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5 Rural Serv Dist Review Ord CITY OF CIlANHASSEN City Cmt" Drillt, PO Box 147 ;anhl1S5rn, Minnesota 55317 Phon,612.937.1900 ~en"al Fax 612.937.5739 gineering Fax 612.937.9152 \lic Safety Fax 612.934.2524 éb www.ci.chanhl1S5en.mn.us 5" MEMORANDUM TO: Scott Botcher, City Manager CYlf' FROM: Don Ashworth, Economic Development Director DATE: November 14, 2000 SUBJ: Review Rural Service District Ordinance Background In 1995, the City Council selected a citizen task force to review the rural service district ordinance which had remained in its original form since adoption in 1967. The review was prompted by two factors: 1. Severallargcr parcels continued to receive the lower city tax rate as they had not been platted (previous basis for exclusion) even though they did not meet the original intent of "farmed property," i.e. Gedney Pickle, Prince, McGlynn, numerous hobby farms, etc.; and 2. An administrative error had occurred for the tax years 1991-1995 which resulted in the tax rate being changed ftom the ordinance prescribed rate 01'75% of the city tax rate to 90% of the city's rate. , , , The task force recommended that the automatic loss of the lower rate should continue to exist i'fpr¡¡perty ;;;S-rubdivided, but they added very narrow language to ensure that the only properties receiving the lower rate would be "actively )farmedpropertiê~Jélimifu¡~ the previous loophole for larger non-subdividable parçels, ,,'sing the newly Cseated definition of "farmed", the task force reduced the apJ?roxilfate 120+ PIlfC Is IIæeting the previous criteria to approximately 40 patcelS.. Thè.City Couneil 'mously approved the task force recommendations /' [Note - new ordinanCe was drafted and approved and a resolution passed establishing th'e 40 parcels as qualifying for the modified rural service district ordinance]. In regards to the overtaxation issue, the Council approved the staff recommendation that the 40 parcels which had been farmed during 1991-1995 should be compensated by setting their tax rate àt 60% of the city's tax rate for the years 1996-2000. The Council approved this recommendation including a request that the ordinance/tax rate be reviewed in 2000. Current Analvsis To comply with the Council's direction, staff reconvened the original task force members - Al Klingelhutz, Willard Johnson, Steve Berquist, and Gayle Degler. Cit'¡ o(Chanhass",. A fTOWin! cammunit'¡ with cltan lakes, aualit> schook a charmin. downtown. thrivin. businesses. and b,autifù1 Mrks, A mat .la" to lillt. Ulork. and o&. ';¡ Scott Botcher November 14, 2000 Page 2 The committee discussed each of the 40 current parcels in detail and believes that the following II parcels no longer qualifY for the rural service district tax rate, i.e.: Parcels Proposed to be Deleted ftom the Rural Service District Parcel Number Owner 25-0083310 Herita¡¡e Development 25-0083320 G. Erickson 25-0090300 John Savarvn Estate 25-0091700 John Savarvn Estate 25-0092800 Mills Pronerties 25-0136010 A. Williamson 25-0160300 Chaska Gatewav ' 25-0160310 Chaska Gatewav 25-0230700 Jim Currv 25-0232100 V.W. Land Holdimzs 25-0351200 Chester Teich Additionally, the committee recommended that the current ordinance continue in effect recognizing that the City desires to see a staged development ofrural Chanhassen during the periods of 2005-2020 (see attached MUSA expansion map). The committee felt that premature taxation of these areas at the full city tax rate while simultaneously not allowing development rights appeared to be a double standard. The task force also