BOARD OF REVIEW 2004 04 26CHANHASSEN BOARD OF
REVIEW AND EQUALIZATION
SPECIAL MEETING
APRIL 26, 2004
Mayor Furlong called for the continuation of the Board of Review and Equalization
meeting at 6:00 p.m.
COUNCIL MEMBERS PRESENT: Mayor Furlong, Councilman Ayotte, Councilman
Labatt, Councilman Lundquist and Councilman Peterson
STAFF PRESENT: Todd Gerhardt, and Roger Knutson
FINAL ACTION OF APPEALS SUBMITTED TO THE BOARD OF REVIEW
AND EOUALIZATION.
Mayor Furlong: We do have the staff report in front of us that's been prepared and,
which ! think everybody has had a chance to review and look at. At this time is there any
additional comments from the assessor's office, or this is your report?
Angie Johnson: This is our report. The recommendations that we have here of what
we're recommending. Unless the Board has any questions, these are our
recommendations.
Mayor Furlong: Okay, thank you. Any questions for the assessor's office. Any
questions for staff?. Craig, could you take over for a minute? We do have somebody here
that might want to comment on the assessor's report.
Councilman Peterson: With that in mind, why don't we get the comments, if there are
any individuals that wanted to make a comment on the report or have any other
information, why don't you come forward and state your name and address please.
Anybody?
Todd Gerhardt: We have Mrs. Reeder here this evening. No?
Maren Reeder: Yes.
Councilman Peterson: Would you like to make any comments or not?
Maren Reeder: Yes ! would. Specific to my property.
Councilman Peterson: Yes. Or about anything in general, that's okay too. Name and
address please.
Maren Reeder: Copies of, ! don't know if you want copies of what I'm going to say.
Board of Review and Equalization - April 26, 2004
Councilman Peterson: Sure.
Maren Reeder: My name is Maren Reeder and we live at 6501 Troendle Circle. We
discovered approximately 2 years ago a problem with the windows in our home and
subsequently we had the home investigated by a variety of different people. We received
estimates of repair that ranged from $220,000 to $114,000. We chose the $114,000. We
have been working on the house now for the past 2 months. The cost of repairs have
escalated because of significant damage to framing members in the home which could
not be predicted before the home was, before construction took place. So the bottom line
is, to bring the home back to it's market value before we discovered the problem requires,
or is requiring $132,549. My husband investigated what the City of Woodbury is doing
for similar cases because they have approximately 30 percent of their stucco homes that
have undergone similar problems and what he discovered is that, and this is in the last
paragraph on the sheet ! gave you. Woodbury has issued 209 permits for stucco repair
representing 31 percent of it's 670 homes with stucco exterior. Most of the stucco repairs
included structure damage and mold remediation with many costing $150,000 or more.
After a physical inspection to confirm the presence of damage and the accuracy of the
baseline valuation, Washington County subtracts the amount of the cost to repair estimate
from the valuation until such time as repairs are made. With respect to the repair
required, we did have Michael Happ, who is from the Building Codes and Standards
Division at the State come out and he has been involved extensively in the project. He
agrees with the extent of repair that was required to the home, and it is for these reasons
that we feel reducing the market value of the home by ! think $14,000. ! can't.
Steve Clay: $17,000.
Maren Reeder: $17,000 is not, does not reflect the actual decrease in value to the home.
Mayor Furlong: Alright, thank you. Questions.
Councilman Ayotte: Thank you. Was any of your cost, or would any of your cost be
recovered through insurance?
Maren Reeder: No. We're currently suing the builder, so the original builder of the
home. So we cannot recover any costs from our homeowners insurance. We may be able
to recover money from the builder's insurance company.
Councilman Peterson: Is the house less than 10 years old?
Maren Reeder: Yes.
Mayor Furlong: Is the builder, what is your, what sort of correspondence have you had
with the builder? Were they involved in evaluating the damage or have they agreed to
pay for anything?
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Board of Review and Equalization - April 26, 2004
Maren Reeder: They refuse to help us in the matter, which is why we hired legal counsel
and Michael Happ has also been in contact with the builder and he got a similar response.
Mayor Furlong: Are they still in business? The builder.
Maren Reeder: Yes.
Councilman Peterson: The repair work has or hasn't been done?
Maren Reeder: It's currently being done. And they did discover several building code
violations.
Mayor Furlong: Upon repair or completion of the repairs, would the house be back at a
normal level as if the damage had not occurred?
Maren Reeder: Yes, ! think so. We're not putting stucco back on, so some people would
argue that lowers the price because it's no longer a low maintenance or zero maintenance
exterior. Other people would argue that in fact it increases the value because of the
problems many people are encountering with stucco homes. ! don't think it's the stucco.
! think it's the windows, but the bottom line is the perception out there is that stucco
homes are problematic.
Mayor Furlong: Okay. Question for the assessor's office.
report, if I'm reviewing this correctly, you reduced the value,
similar to the other ones, or you reduced the property?
How, with regard to your
is this the value of the land,
Angie Johnson: Land and buildings.
Mayor Furlong: Land and buildings.
Angie Johnson: Total market value was reduced 16 percent, and this was a tax court case
that we handled here in Carver County. It was the same situation.
Steve Clay: ! should clarify that Mr. and Mrs. Reeder called us about a year ago ! think
originally.
Maren Reeder: Correct.
Steve Clay: And we, at that time took the 16 percent off the building and the land.
Unfortunately someone in our office who was going through and making land
equalization adjustments in that neighborhood didn't catch the note on our screen and !
took that 16 percent off the land portion. So we're recommending this $17,400 reduction
tonight is to again take that 16 percent off the land portion. ! was out to their house and
they are in the process of correcting. Most of the estimates, and this is not the only
property in Chanhassen that's having this problem. We have a number of other
properties that we've adjusted at the 16 percent level. You can approach it a couple of
Board of Review and Equalization - April 26, 2004
ways. You can take a simple ! guess would be the best, an easier, simpler route that
Woodbury took was to simply look at the cost to cure the problem. And often these
estimates come in in the range of $150,000 to $250,000 depending on the size of the
home and the amount of damage, so her estimate is not out of line by any means.
Mayor Furlong: I'm sorry, to clarify the estimated cost to repair seems reasonable?
Steve Clay: Yeah. To remove the stucco and replace flashing and correct any damage to
the interior walls, so that's not an extreme number by any means. So you can deal with it
by subtracting the cost to cure the problem and putting it back on when the job is
finished, or what we're doing in Carver County is, ! looked at sales data of homes that
have sold where they had the problem and the buyers and sellers knew about the problem
and have tried to extrapolate an impact as a percentage of what the condition is doing to
that home market value property. ! think we've had 2 sales or 3 where we've had some
market data on. ! strongly suspect over the next year or so there will be more and more
of these problems coming up and hopefully we'll give them more market data telling us
how our buyers are looking at this and how we'll be adjusting our purchase prices for
those who know the problems exists and proceed with the purchase regardless.
Mayor Furlong: I'm sorry, sure. Councilman Ayotte, please.
Councilman Ayotte: Can ! ask a question?
Mayor Furlong: Please do.
Councilman Ayotte: Have you noticed any, with the type of problem that you're seeing
here and if you see the problem growing to some degree, have you seen any trends with
respect to demographics or builders or ordinance violations, any of the above. Not
stating specifics. Have you seen any trends?
Steve Clay: What I'm seeing generally is that often times the problems originated on
window or deck flashing. Whether it was installed improperly or whether it was a design
problem with the windows, ! can't speak to that but most often these problems occur
around windows. Stucco homes tend to be more involved in this, not exclusively but we
see more of it, or I've seen more of it in stucco homes just because it's so much tighter
seal. The outside, the moisture has little places to go other than get trapped inside. And
there are those who argue that the building codes that changed in the last 10 years
requiring plastic wrapping on both sides of the stud walls is part of the problem because
there's no more opportunity for the walls to breathe once moisture gets in there. It can't
leave.
Councilman Ayotte: Is any of the information that you have, or you've discovered, is all
of that public?
Angie Johnson: Yes it is.
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Board of Review and Equalization - April 26, 2004
Steve Clay: Yeah. There are, 2 years ago ! think it was, maybe 2 different companies
that were doing this sort of repair work. Christian Inc. and one other. The name escapes
me. ! just read in the newspaper this last weekend that it's kind of a real burgeoning
industry. There's 20 or 30 now...so obviously the problem's out there and they're
recognizing that and they're creating businesses to meet the need.
Councilman Ayotte: I guess the reason why I brought up the question is because if we
continually have this issue and there's an issue with valuation, it seems to me that
collectively both the city and county ought to take a good hard look on what we need to
do to turn it around.
Angie Johnson: ! think presently because of the building codes again have changed, the
problems have been corrected. Mostly it's been the houses that were built in the late
1990's, like the '98 version out. That's one of the years that's probably one of the worst.
'97-98.
Maren Reeder: May ! make a comment?
Mayor Furlong: Sure.
Maren Reeder: Theoretically all of the homes follow building codes, so that if building
codes changed and all builders followed those building codes we might not see those
problems. But what I've been told from people at the state who work in this building
code business is that people still don't follow the building codes and this is an aside to the
property tax but as a city ! think you do need to think about, okay if people, if our tax
dollars are paying for people at the city to come in, our home passed on all of the
building codes and there were building code violations so just wanted to make that aside.
Mayor Furlong: Okay. Question for clarification. Just so I understand. The original
assessed land and building, let's see, that one was reduced by the 16 percent on the
building but you omitted the 16 percent on the land so you're proposing adjustments to
bring that down. So this is already been adjusted. The building has already been
adjusted by 16 here. Okay. The 16 percent adjustment total market value, how many
court cases was there? Just one?
Angie Johnson: We just had one. We handle all the, if you recall last year ! think there
were a couple property owners that were here with the same issue, we had them in
Victoria. We've had them in Chaska. We have handled them all alike.
