with John. I say, I've looked at the properties you've
given me to go look at. They do not compare to my 5 lot development. They never will. We are
the only, we are a unique development and I understand the need to try to take gross sales in
Chanhassen for lakeshore property and try to apply them to every lakeshore lot, and that's fine.
You can start out that way but now we're down to the reality of the situation and specific
instances and when you get down to that level, you can't see 16 percent increases year after year
in our particular case. It just, it doesn't wash with reality and common sense that a person should
have.
Mayor Jansen: Okay, thank you.
Rob Olson: Thank you.
Mayor Jansen: Appreciate it.
Councilman Ayotte: Can I ask another question?
Mayor Jansen: Of staff?
Councilman Ayotte: Yep.
Board of Review and Equalization - May 13, 2002
Mayor Jansen: Sure.
Councilman Ayotte: If on the comment and the discussion that occurred, and a certain amount of
miscommunication and someone not calling someone else with regard to $25,000. Ifa statement
was made by your, by our representative that that 25K reduction was reasonable and made a
statement that that's what was going to occur, rather than a discussion point, would we recognize
that and accept that? If someone made a commitment. And the reason why I ask that, on the
federal side, I work for the fed's, ifI as a federal employee would make that statement, even
though I'm not a contracts officer, and I said we're going to reduce it by 25,000, I would be held
to that by Federal Acquisition Regulations. And we would have to recognize the 25K. Do we
have that same kind of requirement or goal or law or regulation?
Angie Johnson: If that's what you would like to do, that would be fine.
Mayor Jansen: As a council we can obviously make that decision.
Councilman Ayotte: Yeah, but I was just wondering if there was some sort of.
Mayor Jansen: What they did was exercise their usual procedure and in not having heard back,
they then proceeded to pull together all of these documents.
Councilman Ayotte: Well I understand. I'm just saying the $25,000 hiccup to me.
Angie Johnson: If that's what you would like to... fine.
Councilman Ayotte: Thank you.
Mayor Jansen: Alright, thanks. Is there anyone else here that would like to speak to their appeal
this evening? If so, approach the podium. Seeing no one, I'm going to bring this back to the
Board of Review. Council. Councilmen.
Councilman Boyle: Well in the case of Mr. Olson, he feels it should be $431,000. There was
indication earlier given to him that $25,000 of $461,000 was the first verbal thought coming from
a County representative. Possibly a compromise there. I would go with the homeowner for at
least $25,000 reduction.
Mayor Jansen: Okay. Other comments?
Councilman Ayotte: I agree.
Mayor Jansen: Okay.
Councilman Peterson: I'm comfortable with that.
Mayor Jansen: If we're going to handle one separately, do you just need a motion for all except
for and then we change 10 or as amended? Would you like.
Angie Johnson: Why don't we just do this one first and then if you want...
Mayor Jansen: Okay. IfI could have a motion for Mr. Olson's property, number 10.
Board of Review and Equalization - May 13, 2002
Councilman Boyle: Make a motion that PID number 25.2610010 be adjusted by $25,000 down.
Angie Johnson: Coming to $461,100 then.
Councilman Boyle: That's correct.
Councilman Ayotte: I'll second.
Councilman Boyle moved, Councilman Ayotte seconded to approve a reduction of $25,000
bringing the market value to $461,100 for PID 25.2610010, 7700 Crimson Bay Road. All
voted in favor and the motion carried unanimously 4 to 0.
Mayor Jansen: IfI could have a motion on the rest of the, let me ask one question. Do we have
to do Hennepin County separately or can we do everything together as a motion?
Angie Johnson: I'm not sure.
Roger Knutson: As a motion it doesn't matter. You can combine anything you want into a
motion.
Mayor Jansen: Okay, great. IfI could have a motion please.
Councilman Boyle: I make the motion we approve the appeals as recommended.
Mayor Jansen: As recommended by staff?
Councilman Boyle: By staff, yes.
Mayor Jansen: Okay. All those in favor? Oh I'm sorry, I needed a second. Excuse me, I
jumped ahead. And a second?
Councilman Peterson: Second.
Councilman Boyle moved, Councilman Peterson seconded to approve the 21 appeals for
Carver County and the 1 appeal for Hennepin County as recommended by staff. All voted
in favor and the motion carried unanimously with a vote of 4 to 0.
Mayor Jansen: So that concludes our meeting. We are adjourned as the Board of Review. Thank
you.
Mayor Jansen adjourned the Board of Review and Equalization at 6:50 p.m.
Submitted by Todd Gerhardt
City Manager
Prepared by Nann Opheim