Mayor Furlong: Okay. Are we aware of, two questions coming here. Are we aware of
other court cases around the state that have dealt with the same issue and what have those
discounts been?
Angie Johnson: I'm not aware of any.
Steve Clay: I'm sure there's going to be a number of them out there.
Board of Review and Equalization - April 26, 2004
Angie Johnson: Most of them are going after the builders themselves.
Mayor Furlong: Right, but ! think the issue here, as I'm looking at it, two things. One,
we're dealing with a potential permanent reduction in value because these other problems
exist. Because if the corrections will correct the problem, then the issue comes back and
this is the issue you raised ma'am was, was do some people see it, if it was a stucco
house with water damage, is that a negative permanent impact on the value. As opposed
to the cost to repair which are, that's what it costs to repair. So ! guess I'm looking for a
few more basis than one court case because the court cases are specific to the facts and
circumstances of that case. So ! guess the one question ! would have, and maybe this is
specific information we need to understand, if not tonight going forward, understand how
many other court cases there were and what the indications were from those court cases.
Angie Johnson: We get all the court cases. Come through our offices. ! have not seen
one yet.
Mayor Furlong: Okay, so we're thinking this is the only one in the state? Okay.
Angie Johnson: And basically the 16 percent, when we do, go into trial, we prove the
value of the house by both sales comps and by cost reports. And so it was basically
based on the sales comparison report that we went and looked at other houses that had
these problems. Buyers bought them and after they bought them, fix the problem
themselves and then this was the reduction in the sale market value from what they
thought the house would have been worth without this problem and what they paid for it.
Mayor Furlong: And now you're leading to my second question. What market data do
we have that speaks to sales of homes with water problems such as this versus sales of
homes without?
Angie Johnson: That was the comparison, 16 percent reduction.
Mayor Furlong: And again, maybe helping us to understand what those numbers were,
what were the range of the costs incurred relative to the market value paid? In those sales
comparable sales data. The court decided 16 percent. ! guess I'm looking more for a
market indication than what a single judge said.
Steve Clay: We can get that information for you. ! don't have it with us tonight.
Angie Johnson: ! mean ! guess that's all we placed it on is what the owner of the
property said this is what it would have been valued at without the problem. This is what
we ended up paying for it because the problem was recognized.
Mayor Furlong: And you're identifying that by the price paid plus the cost to cure.
Board of Review and Equalization - April 26, 2004
Angie Johnson: No, the discounted price. If their house wouldn't have had a problem it
would have sold for $400,000. Because there was a problem, the buyers were only
willing to pay this much. We have sales to prove that and it came out to be 16 percent on
these sales. The difference between what it should have been, that it should have sold for
and because of the.., in the home.
Todd Gerhardt: Angie, how many comps did you have as a part of that review?
Angie Johnson: That one tax court case only had 3. This was in the Deer Run area and
we had 3 sales right in that area. Since then we have contacted some owners of houses
that, and that and right now we haven't come across any other sales. It's very hard to
come across sales like this. Either the owners were not ever aware that there was a
problem, or they bought the home and there hasn't been a problem.
Mayor Furlong: Okay, because ! thought ! heard that it was somewhat prevalent, these
water issues.
Angie Johnson: What do you call prevalent? You know we probably have two dozen
homes right now.
Mayor Furlong: Alright.
Roger Knutson: Mayor, can ! ask a question? On those 3 comps you have, did the cost
to cure, did you know on those 3 what the cost to cure was?
Angie Johnson: No we don't. We've only got the cost to cure on the homeowner that
sold.
Roger Knutson: So just on this one. So the cost to cure on those 3 could have been small
or could have been very large?
Angie Johnson: Right.
Mayor Furlong: Yeah, so we don't.
Councilman Lundquist: The Woodbury way, whatever we want to call that. Subtracting
that off until the repairs are made. So once those repairs are made, then the next
valuation year they just tack it back on again? Is that how they?
Steve Clay: Then we would value the home as though it had no problem.
Angie Johnson: Yeah. We would...
Councilman Lundquist: So just for clarification, I'll use round numbers. $300,000 now.
It costs $100,000 to fix it, so you drop it to 200 until such time as the repairs are made, 6
months, 8 months. Then it goes back into the next valuation year. You add that 100 back
Board of Review and Equalization - April 26, 2004
on plus whatever reasonable market adjustments have been made, so they're going to go
from 300 to 200 and then the next year they're going to go from 200 to 320, or whatever
the amount is. Is that how they do it in simple terms? So okay.
Angie Johnson: The thing is here though too, usually when we get an appeal because we
are doing mass appraisal. We'll look at that house as a specific house, just like when we
go into tax court. We are going to do an appraisal on that house. If you read through
Steve's information, he did go through a sales comparison on the house and he came up
with a value of what, $482,500. We're only valuing this house at far less than that even
before we took the 16 percent off. And so basically what we should be looking at, that
$472,000 minus whatever the reduction should be.
Mayor Furlong: And part of that difference is because you've already taken the 16
percent off the building value. That difference wouldn't be as great. There might still be
a difference there but it wouldn't be as great.
Angie Johnson: Correct.
Mayor Furlong: Okay. Questions? Comments? For this particular one. Do we want to
deal with this specific, thank you by the way.
Maren Reeder: Can ! make one last comment?
Mayor Furlong: Certainly.
Maren Reeder: ! find it very difficult to believe that somebody would have bought our
house given the repair estimates that we had for only 16 percent less.
Mayor Furlong: Okay, thank you. Any other, is there anybody else that wishes to speak
on one of these particular items that's included in the assessor's report? Seeing none,
why don't ! bring it to council for either additional questions of the assessor or comments
on any of these properties.
Councilman Ayotte: Is there any reason the Woodbury solution, as Brian's pointed out,
we're not locked to that so for recovery purposes again, my personal concern of having a
resident having to deal with a spike that even though it may be fair is extreme for the
resident. Is there any reason why that can't be extended over a longer period of time? So
in other words the assessment would go back up to your example, $300,000 but it would
be the payment of that could be pushed out over a longer period of performance? Can
that be done?
Steve Clay: ! don't believe so.
Councilman Ayotte: Okay.
Board of Review and Equalization - April 26, 2004
Steve Clay: You have to estimate the value of the property as it exists on January 2nd of
each year. If the problem is cured then that's the value.
Councilman Ayotte: Let me try it another way. Even though the assessment occurs at
$300,000, could it be postponed or does that have to go through another hearing process?
Angie Johnson: You could do that but are you being fair to the neighbor that...
Councilman Ayotte: I understand. Just asking the question.
Angie Johnson: And our job is to be equitable.
Mayor Furlong: Question in that regard. The way these, the way your process works,
help me understand that. With this 16 percent reduction, and with, and assuming the
mass appraisal process that you use, next year and the year after that and the year after
that with regard to all the homes in this neighborhood, are they generally going to see a
similar increase from year after year? So is this 16 percent a permanent 16 percent
reduction? That you're proposing here, or is that 16 percent going to go back to zero
percent reduction next year?
Angie Johnson: It depends upon if they do repair their home or not.
Mayor Furlong: Well ! guess, let's assume they're going to make the repairs for the
water damage, and let's not talk specifically here. Okay, once those repairs are made,
then that 16 percent reduction is removed?
Angie Johnson: Correct.
Mayor Furlong: And it goes back as if there was never an issue.
Angie Johnson: Correct.
Councilman Lundquist: So it's essentially the Woodbury model only you're taking 16
percent instead of the cost of repairs.
Angie Johnson: Right.
Mayor Furlong: Yeah, see ! guess just a comment on that process. ! don't think that
makes sense because ! think they're, even with repairs, there may be a permanent
impairment to value because some buyers may say ! know you fixed it all but ! don't
know if there's other problems so I'm going to go look someplace else. So ! mean if.
Todd Gerhardt: The only other argument you're missing on that is, ! think Angie is
saying this home is valued at $472,000 so she's already given it $100,000 discount and
can you explain why you.
Board of Review and Equalization - April 26, 2004
Angie Johnson: Because we do mass appraisals. You know we wouldn't have looked at
this particular house, just like when we had the tax court case. That's when we find out
that we were $100,000 below market value on that even without the reduction that we
ended up giving them again too. Just that what we're doing mass appraisal, yeah we're
looking at that neighborhood as a whole. And until we start looking specifically at a
property and that's when, even when we're doing our twin tile, now we're doing still a lot
of things in that area.
Todd Gerhardt: So that $100,000 reduction did not take into account the...
Angie Johnson: No, basically we were just that far below market value actually.
Mayor Furlong: And we could be in a similar situation with other homes in the
neighborhood or across the city. With mass appraisals, aren't you likely to see those
differences occur where you have areas of rapidly increasing land value, real estate
prices?
Angie Johnson: You immediately try to be...comparison report on that particular
property. We're not going to do that after with mass appraisal until we get to this point.
Mayor Furlong: Okay.
Councilman Labatt: Angie, so we're already dealing with a property here that's being
under appraised by $100,0007
Angie Johnson: Correct.
Councilman Labatt: And on top of that we've discounted, or you have an additional 16
percent.
Angie Johnson: Right.
Councilman Labatt: And then now this new adjustment is an additional 16 percent. On
the land.
Angie Johnson: They have 16 percent both on land and building last year. Apparently
this year, like Steve said, somebody was going through the land and doing some equity
studies. Removed the 16 percent not realizing that that should have remained. The 16
percent on the house but not on the land. So when the property owners contacted our
office, that's when Steve went back and did some studies on it and realized that the 16
percent on the land should have been there, so that's all we're asking is that it be put back
on the land. It's already been on the building.
Councilman Lundquist: They only got 11 percent last year but they only got two-thirds
of it that never got done.
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Board of Review and Equalization - April 26, 2004
Councilman Labatt: Okay.
Purchasers. Do you know?
Maren Reeder: No.
Councilman Labatt:
Are the Reeder's the original builders of the house?
We're not the original owners.
And when did you buy the house?
Maren Reeder: In 2001.
Councilman Labatt: Okay. And Angie, when did the mold issue with the stucco become
public? Publicly known and.
Angie Johnson: ...Probably in 2000.
Councilman Labatt: So but before she bought the house in 2001.
Steve Clay: Are you talking about this house specifically or?
Councilman Labatt: No, I'm just talking, they bought their house in 2001. When did the
whole mold issue come up?
Angie Johnson: Probably after they bought it. ! don't think we've had it before.
Maren Reeder: No, it started in the 90's. You mean stucco homes in general? When
did it start to have problems?
Councilman Labatt: No, no, no.
Councilman Lundquist: He wants to know if all the houses in Woodbury were having all
these issues before you bought your house. People started suing builders for stucco
issues before 2001 when you bought your place.
Maren Reeder: Yes.
Councilman Labatt: Thanks. And the sellers never disclosed any water problems or
anything, or wall problems, correct?
Maren Reeder: I'm sorry, they didn't?
Mayor Furlong: I'm sorry, excuse me. Could you step up back to the microphone just so
we can be sure that this all gets recorded. Thank you.
Maren Reeder: No, they did not disclose any. They were not aware of a problem.
Councilman Labatt: Okay. And when did you discover the mold problem?
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Board of Review and Equalization - April 26, 2004
Maren Reeder: March of 2002.
Councilman Labatt: So when did you move in? 2001, what month?
Maren Reeder: May.
Councilman Labatt: So in 9 months of living there then you noticed the problem just
occurred, correct?
Maren Reeder: Correct. There was no evidence of a problem. We simply read about
stucco homes having these problems and we hired somebody to investigate whether or
not we had issues in our home.
Councilman Labatt: Okay. Okay, that's all.
Mayor Furlong: Okay.
microphone.
Thank you again. Thanks for coming back up to the
Maren Reeder: I just have a question for certification. In my statement it says that the
estimated market value for 2003 was 404,000 and for 2004, 417. So I'm not seeing a 16
percent, the way you're describing is that it was dropped 16 percent last year. And I'm
just asking for clarification on that. ! don't get it.
Steve Clay: If we had 16 percent reduction on both land and buildings, we would have
had a value, an estimated market value in 2004 would have been 375,700. That's with
the 16 percent. If ! take that number, 375,700 times .16. So if we hadn't been
subtracting that 16 percent for the water and the mold issues, your estimated market value
notice would have reflected a value of approximately 435,800.
Mayor Furlong: This year's property tax notice, the one that we're referring to right
now?
Steve Clay: I'm sorry, say that again?
Mayor Furlong: What I'm hearing is a question between numbers received and years.
Maren Reeder: Right. I'm just confused because you're talking about, what I thought I
heard you say is that it was reduced 16 percent last year. And what ! see in our statement
is that.
Steve Clay: No. No, it was reduced for January 2nd of this year, 2004.
Maren Reeder: So it was not reduced last year?
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Board of Review and Equalization - April 26, 2004
Steve Clay: No, ! don't believe our office knew about the problem until some time last
summer. So that it wasn't corrected by January 2nd SO we took that 16 percent, put that 6
percent back on there.
Maren Reeder: ! just wanted to clarify that because the implication was it had already
been reduced.
Angie Johnson: That was my misunderstanding.
Mayor Furlong: Thank you.
Councilman Ayotte: One more question. In the people that assess the situation of your
home, the repair, at the point in time that you found the problem, the cost to repair it and
went with the low bid, did they state whether or not there would have been further
degradation if you had not discovered the problem?
Maren Reeder: Yes. ! asked the most unbiased opinion of that is Michael Happ from the
Building Codes and Standards Division and he said we absolutely had to do the repairs
we did. If we did not, it would have further deteriorated and been a much larger problem.
Councilman Ayotte: Did they state to what degree that much larger problem would have
been?
Maren Reeder: For example, we had to reframe entirely the two chimneys. They were
rotted. They were completely rotted. So that issue also showed up underneath windows
and in some areas the rim joist were also rotted. If that problem continued, further
deterioration would have occurred to the rim joist of the house.
Councilman Ayotte: And I guess the point I'm making is that if these people didn't put
the problem in check, the valuation of the home would have been much, even much worst
than it is at this point. Is that a safe statement?
Maren Reeder: Ah yes. The repairs would have increased over time, yes.
Councilman Ayotte: Thank you.
Mayor Furlong: Okay, thank you. Alright, we're still at discussion levels on this
property or any others, if we want to continue talking about this property. Reach some
conclusion on these. At some point.
Councilman Lundquist: Question for Mr. Gerhardt. Todd, do you know what is our, an
idea what our effective tax rate is on properties? City, county.
Todd Gerhardt: I don't know right offhand. I'd have to go up and check.
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Board of Review and Equalization - April 26, 2004
Councilman Lundquist: Anybody else know. What are we looking at, 1 percent?
something like that?
Councilman Peterson: You estimate 1 percent for buying and selling a house.
Councilman Lundquist: Okay.
Mayor Furlong: Okay, discussions. Thoughts.
Councilman Peterson: Yeah ! don't see whether it's the Woodbury example, ! don't see
that any more compelling necessarily than the 16 percent. ! see the logic in it so ! don't
know if ! can sit here and creatively think of a better way to do it other than that so I'm
comfortable going with their recommendation on the Reeder' s.
Mayor Furlong: Other comments on this particular property?
Councilman Labatt: I agree with Craig.
Mayor Furlong: Other comments at all?
Councilman Lundquist: ! would lean more towards the other Woodbury example.
think for just the out of pocket costs, and other things for that the Reeder's and any other
homeowners would go through is an example from Woodbury. It's a short term deal.
It's only going to happen for a year and then it will be recouped anyway. It's obviously a
substantial hardship and ! think 16 percent is, although it maybe has court backing that
don't think anybody's going to just pay 16 percent less for a house that they know has
stucco damage, especially considering all the other stuff going on.
Councilman Ayotte: ! agree with Brian, especially with the trend and as evidenced by
what you said, they went from 2 vendors involved in the abatement business to well over
30 so the issue is percolating up. It's becoming more visible and people are becoming
more cautious. We used to have asbestos. Now we stecobackus spore, black mold and
so forth as a concern. ! don't know your particular situation but that does spook people
so ! would tend to say that the Woodbury solution for me is, since it's just very, very
definitive for a short period of time ! find more palatable because ! think they, these folks
stood up to the plate and I'm not going to call the previous owners situation but if they
were in that house for that period of time and discovered the mold, the smell of that mold
existed prior to that point ! bet. So ! tend to agree with Brian.
Mayor Furlong: I guess maybe we're approaching this from different situations but you
know to me, to do the Woodbury, the full reduction and then back reduction is going to
be a challenge because it, that's going to work for those that come in and contest, or will
be a year late on that. I guess what I would be interested in, because you know the, what
I'm interested in and part of my questions are what is the ongoing permanent demonition
to value that occurs due to fewer buyers in the marketplace willing to even buy a home
that has had this type of damage, and this type of repairs made to it. And I think what
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Board of Review and Equalization - April 26, 2004
would be helpful in answering that question, because we may get, this group may get that
question ongoing from other residents that maybe haven't come forward now during the
repairs, but at the time they sell their house, you know this is going to have to go on the
sellers disclosure statement now, even the part, sellers sign a statement saying they
weren't aware of it. The current owners are and at some point they'll have to sign that
and is that going to reduce the number of buyers that are even going to look at the house,
even if it'd be a perfect house otherwise with all the repairs made. So ! think the
challenge there is 16 percent for one year, which is what ! heard. That to me doesn't
seem to make sense.
Angie Johnson: To a cost to cure.
Councilman Ayotte: Say again.
Angie Johnson: ! mean 16 percent until they have repaired their home. The thing is we
are looking at sales and we are trying to find the sales of homes that have been repaired in
that and there is a discount in that selling price. You know they...
Mayor Furlong: And the challenge is, understand. I'm not faulting the process but the
process itself is flawed because we have a single court case, which is based upon the facts
and circumstances in that particular property, and it was based upon, as ! understand it,
three comps which ! know in residential that's okay, but we're also basing it upon owners
representations of those comps rather than actual market data. So ! think we're limited
there. Where do we go on this particular property, you know my, ! struggle with the
Woodbury model because of the volatility that that creates but there should be something
more permanent.
Councilman Ayotte: Than the 16 percent.
Mayor Furlong: Well, 16 percent permanently might be appropriate. You know there
might be, and maybe a 10. Does 15, 16 percent but if it's a permanent reduction in value
of assessed value going forward might represent the market value of that property relative
to identical property without.
Councilman Peterson: Mr. Mayor, ! think ! understand your point and ! absolutely agree
there will be less number of buyers who are willing to accept that house, but that doesn't
mean that the price will be any less because you're more than likely to find a buyer that's
willing to pay market price because they don't care. It may take longer so the market
price should still remain the same because we know that there are buyers out there, just a
smaller number. So it may take longer to sell for X price.
Mayor Furlong: And ! guess that gets to supply and demand and we don't know that and
that's, if we can get some market data to support that assumption then.
Councilman Peterson: I wouldn't want to take on that task.
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Board of Review and Equalization - April 26, 2004
Mayor Furlong: Well, that's our job to try to be fair here and get as close as we can to
market value. The challenge as ! look at the, and ! feel for the property owner and
empathize with them with this huge, not only the cost to repair but the legal cost that
they're going through. That's a challenge. That's a challenge but if it's, once the repairs
are made, if it's there again, it's going to be right back up there at whatever the market
assessed value is and ! think that might be a permanent over valuing situation, so.
struggle a little bit with the Woodbury model. Yes.
Angie Johnson: I don't mean to interrupt but do you have any other, I need to get to
another meeting. Keith Kern, our deputy here will stay and Steve will stay to finish up
but if you have any questions for me, ! have to get to Mayer.
Mayor Furlong: Does anybody have any questions, because ! may have one that's going
to lead into another property. What are we doing, or can we get specific information to
address property owners, Ms. Mancino's contention of the relative value of other zoned
property relative to residential.
Angie Johnson: Keith actually was the one that worked actually on that and so he'd be
able to answer all your questions on that one, even more so than ! could.
Mayor Furlong: Okay. Alright, thank you. Alright, where do we want to go from here?
Do we want to discuss any other properties or relationships, see if we can move this
along and complete this in 15 minutes.
Steve Clay: If ! could make the suggestion that we could vote on this one. On the
Reeder and then possibly take the others en masse...
Mayor Furlong: Well let me ask this question. Would it be the board's agreement that
staff has recommended an assessment on these. Let's take off of this role any that we
don't agree with staff's assessment and deal with all the others in a single motion and
then those that we want to discuss separately we can discuss. Is that fair? Similar to a
consent agenda process. Would that be reasonable? Just to try to get conclusion on
something here. Okay, if we could move with that. Are there any of these properties or
property owners listed that somebody would like to discuss in further detail?
Councilman Ayotte: Mancino's.
Councilman Labatt: Yep.
Mayor Furlong: Okay. Are there any others relative to, otherwise we'll deal with a
motion that will consider staff' s recommendation.
Councilman Lundquist: Does that include the Reeder's or not include the Reeder' s.
Mayor Furlong: I'm sorry. If you want to take them off and suggest.
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Board of Review and Equalization - April 26, 2004
Councilman Ayotte: ! think we ought to continue to address Reeder's. I'm not real
comfortable...
Councilman Lundquist: ! would pull Reeder then as well.
Mayor Furlong: Alright, thank you. Any others? If not we're left with the first 7
properties on the list. Is there a motion to approve the recommended assessment for
those first 7 properties.
Councilman Peterson: So moved.
Mayor Furlong: Is there a second?
Councilman Ayotte: Second.
Mayor Furlong: Any discussion on that motion?
Councilman Peterson moved, Councilman Ayotte seconded that the Board of
Review and Equalization approve the following assessments per the staff's
recommendation:
Gerald & Janet Paulsen
Paul Lidstone
Bruce & Jennifer Linn
Stephen & Melinda Giordano
Thomas & Jeanne Kraker
Terry & Gwen Nelson
Michael Jonikas
7305 Laredo Drive
3991 Country Oaks Dr.
4001 Country Oaks Dr.
7603 Huron
801 Pleasant View Road
161 South Shore Court
6368 Oxbow Bend
$211,400
$295,600
$272,100
$205,700
$353,500
$339,200
$501,400
All voted in favor and the motion carried unanimously with a vote of 5 to 0.
Mayor Furlong: Let's take the Reeder's since we're current with that one. Is there
further discussion on that item or is there a motion?
Councilman Ayotte: I'd like to see if staff, legal counsel has a recommendation. ! tend
to favor both comments from Brian and Tom, that the 16 percent leaves me cool because
of the unknown. And the other part is the resident has done due diligence to identify the
problem and disclose it and for that as being, is confronting an issue for the valuation of
the home down the road. So do you have any thoughts on that that could help us get this
off dead center?
Todd Gerhardt: What was the total of the cost for the improvements that you made? Or
going to be made.
Councilman Lundquist: 132,549.
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Board of Review and Equalization - April 26, 2004
Todd Gerhardt: 132, okay.
Roger Knutson: First, as far as her efforts and her due diligence and all that, I don't
know if that really plays into your decision making because the question is, what is the
valuation of this market value of this property on January 2nd, 2004. So what is it? And
anything that doesn't help you answer that question is not relevant. And just as ! see it,
and my numbers are a little off because ! used the $132,000 as the cost to repair so you'd
have to make some adjustment, but one question, at least I'm unclear on is what would
you take this $132,549 off. The market value is $482,500. Then you'd take it off that.
Mayor Furlong: That would give you 350.
Roger Knutson: That's what ! got. 352,549 maybe. Roughly 350 but, or ! think that's
what you'd take it off if that's the market value, which puts the difference between that,
the Washington approach as you would call it, the Washington County approach and the
approach being used by your assessor is $25,000 difference.
Mayor Furlong: Not now. Sorry. Sorry. We've got to reach some conclusion here.
Yeah, ! guess with regards to discussion there, and just doing the same calculation, really
the difference here, if the reduction in value is off the market value, for the one year cost
of repairs, so we give this a 350 number versus a 375 being recommended by the
assessor's office. As opposed to taking the 132,000 in repairs off the assessed value.
The challenge is ! don't know exactly how Woodbury does it, or Washington County.
Roger Knutson: Mayor, if I could suggest, maybe you don't want to do this. You might
want to ask the assessor, what would he take the $132,549 off of if he were to use the
Washington approach. What is the subtraction? What is the base number you'd be
subtracting from? Would it be the 482 or would it the other number?
Mayor Furlong: I guess that's a question I would ask, are you familiar with how
Washington County does this?
Steve Clay: As ! understand their procedure, they would take the estimated market value
that their computer estimating system generates and then subtract from that, whatever the
cost is to cure. So it would be from that 435,000 value minus the 132.
Mayor Furlong: And then how does their system capture that back again the following
year?
Steve Clay: ! think you just flag it and check it at the end of the year and if it's been
corrected, then they take that 132 or whatever amount that they take that off and
determine a value.
Mayor Furlong: So that would come off the 435 so we'd be looking at $300,000
approximate assessed value?
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Board of Review and Equalization - April 26, 2004
Keith Kern: We've never contacted the City of Woodbury. Each district has kind of
their own formulation. Nothing has been set by the Department of Revenue at this point
and that's something I think in the near future the Department of Revenue is going to
have to set a standard for all districts to look at. Right now it's each district is handling it
a little bit differently. The state statute said that we have to place a fair market value
based on it's condition, and so cost to cure certainly sets the most upper limit because
you're also curing other things that have occurred just in normal depreciation. So it's a
difficult situation. Hopefully with more market sales that come in in the next couple
years and with maybe some guides from the Department of Revenue, each jurisdiction
will be doing things in the same manner. That's what we've been trying to do in Carver
County. Not saying that our methodology is the best, but we're treating everyone the
same way.
Councilman Ayotte: But isn't it safe to say, based on what we've heard before and since
the problem's becoming more prevalent that the population of households for this
particular problem... So therefore the fair market value would drop.
Keith Kern: That's a very general statement because we've had other instances with
stigma, such as radon gas, asbestos and so on. Stigma's tend to come and go. We don't
know that until we get enough market data. You could theoretically think that
probability, sure. There's certainly the stigma out there with I think stucco homes. This
is no longer going to be a stucco home, but it's going to have to be disclosed that there
was a problem. I think the problem exists in probably a majority of the homes, whether
they're stucco or not because of the climate of Minnesota. Because of the building codes
as far as air tight. Most homes, if you start cutting through the walls are going to have
some trap moisture.
Councilman Ayotte: But some trap moisture and having stecobackus spore versus
trapped moisture is a big deal. And what we've seen nationally, a lot of homes have been
condemned. Texas has had the problem and Indiana's had the problem. So I don't know
if that's a safe statement because through experiences I've had, and I deal in this sort of
thing, I think it's an issue and I think it's safe to say that there is a probability that that
population's going to grow, therefore valuation's going to drop in that category.
Keith Kern: We'll have to wait for sales to indicate that. I mean that's the bottom line.
We can sit here and theorize what the market's going to do but.
Mayor Furlong: Let me ask a question Councilman Lundquist and Ayotte. You're
preferring the Woodbury model. We've heard information and how would you see
applying that? Would you apply it to the estimated appraised market value? The
482,500 from that. That would be your?
Councilman Lundquist: That would be the way I would interpret it because the assessed
value is really governed by more than just a market. There's other statutory things and
things in there so clearly the assessed value really doesn't have any bearing when you're
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Board of Review and Equalization - April 26, 2004
going to sell a house. It's other than what you pay in taxes but it doesn't matter so my
interpretation would be on the 350.
Mayor Furlong: On the 350 low, which is departing as ! understand it from the
Woodbury which would take it off the computer generated assessed value before
deducting 3 from 32 from there. Which would put it somewhere at near 300, if !
remember the number correctly. Prior to the 16 percent reduction in the building were
you at about 435?
Councilman Lundquist: Yeah.
Mayor Furlong: Okay, so that would put him at about 300. We're saying 350 is what
you're proposing?
Councilman Lundquist: Where did that 435 number come from?
Mayor Furlong: That's prior to the 16 percent reduction that was applied to the building
and then upon the resident's challenge they said oops, we missed the 16 percent on the
land too, so the 17,500 that we're looking at right now is the additional, 17.4 is the
additional 16 percent. Applied to the land. Yes or no, is that correct? Thank you. So !
guess then the question is, would you follow Woodbury, which would take, put it at 300,
were you proposing to take it off the appraised value which would be at 350 versus the
assessor's recommendation at approximately 376.
Councilman Ayotte: Well the only gap point we have is the Woodbury model of 300K
and the other one so, and since we don't have the specifics, ! would go with the 300K.
Mayor Furlong: Okay, Councilman Lundquist, do you agree? ! guess because ! could
see going to the 350 as a reasonable way of taking the cost of repair off the estimated
market value, because that really is what we're saying if the market value is this absent
the need for the repairs, then if we take the cost, proposed cost for repairs off the
estimated market value, not the computer generated assessed value. As long as we can
flag it so that amount off the assessed value is replaced, and that we get more information
next year with regard to market transactions on these so we have something more to work
with. Councilman Peterson, your thoughts?
Councilman Peterson: Yeah, I'd move that we move it to 350. Not necessarily on the
basis of the Woodbury model, but under the basis of it seems reasonable, more
reasonable than the 16 percent and it seems more reasonable than the Woodbury model.
So I'd just move that we appraise it at 350, or assess it at 350 instead of 375.
Mayor Furlong: Estimated market value less cost of repair. It's quantifiable.
Councilman Peterson: And let staff work out on a go forward basis improvement to the
way we're doing it.
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Board of Review and Equalization - April 26, 2004
Mayor Furlong: That's fine. So is that a motion?
Councilman Peterson: That's a motion.
Mayor Furlong: Is there a second?
Councilman Lundquist: Second.
Mayor Furlong: Any discussion on that motion?
Councilman Peterson moved, Councilman Lundquist seconded to approve an
assessed value of $350,000 for David and Maren Reeder at 6501 Troendle Circle.
All voted in favor and the motion carried unanimously with a vote of 5 to 0.
Mayor Furlong: We've got 5 minutes here prior to the start of the council meeting. My
preference would be to start the council meeting on time. Can we continue this until after
the council meeting?
Keith Kern: I've got a meeting in Laketown Township at 7:30, so I'll have to excuse
myself. Steve can be here. He's very familiar with the Mancino property and the work
that ! did. And ! don't know if there's any.
Steve Clay: Nancy and ! go way back.
Mayor Furlong: ! guess is that comfortable to the board?
Keith Kern: If you've got any questions as to the packet that we presented.
Councilman Peterson: Let's just vote on it. ! mean ! think, personally with the Mancino
property, ! think the only issue is should we put a 70 percent increase over a one year
period, and my only thought is, what ! was going to move for, let's move that 70 percent
over 2 years instead of one year and keep the assessment the same. If we can do that
legally.
Mayor Furlong: I'd be comfortable with that process as long as we also challenge the
assessor's office to, and staff, to take comprehensive look at the issues raised, which is
the relative fairness of value between residential and.
Councilman Peterson: Absolutely agree.
Mayor Furlong: ! mean ! think we need to do that, and that's the issue there.
Councilman Ayotte: ! saw a lawyer shake his head. That concerns me.
Roger Knutson: The only thing, comment ! would have is, you really can't, you're not in
a position to set the valuation of January 2, 2005 today. You're only looking at this
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Board of Review and Equalization - April 26, 2004
year's, the 2004, January 2nd 2004 valuation. That's the only item before you and you
can make a note to yourself or do something but you really aren't going to affect the 05
valuation.
Councilman Lundquist: So what you're saying Roger is that there's no way to guarantee
next year's only going to be 35 percent half of 70. It's going to be what it's going to be
based on their data.
Keith Kern: Our office is set by statute so whatever sales are doing, if the market says it
needs to be up to 80,000 an acre, then.
Councilman Peterson: We can deal with that next year. ! mean half it now and deal with
it, if it's an issue next year.
Mayor Furlong: So do you have, can somebody do the calculation? The information in
the staff report was this generated by your department?
Keith Kern: Correct.
Mayor Furlong: Okay, so if we take, and these are land and market values both? On
here.
Keith Kern: Correct.
Mayor Furlong: Okay. Or excuse me, land and building values. Does somebody want to
do the math.
Councilman Labatt: I'm just curious why we're, ! mean you look at the sheet provided
here. There's some that faced 142 percent increase, 129, 99 percent increase.
Councilman Lundquist: Yeah, some of those are going to be ag properties and aren't
paying that in effect of taxes either and even if.
Councilman Labatt: No, they're all within, cripes they're all within sight of this property.
Councilman Lundquist: But even if they aren't, it's still incumbent upon them to come
before the board.
Councilman Labatt: Well I think we're singling a single person out here.
Councilman Lundquist: We just did the same thing with the Reeder's. They came
through with the stucco problem. There's probably lots of people in Chanhassen with
stucco problems. That's incumbent upon the homeowner to come before the board to
present their case. If they didn't choose to, that's nothing that we can do.
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Board of Review and Equalization - April 26, 2004
Councilman Ayotte: Or possibly didn't know how to either, but I'm getting back to the
Mayor's point. We've got a 1900 hours start time and I'd like to talk this through a little
bit more and ! talked to Mrs. Mancino today on some points and ! think it's important for
other folks that have been assessed. I'm concerned about the spike in assessment. It may
be fair but I'm concerned about the residents realizing a 60 or a 70 or 100 percent
increase, and I'd like to talk through that a little bit because ! think it's important. So !
don't know, what are you asking to continue to after the meeting?
Mayor Furlong: Is there objection to that? Hearing none, is there a motion to continue
the Board of Review and Equalization until following tonight's council meeting?
Councilman Ayotte: So moved.
Mayor Furlong: Is there a second?
Councilman Peterson: Second.
Mayor Furlong: Second's been made. Any discussion?
Councilman Ayotte moved, Councilman Peterson seconded to recess the Board of
Review and Equalization to after the City Council meeting. All voted in favor,
except Councilman Lundquist and the motion carried with a vote of 4 to 1.
Mayor Furlong: I'd like to reconvene the Board of Review and Equalization that was
continued prior to our council meeting. ! believe, if I'm going back to my notes here, that
we had made a decision on all the properties except for the Mancino property. So ! guess
at this point ! would, we have the assessor's report in our packet. ! believe Ms. Mancino
emailed the council some comments that she had in reply so at this point ! would open it
up to the board.
Councilman Labatt: I didn't get an e-mail so I'm curious as to what comments she had.
Mayor Furlong: I thought she sent it to the council. You can read that if you'd like.
We'll take a moment.
Councilman Labatt: This came out yesterday?
Mayor Furlong: I think it was last night that it was actually sent. If you want to read
that, why don't we take a quick recess and stop recording. We're back at this point, are
we ready to proceed.
Steve Clay: ! think ! have the gist in mind.
Mayor Furlong: Maybe just, why don't you, 20 words or less if that's possible, bring us
up to date Steve on the issues. The back and forth and then if there are questions by those
of us, let's try to be as expeditious as we can.
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Board of Review and Equalization - April 26, 2004
Steve Clay: 20 words or less I can't do.
Mayor Furlong: Okay, well use as many as you need.
Steve Clay: Ms. Mancino's property, or the just of her problem here is that it went up so
much in one year, and ! think that's maybe gnawing at most of you here also. If you look
at the information that came out in this last packet, you had asked for a list of other
neighboring properties and you can see that they all received some significant increases
also. Over the past number of years, let me just briefly review what's called limited
market value line which came out of the state passed about 10 years or so ! believe. Back
when market values were appreciating at 5 and 6 percent a year, which at that time
everybody thought was just amazing and egregious so the legislature decided they needed
to do something and they passed this law saying okay, the assessor's must according to
law estimate the market value as to what they think it would actually sell for, but if your
property increases in value more than a certain percentage, because of changes in the
market as opposed to making some physical change to your property, such as adding a
garage or finishing a basement, that the dollar amount that your property taxes would be
based on would be limited to a certain percentage increase. And that percentage has
changed over the years. 3 or 4 years ago it was 8 percent. Or 10 percent and then
dropped down to 8 and moved back to 10 and 12. This year for this most recent
assessment, the limited market value is at 15 percent increase or 25 percent of the
difference between previous year's value or limited value and our current estimated
market value. Whichever of the two is the greater amount. So over these past few years
we have started seeing sales for these land sales coming in for developable properties in
the city, not just Chanhassen but Chaska, Victoria, and have a pretty good idea and can
prove fairly well that values were going up certainly at a rate higher than what was
generally being seen by approved sales of other single family homes, things like that. So
we started slowly raising those land values. We were always throughout probably 99
percent of these properties the value we set each year was higher than what the limited
value was calculated for them so we're setting it at this level but they're actually paying
taxes on the limited market value. So there wasn't a real great rush to get these values up
to where we thought the actual market value was because we knew that no matter how
much we raised them in a year, they're still going to be subject to this limited increase
that the legislature mandated. Now, in the last year or so we've had quite a few sales of
properties telling us, and making it quite obvious to us that these land values were even
more highly valued than we thought, and were rising quicker than we thought. So we
have that fact. The second thing that happened is that the state has decided that the
limited market value was a mistake and they tend to do, anytime they pass a law to try to
fix a problem, when they're usually creating more problems and it takes about 10 years to
figure it out and then they start repealing the law, which they're doing now. In another 2
or 3 years the limited market value is going to be phased out completely. So we have that
to work with, or to motivate us to start increasing these values quicker. Third thing is
that with the advent of the internet and county's web site and taxpayers demand for
information, which we are providing, everybody, nearly everybody has a very quick and
simple access to all the property valuations. They're not sure who owns the property or
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Board of Review and Equalization - April 26, 2004
what the location is, they can pull up an aerial map and find it. Click on it. Get the name
and find out what it's valued at. Subsequently there are a lot of people out there now
looking at everybody else's values and comparing it to their's and wondering why their's
is this and the other person's is that. We're thinking about getting some little badges
printed out like the police and fire departments do, you know junior firemen. We're
going to get some junior appraisals printed up and give them out to some of our novice
appraisers out there. So we have all these things that have been working the past 2 or 3
years. We decided that we had more than enough market data to tell us that we needed
the increase market values. The limited market value is being phased out and decided to
make a pretty big jump and really get to the heart of the matter in a fairly short period of
time, rather than drawing it out as a more painful event over the course of the next 2 or 3
years. And then basically what brings us to this issue tonight with Mrs. Mancino is the
degree of increase. To be more specific, ! included a list of 5 comparable sales of
properties in your packet. Comparing her property to them that had sold in the last year
or two. Most of these have a bit less acreage than her's, but there may be adjustments
similar to what we were generally valuing her acreage at. Looking at these four sales,
and these all sold with homes on them. Most of the homes were torn down immediately
to provide access for grading and subdivision. I'm sure you're probably aware of most of
these subdivisions that took place here. Looking at those 4 properties sales, it indicates a
value for Mancino property of anywhere from $1,244,000 to just over $2 million. The
average of those four is roughly $726,000, which is considerably higher than we have her
property valued at that was aggrieved at this year. Which ! guess is my way of saying
that these values are going to keep going up some more in the next few years. So do you
deal with it and just kind of bite the bullet and say you know this is what's happening out
there in the market. It's pretty plain to see. If you decided you don't like the fact that it's
jumping up this quickly but it's going to be going up over the next few years even more
and there's just really nothing we can do about it. The state tells us we have to estimate
market values at what they would sell for and the sales are telling us this is what they
would sell for.
Mayor Furlong: Okay, questions.
Councilman Ayotte: Have we done, has anyone done anything about educating the
residents of what's going down the pike? Has there been any preparatory work? All of a
sudden we see, and I'm not concerned specifically with Mrs. Mancino's property. I'm
concerned about the trend that there's a catch up game going on. ! shouldn't use the term
game but process going on because of the spike and the ones that are receiving the
disadvantage of being unable to plan, even though they may have access to information
via the computer, what's been done to ease the resident's into that? ! mean all of a
sudden, bam. There's an assessment and you realize these large.
Steve Clay: Well we were essentially trying to ease them into it these past few years.
Thinking that we would you know have a number of years to do that. But now with this
limited market value being rather quickly phased out, you sort of put in a pinch there. !
don't know that there's been any discussion about any sort of formal notification of
people. A lot of properties, we see these increases and you've only had one person call to
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Board of Review and Equalization - April 26, 2004
you know decide to complain about it. I strongly suspect that most of these property
owners have a very good idea of what their property's worth. If not for the fact that most
of them are being called on a fairly regular basis by developers asking if they want to sell
their property.
Councilman Ayotte: That might be the case, and I don't know if we can. The point is, I
can only go from my reference point. If ! were to perceive that notification, it would be
more than just a subtle shot. People won't have the time to plan to react to an uninvited
payout and it's got to be a pretty hard pill to swallow in a realistic fashion. That's the
problem that I'm having personally, and again I'm not voicing this concern just to one
resident but a whole category of them and that's why I'm having difficulty with this one.
Todd Gerhardt: Mayor, if ! may make a comment here. The state has put a schedule
together. That's what limited market value does. It lessens the burden on those
individuals that see a dramatic increase in their market value. Unfortunately, the state has
not taken the issue up on what happens in year 2007. We're members of the League of
Minnesota Cities. We are lobbying them. Roger can testify to this. Every year it's one
of our policies and practices to put policies together for the State to consider, and we are
asking them to continue the step process that they've been using here to lessen the burden
as 2007 comes around the corner, and they have not addressed it this year. I'm sure they
feel as if they have a couple more years to handle the situation, but we need to talk with
Senator Ortman, Representative Hoppe and let them know that we have a lot of limited
market value out there that isn't being taxed. Two years ago, ! know Hennepin County
had over one billion dollars of market value not being taxed. That was 2 years ago. It's
probably doubled since then. I'm not sure what that number is today, but you know we
will not be alone in this issue so we are trying to send a message through the League of
Minnesota Cities but ! think we need to work directly with Senator Ortman and
Representative Hoppe on this issue.
Mayor Furlong: Okay, thank you. Are there questions? For the staff.
Councilman Labatt: So Steve, so if I, let me back up here. Last year this same person
contested and then do you recall what her increase was last year?
Councilman Lundquist: ! think last year Mrs. Mancino came in to contest and then
withdrew after she got the information so.
Councilman Labatt: Right. Okay, yeah. You're right. She did withdraw because the
increase was quite low.
Mayor Furlong: Well ! think it was 9 percent, ! don't know.
Councilman Labatt: 8 lA percent last year.
Steve Clay: Yeah, ! believe you're right.
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Board of Review and Equalization - April 26, 2004
Councilman Labatt: And maybe the problems originated several years ago when it
wasn't being taxed properly.
Mayor Furlong: Assessed you mean.
Councilman Labatt: Assessed, yeah. But ! mean, as ! look at this here, ! mean you're
looking at the final value estimate of $1.726 million and they're coming in at 1.2 total.
So right now we're assessing $500,000 or a half million below what the final value is at,
correct? If we want to look at what we did with Reeder' s.
Steve Clay: The property, yeah. And compare it to that. Those four comparable sales.
The land schedules we're using for this property are similar to the land schedules and
dollars per acre we're using for all of the other larger properties in the city, so everybody
else is also going to be a similar point somewhere below market value. Actual market
value, which is maybe why none of the other owners have called. You know if your
question is, is this increase in land value going for some people with larger acreage
properties to have to sell or develop sooner than they would like to? Probably. ! guess
my concerns along this line, laying more towards the group of individuals who are senior
citizens. Single family home, whether it's on a lake or something. Whether the value of
their property or home that they're living in is going up because of the market and their
property taxes are increasing and they're on a fixed income. ! tend to, my heart bleeds
more for them ! guess than these other properties. So when you're talking to the
legislators, ! would ask them to see if they can get something going in that respect also.
Mayor Furlong: Other questions? Let's move to comments then.
Councilman Lundquist: Some of the comments Steve that you just made, ! think there's
a lot of things going on here. Whether or not, ! mean you could argue the Mancino's are
retired, fixed income. ! mean you can argue til you're blue in the face about this versus
that and mixed density or medium density, single family. What the real value is. The
point that ! keep coming back to is, is the Mancino's are being asked to increase their
assessed value by 70 percent. That's 10, that's nearly 10 times what the other houses are
being asked and yeah, there's all kinds of extenuating circumstances and things like this
but ! just can't, you know their land may be, ! wouldn't argue that their land is worth you
know, that they could go out and get $2 million. Maybe they could. ! mean there's a lot
of things that could happen and wouldn't happen and you know whether you force them
to develop their land earlier than they would like to because it's financially they can't
afford to pay the taxes anymore. ! mean there's all kinds of arguments there that we
could make too. We value our green space. ! mean there's all kinds of stuff going on,
but ! can't, just can't sit back and let a resident have to absorb a 70 percent increase in
assessed value in one year. ! just can't, and you know, it's just not, ! just can't sit back
and let them take it 10 times and whether the rest of the properties on this page have
extenuating circumstances. Whether or not they actually pay these taxes and it's
agricultural or not, again the fact is that the Mancino's came forward to repeal, using the
due process that's set forth that they have, and they came forth. None of these other
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Board of Review and Equalization - April 26, 2004
people came forth. Well that's their choice or non choice but again, there's just no way !
can support a 70 percent increase in one year.
Steve Clay: ! can understand your concern there. ! think you need to remember though
that the issue before the board is the assessed market value correct. Could this property
sell for what we have it assessed at? Whether the current assessed value increased by 70
percent or 129 percent as in Mr. Carlson's case, one of her neighbors, isn't really a point
by which you are supposed to make a decision. Is the property worth what at least what
we have estimated the estimated market value. These other issues are, really most of the
other issues that we talked about so far tonight are issues for the state legislature.
Councilman Ayotte: Say again?
Steve Clay: Most of these issues we've talked about so far are really issues for the state
legislature.
Councilman Peterson: Similar issue to us being able to interpret what responsibility we
have to make a decision versus the similar responsibility you had in the last 3 years to
bring it to market value. I mean you made a conscious decision not to bring it to market
value 3 years ago. You said that you made a decision to make a leap now versus making
a step, where you could have made the step and you decided not to. That was a conscious
decision. I think that was the wrong decision to make, affecting the citizens of our city
and if you're doing it across the county, I don't think that's fair. But there's
interpretation throughout this and you made interpretation this year to catch up. And I
don't think that was the right decision.
Councilman Ayotte: Irrespective of the individual, any resident that would have that kind
of increase, that's a concern for me. That's the concern and I'm not here to argue the
point because you brought up the point yourself. ! don't want to receive a junior assessor
badge.
Steve Clay: I wasn't referring to you.
Councilman Ayotte: No, no. My point is, is that the valuation, the number may be 100
percent correct. It's just the fact that any resident should not be caught off guard, and ifa
resident doesn't come forward, then the supposition could relatively be safe to say that
they were not caught off guard .... because this resident understands process and so
forth, but that's not my, that's not fair for me to make that supposition. The fact is, 70
percent in my view is a big lump to swallow at one time. Same as the mold issue was a
big issue for the.
Mayor Furlong: Other family.
Councilman Ayotte: Other family, so ! have a hard time swallowing 70 percent. ! wish
you could tell me a way that we could deal with that issue. You've already said we can't
deal with it on a 2 year period of performance or 3 year period of performance. You
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Board of Review and Equalization - April 26, 2004
could. You can program increases that can predictably be communicated to the resident
over a period of time is your recommendation. It seems to me you could do that. Which
would get us off the dime. So that then my concern of not having the resident educated
so that they can plan for it goes away. So if the assessor's office could program
predictably what could be the anticipated hit by a resident, then it takes us off the hook
and it gives them the buy time to plan for such a hit. ! don't know if that's doable or not.
! just throw that out. Is that doable? Does the assessor's office have the ability to
predictably plan increases based on what they see is going to be the future situation to
play catch up rather than playing catch up over a 12 month period?
Steve Clay: Once you have the sales data to tell you that property, or type of property is
worth this much money, there's no provisions in the state law to say you can slide up at a
certain pace.
Councilman Ayotte: You could slide up to a certain pace beyond a 12 month period?
Could you communicate to a resident that the resident should program on some level of
increase over a period of performance beyond 12 months without it being contradictory
to a law?
Steve Clay: ! guess I'm not sure. We could send them all letters saying that, you know
be prepared because...in about 3 more years.
Councilman Ayotte: See, that gives an educational flavor that ! think would be more fair
than what we're doing right now.
Councilman Labatt: ! think the homeowners Bob, to your point, realize what their
property's going for when they see what the school district just paid for the Mattson
property. People are not naive to what their value of their land is when they own 90 acres
like that guy did and they sell it to the school district, or when they offer the guy across
the street and down the corner a little bit more money for his property and he says no, !
want more. People know what their property is worth when they're sitting on 25 acres.
And they realize that the school just paid nearly $90,000 an acre.
Steve Clay: 96.
Councilman Labatt: $96,000 an acre? When they pay $96,000 an acre for a cornfield,
they know darn well what their property is worth when they're sitting on 10 acres or 15
acres. Anybody can do the math.
Councilman Ayotte: Well with that said, ! was somewhat surprised with what my
property went to but still, for me it's programmable because ! have an assessment on a
much more gradual increase, but ! own such a small lot. The smallest in Chanhassen !
might add.
Steve Clay: 96,474.
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Board of Review and Equalization - April 26, 2004
Mayor Furlong: See the challenge ! have is that as the assessor's office, that office too
should know what property values are going for, and has going for and what ! hear that's
a little disturbing is that you knew the prices were going up but you chose not to proceed
because of the current property tax rolls. And that's difficult for me to understand if also
what I'm hearing.
Steve Clay: In hindsight I'll admit that we were probably wrong in taking that approach.
Mayor Furlong: And ! guess the struggle ! have is what we don't know is what other
property classes that might have been occurring in too or where we are with other
property classes. To the extent ! think the objective is to, one of the issues that's raised is
what's the city's motivation to increase property values so people develop and get taxed
out of their home. The city isn't in the business of establishing statutes to figure out your
property taxes. The legislature does that. What we're responsible for us looking at the
values and ! think responsible and have the fiduciary responsibility to make sure that
they're fair. And one of the steps in the process to have the residents come forward when
they think they're not being treated fairly, including one of the items on the standard form
is it went up too much in one year. There's a sense of fairness there that ! think is
lacking. So that's my struggle here is the apparent objective decision not to increase
these values as perhaps they should have been over recent years and trying to play catch
up all in one year. That doesn't, ! don't think that's a fair treatment. And that's my
challenge. Would that these other property owners came forward, ! don't know what
people have different opinions of what their property is worth. And yeah, they can see
what's going on but we as a public entity as the assessor's office take steps to...in a
timely fashion too. ! don't know that ! have a proposed solution but ! struggle with the
recommendation for reasons stated.
Councilman Labatt: ! think that, if we do what we're charged to do as this board, and we
ask ourselves this question, and Steve said, is the property worth what the county assessor
says is it's estimated market value of $1.2657 Is it worth it? We have to ask that
question objectively, yes or no. And that breaks down to a cost per acre of about 46.2
and that's just on the land.
Councilman Ayotte: Steve I agree with you, that I see, there's no argument there that the
value is accurate. ! just have a hard time irrespective of whether it's this resident or
another resident, for that kind of increase in a one year turn around time. It's just as
simple as that. And I'm not arguing with the assessment. I'm just arguing with the
growth in that period of time. And I'm looking, if you could come up with a.
Steve Clay: ! sit here at your pleasure to be the bad guy.
Councilman Ayotte: I appreciate it.
Councilman Lundquist: Bob likes somebody else to be the bad guy for once.
Steve Clay: I'm not stepping on your shoes?
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Board of Review and Equalization - April 26, 2004
Mayor Furlong: Councilman Lundquist, you're frantically pushing some buttons.
Councilman Ayotte: I just don't know what the solution is. Go back to the point. Is
there a way that you can program an increase over a period of time longer than 12
months? And would that set a precedent...
Steve Clay: As far as I know of there's no provision in state tax law for that so I guess I
can't answer your question.
Todd Gerhardt: I'm going to try to shed a little light on limited market value. If you go
to the second page of the handout that ! handed out and it says in 2005 the amount of
increase shall not exceed the greater of 15 percent of the value in the preceding
assessment or 33 percent of the difference between the current assessment and the
preceding assessment. So the most that her market value could go up for taxes payable in
2005 would be 33 percent.
Mayor Furlong: Of the increase.
Todd Gerhardt: Of the difference.
Councilman Lundquist: Yeah, but the increase in the market value, you can just pick a
number. 10 million dollars. ! mean if you get things to substantiate it. We're not
arguing ! don't think with the point that the market value is 1.7 million or whatever it is.
We're arguing with, we're trying to make up for sins of the past, decisions of the past in
one fail swoop. And it's just, ! think the argument, at least my argument is too much at
one time and because there were mistakes made, or not necessarily mistakes but decisions
made that in hind sight probably could have done something else. ! think that's what
we're, there isn't a property here that we've looked at as a board of review that hasn't
been assessed at lower than market value. Some of them, more than others, for whatever
reason, so ! don't think the argument is you know, if we're following the statute or not or
those things. It's ! think my argument is, ! know my argument is the amount of, that
we're trying to make up for, ! feel like we're making up for is just too much at one time.
Todd Gerhardt: And all I was doing is clarifying so you understood how much you could
up the value 33,000, or 33 percent and that's the maximum that you would ever have to
pay in taxes on that. So if you decide to go 35 percent, there's 2 percent of that market
value that's not going to be taxed. So because limited will cap that on what you're going
to be paying taxes on. And then the following year Steve is going to come right back and
put it right back maybe even higher than 46 percent. And then the next year it's going to
50 percent of the difference from the previous year to this year.
Mayor Furlong: But again that, that's dealing with the amount of taxes that, or the tax
increase.
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Board of Review and Equalization - April 26, 2004
Todd Gerhardt: Yep. ! just want to make sure the council understood how the limited
market value worked, and ! hear what ! think the council is saying is that they believe that
the valuation going up 70 percent is too high, and you want to look at splitting the
difference on that, and that's your decision. But it's not going to make a difference to the
Mancino's because they're not going to get taxed on that, and Steve's going to have to
come back the next year and put it right back, maybe a little bit higher than was the
previous year.
Councilman Ayotte: But what that does, it gives this resident an opportunity to program
for that increase.
Todd Gerhardt: That's what limited market value does.
Councilman Ayotte: I hear what Steve's saying, and I don't know whether or not they
were surprised. ! just know that if ! were hit with that, and that' s the only reference point
! have. If ! were hit with that value, even if ! owned an acre or two more, it would be
sticker shock to me. That's my whole point.
Steve Clay: Unfortunately I didn't bring the number for what her limited market value is
on this current assessment. If these numbers ! have penciled in are correct, and 25
percent difference between last year's limited and our current 1 million plus estimated
market value would have her limited still below $700,000 range, so if you were going to
amend her estimated market values down from this million dollar mark to, you'd have to
go below 700 before it would change what she's actually going to be paying anyway. So
that provision is there...2 or 3 years before this limited market value is phased
out.., somewhat more of a gradual increase.
Councilman Ayotte: But it would be a programmed spike versus.
Todd Gerhardt: And the Mancino's mentioned that at the last hearing, is that I think she
was more concerned what happens in 2007. Because she knows that's going to be the
day of reckoning, and that's where we've been trying to establish policies at the state
level from the League of Minnesota Cities because there's going to be a lot of, I mean
you could, every lake home in town has limited market value against it.
Steve Clay: No, not every one but quite a few.
Todd Gerhardt: Should be every one, but you may have had some ownership changes
and that may have adjusted it.
Steve Clay: It still doesn't affect limited market value with ownership changes.
Todd Gerhardt: It doesn't?
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Board of Review and Equalization - April 26, 2004
Steve Clay: No. 2 and 3 years ago is when we started getting those lakeshore values
closer to the actual value... I'd have to do a study right now but it's probably more like 60
or 70 percent of...
Councilman Lundquist: So what you're saying, if I understand you correctly is it doesn't,
70 percent, 80 percent, 350 percent, basically it's the assessor's message or policy at this
time that the Mancino's are going to be paying 25 percent increase in their taxes every
year until this limited market value statue is phased out in '07.
Steve Clay: Next year it's 15 percent or 33 percent of the difference. The year after that
is 15 percent or 50 percent of the difference, whichever is greater.
Mayor Furlong: And is that difference on the limited market value change or on the
market, the assessed, the full assessed value?
Steve Clay: No, next year would be 33 percent.
Mayor Furlong: ! don't care about the percentages as much as the basis for the
percentages. Is it limited to limited or is it limit?
Todd Gerhardt: Limited to taxable. Limited market value to taxable market value will be
going up in 2005 from 15 to 33 percent. 2006, 15 to 50 percent, and 2007, full market
value. There will not be limited if they do not change the statute.
Mayor Furlong: And these are the assessed, and ! guess ! want to make sure if, what I'm
hearing is that, unless the assessed value is set at a point below 33 percent, or 25 percent
above the prior assessed value. That's market assessed. Not the limited market value,
but the assessed value. There is no difference in the tax liability. So next year then,
where does that calculation begin on? Does it begin on the prior year limited market
value or does it begin on the prior year assessed value?
Steve Clay: Prior year's taxable market value. Whether it was an actual value or a
limited market value, whatever your taxable market value is. Compared to the current
year' s estimated.
Mayor Furlong: Well gentlemen, we've bounced this around.
conclusion? Do we have a proposal?
Can we reach a
Councilman Peterson: Yeah, ! propose not a lot different than what ! offered earlier. My
issue isn't about the market value. It's about, I'm trying to make a commentary on the
process that ! don't think is working. And regardless of whether or not Mancino's in this
case are going to pay less taxes or more taxes, wasn't my point of all my commentary.
My commentary is oriented around, ! don't like the process that was taken. ! think it's
broken and ! want to fix it. If it would get the attention of the assessor's office by saying
drop this by half, if that got the attention for us to look at this more carefully and be more
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Board of Review and Equalization - April 26, 2004
diligent in what we've done in the past and the future, then so be it. I think it is the
commentary versus dealing with specific facts.
Councilman Ayotte: I heard the assessor's given. I don't know with regard to state law
or programming the increase, which might set precedent for a number of residents. It
would also give us a view of what we could do in our fiscal planning. And ! don't know
if there's a way that we can find that out before we vote on this. Is there any way that we
can postpone a ruling until we get an answer to programming increase?
Steve Clay: No.
Mayor Furlong: ! think there's a, the clock is ticking when we.
Todd Gerhardt: 20 days.
Mayor Furlong: Okay, so what do we have til? Sometime later this week?
Steve Clay: Correct.
Councilman Ayotte: Well I don't feel comfortable in reducing it, but I don't like the idea
of hitting any resident with that kind of increase. That's my problem.
Councilman Lundquist: In fact we're not going to be reducing. We'd have to drop this
down from 70 percent to something less than 25 percent to reduce their actual tax burden.
Councilman Ayotte: And what I was asking for, and I didn't get an answer on, is there a
way of programming an increase longer than a 12 month period?
Councilman Lundquist: Statute lays it out. About 33, 50.
Mayor Furlong: That's the taxes payable versus the assessed value. Is that what you're
referring to?
Councilman Ayotte: No. What I'm talking about is if there's a way that there could be
over a 2 year period a mechanism to deal with that increase other than the limited
calculation. ! don't know. And you said you didn't know.
Steve Clay: The only way ! could think of councilman would be to allow everybody's
valuation increases down. Everybody's increases down from the previous years, but
that's exactly what I've been criticized for doing these past 4 or 5 years. So ! guess I'm
not sure where the benefit lies in continuing what you're seeming to agree on was a bad
policy to begin with. Which ! wasn't arguing with you. But as far as the state tax code
goes, there's no special provision for what you're suggesting, no .... tough decisions.
Mayor Furlong: Okay. Any other comments? Proposal. I agree with Councilman
Peterson, the process was not done well here. It was broken and what I'm, it was not
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Board of Review and Equalization - April 26, 2004
done well so how do we fix that? What can we fix? ! guess I'd, one of the things from a
process standpoint, ! mean this is away from this particular property but maybe it brings
up the issue is, should we be looking at other classes of property and reviewing those and
taking a look at, between now and the next year when the assessments go out, are we
setting ourselves up for some other problems with some other classes of property? By
making that statement ! don't know that we are, but unless we look at it, ! guess we don't
know, and then we can avoid the process but ! think this issue from a value standpoint,
it's a difficult one. ! don't know what the answer is there. So ! guess if somebody has a
proposed solution, let's make a motion and see where the five of us stand.
Councilman Labatt: I don't have a solution but I'll go with, recommend with the board's
recommendation, or the assessor's. We're stuck. We're.
Mayor Furlong: We're stuck, exactly. Nope, that's fine. Let's, there's a motion made to
accept recommended assessment. Is there a second? I'll second it. Is there any other
discussion?
Councilman Labatt moved, Mayor Furlong seconded to approve the recommended
assessment of $1,265,200 for Nancy Mancino at 6620 Galpin Boulevard.
Councilman Labatt and Mayor Furlong voted in favor; Councilman Peterson,
Councilman Lundquist and Councilman Ayotte voted in opposition. The motion
failed with a vote of 2 to 3.
Mayor Furlong: That motion fails. Is there another motion?
Councilman Peterson: I'd move that we consider an assessment of a million dollars on a
basis of more, on the basis of showing good faith that we are trying to understand the
needs of the citizens more than what this seems to have evidenced early on. So it's
symbolic more than anything else, lowering down to a million dollars.
Councilman Lundquist: Second.
Mayor Furlong: Made and seconded.
Councilman Peterson: Moving the recommended assessment from 1.2652 to a million
dollars.
Steve Clay: Mr. Mayor, if ! could get a point of clarification. Would the difference of
$265,200, should that be adjusted from the land value portion?
Councilman Peterson: Whatever you think is more appropriate. ! don't know the
difference from an assessment standpoint.
Steve Clay: ! would suggest that as opposed to the building value.
Councilman Lundquist: The land is $1,040,800 Craig and the building is 224.4.
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Board of Review and Equalization - April 26, 2004
Councilman Peterson: So the land would be more appropriate, I agree.
Councilman Ayotte: Point of clarification?
Mayor Furlong: You made a second, didn't you Councilman Lundquist?
Councilman Lundquist: Yes.
Mayor Furlong: Okay, so we're discussing the motion. Councilman Ayotte.
Councilman Ayotte: When you say reduce it, what would we specifically do to resolve
this issue simply than just gifting the $265,000? Because ! do believe if the assessment's
correct, the problem that ! have is correcting the overall systemic issue of process.
don't understand.
Councilman Peterson: We're giving notice to the land owner and to the assessor's office
that we believe that this increase was too much without any notification. So then the
responsibility, they're going to be responsible for continuing the values, to bring it up
again to us next year and let us deal with the same issue. And at that point in time, our
concerns are mitigated because due process has been served and notification has been
served to the parties involved.
Councilman Lundquist: This isn't going to affect what the Mancino's pay in taxes, but
it's to just pay the same amount, but it's sends a message that we want this process to go
differently next year, and that the Mancino's and all the rest of the property owners
should be prepared to see significant increases.
Councilman Ayotte: Friendly amendment? Could we secure acknowledgement from the
assessor's office that we would better understand an approach in the process sooner than
we did this year? So that we could work in concert with the process before we get hit.
Mayor Furlong: Yeah, ! think to comment on that, this is a discussion that the city
manager and ! have had and with the challenges here and the situation that this created. !
think we brought it to everybody's attention and Councilman Peterson's comment, yeah
the process is a problem. ! think the, how do we go about doing it? What direction do
we want staff to give to staff something specific. You know I'll hold comments on the
motion in a second but ! guess I'd say is, we're frustrated with the process, how it
worked. ! think made comments that it was not correct. So what do we need to do to
verify that this isn't going to happen again, to the extent we can, and two, the issue that !
raised before, if there are other classes of property that are in a similar situation as this
class was a couple years ago.
Councilman Ayotte: A friendly amendment would then be resolution of process 6
months prior to execution. So what I'm saying is that we have an understanding of what
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Board of Review and Equalization - April 26, 2004
the classes could be affected and that we would have staff involved in resolution well
prior to execution of the assessments for next year.
Mayor Furlong: Well, and I think, I don't know that that would be an amendment on this
since we're dealing with the establishment of value but ! think your comments are noted
for the record, as ! said, it's something that I've been working on with the city manager
and it's something that ! think we want to take a look at. We've got some issues with
property values and their assessed values within our city. And ! think that's something
that we want to take care of again looking at what's fair. Trying to come up with what's
fair. So ! guess from, just to comment on this with regard to the prior motion and clearly
my comments have been struggling with this one. ! can't see opposing this one because
of any fairness issue on a tax basis. So this is, ! agree with Councilman Peterson's
position and purpose for establishing this motion. The process was not done well and !
think we've expressed that tonight and ! think the assessor's office has heard that. ! hope
they have, and clearly can sense some of the frustration here by this board, and we need
to look at doing something better going forward, so those are my comments. Any other
discussion on this motion?
Councilman Labatt: Just question for Roger. Legally speaking Roger the way this
motion has been made and seconded here and it appears we're heading down the road,
how does it, how do we, is it in line with what we are charged to do as a state, by state
law as a board of equalization? Are we following state law? Or are we stepping over the
boundaries of what we're charged to do? With what the motion and the second, where
would we go?
Roger Knutson: Under state law you're supposed to find out, determine what the value
was on January 2, 2004. That's what state law says you're supposed to do.
Councilman Labatt: So what you're hearing here, are we doing that legally? ! realize, !
think the motion and second here is taking the wrong avenue here. Is we're trying to
send a message to Mr. Clay and his other assessor's down there that their process was
flawed and ! think we all agree, all five of us agree it is flawed. And the last couple years
this property hasn't been assessed to it's full market value or limited market value,
whatever you want to use. But ! think the message that's been conveyed that this
homeowner here is being treated differently and our decision we're about to make here is
going to be, has crossed over the line to what the state law says this board is supposed to
do. We're not assessing and agreeing that this property, on January 2 is being assessed
properly. ! agree with, we did, they haven't done a good job in assessments in keeping it
up but we need to follow what the state law says.
Councilman Ayotte: Roger, are you going to respond to Steve's question? Are we
causing a problem if we take this approach?
Roger Knutson: That's a different question. It will not have any affect, as far as ! can
determine, on anything if you, because of the limited market value issue. Under the law
that ! know it, and ! know it, the only issue before you, legal issue is what is the valuation
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Board of Review and Equalization - April 26, 2004
on that date. To the extent that you're doing something else and you're not following the
letter of the law. Maybe you're following the spirit or something but not the letter of the
law.
Councilman Ayotte: So we're not violating the letter of the law.
Steve Clay: If I understand the law correctly, and you can raise or lower estimated
market values as you deem fit, as long as you don't change the assessment, total
aggregate assessment by more than 1 percent.
Roger Knutson: And you're certainly not doing that.
Steve Clay: Of the total city wide.
Councilman Peterson: ! call the question.
Mayor Furlong: Okay, thank you.
Councilman Peterson moved, Councilman Lundquist seconded to approve an
assessment of $1,000,000 for Nancy Mancino at 6620 Galpin Boulevard, reducing
the original assessment on the land by $265,200. All voted in favor, except
Councilman Labatt who opposed, and the motion carried with a vote of 4 to 1.
Mayor Furlong: Is there any other business to come before this board?
Steve Clay: You can close it but I'll talk to Todd tomorrow and see if we can get
something going as far as, ! wanted to give you a better sense of, a more secure feeling
that we are in fact doing.., assessment job here and that this process failure is really pretty
much limited to just these particular types of properties, and ! can generate some numbers
to help bring your comfort level up.
Mayor Furlong: I think that's a wonderful idea because clearly there is some discomfort
and ! don't think it's, maybe it's an issue of understanding, clarification, so that would
help but also ! think with points raised through this process that it'd be helpful for this
board, or this council to gain some better understanding and some comfort in the process,
so ! think we'll need to work, and let's work with Mr. Gerhardt on that. Okay.
Councilman Lundquist moved, Councilman Ayotte seconded to adjourn the Board
of Review and Equalization. All voted in favor and the motion carried unanimously
with a vote of 5 to 0. The meeting was adjourned at 10:05 p.m.
Submitted by Todd Gerhardt
City Manager
Prepared by Nann Opheim
38