recommended that staff should administer the ordinance, on a yearly basis, recognizing that parcels cannot be deleted except by resolution of the City Council- an action which would trigger a notification to the current owner of the city's intent to remove that parcel. The task force was not asked to make a recommendation on future tax rate as taxation issues have traditionally been a City Council decision [Note: Any action taken by the City Council . between now and July, 200 I would not be effective until fall of 200 I for taxes collectable in 2002]. As the administrative error that occurred for the years 1991-1995 has been reimbursed for those taxpayers who truly farmed during 1991-1995, staff would recommend that the ordinance be modified to its original 1967 level of 75% of the city's tax rate for those parcels currently meeting the standards of the rural service district. Recommendation Should the Council tentatively agree with the task force and staff recommendations, this item should be tabled until the affected property owners can be notified of proposed recommendations. g:\user\don\rural service area.doc I Jeo', ¢ fo.JeM M,..., OWN'" I......p II /.~.¡.. @ efr /lG /110 -I...: W4!. c..... ~t_ J...jJ J 'k,'í ..... "'~... ,f- LIST OF PROPERTIES / RURAL SERVICE DISTRICT 0. v..../ 0__ November 13, 1995 Updated: January 19, 1996 /0/-< '- I (J <> pm NUMBER OWNER 25.0020200 ø"- Irene 1. Pahl 25.0083310 off Heritage Development of MN Inc. 25.0083320 I· Gregory J. & Claire R. Erickson . I . 25.0090300 t John P. s,w<yn E..." 25.0091700 o¢ John P. Savaryn Estate 25.0092800 Mills Properties Inc. ;-9"" 25.0101700 ó,v Theodore F..& Marlene M. Bentz 0 / {off- , 25.0136010 Andrew A. Freseth & LyndaW. Williamson 25.0160300~, cS; Chaska Gateway Partners 25.0160310 oH Chaska Gateway Partners 25.0220100 or' Charles W. Mattson 25.0220700 <1"'- Charles W. Mattson 25.0220800 or' Dean & Lois Degler 25.0221300 or' Chaska Investment Co. 25.0221400 "1" Gayle & Lois Degler 25.0230200 ",;J Delores B. Holasek 25.0230300 ð~ Frank Fox 25.0230400 f)/./ Dorsey & Dorsey ( ~oJ'~ 25.0230500 "Þ" Jeffrey A. & Terri 1. Fox J' 7 0,1 25.0230700 .Jç James A. Curry .¡., eft l W ." 25.0231600 J' òrJ James A. Curry ." ~ pi .ç..'I'" 25.0232100 ,Ø' V. W. Land Holdings 25.0232200 otJ William 1. & Vicky 1. Goers 25.0232300 o~ Bruce J eurissen 25.0242400 or A. & M. J. Klingelhutz Trust 25.0242410 oy' James A. Curry 25.0242600 .,r/ Klingelhutz Development Co. 25.0242900 o¡J Lawrence C. & Elizabeth Klein 25.0253900 ..,.; David R. Teich 25.0260600 or/ Gilbert P. & Margaret C. Laurent. 25.0262000 ep Lowell W. Peterson . J ,~)Ie..., 25.0262100,,>, ø ,,& jI ',-".0 ¿;) _.) )- _"Charles R. & Patricia R. Webber ~ ¿ :1";;'/£' / . 0 25.0340400 '. 0 ~l "~I ~cl,¡J Harry Lindbery 25.0350110 ()o1 Chanhassen Springs Co. 25.0350500 o,J Harold F. Hesse ') t.~~. o1J- - ¡!)-:,lIit') 25.0351200 Chester J. & Betty Teich ;" 25.03618007" ' 0¡J Darrill Peterson etal 25.0361900 .f' Darrill Peterson etal 25.1550020 ! ,.J Timothy A. & Dawne M. Erhan . I"Jo... ~ -F- '...~ i~i'¿th\~ .n å .~~-~ ce Lots -... "', .. I lIT' J "~ -J ~ -. i~:;· ~ ."~ ---)'). ._"". "-( T ~ ~--- ..- ----""- - '-.0.- .-- -- ...,.( ;~¡! . :-Jr- r M . -~~~P''"" · ~-J~'- /~~. ~ fTî1/ is.. ~--' ...., ,~ ,"i!'Ñjl,. í -~ . - . '"E~ h= -I..... ~? .....-..- \5' ':"".' 11:"'1....1 - , "I1!i¡¡ - °1 - ~d I - (-- I - . , þ - - ..- Dìi" "rJ. Lr - ,i-:>t.ì '" L: T/ _r'') ¡11fT 1\..-'; ~ .... II '" ~ ~ _ ~~1 ,,\.~ _ ~~"""'V kÇ.A~~U ILJ.J ",'bf/v. , ~>~IIII~,I,. ~ 11J17 ) Nil:. T ~~" ~I ~.- ~~I I/j>;~~ ~ ( JV ,.,...'.,'.,.,. _? ->;j:"Yiji'1 ../ . ~.I ì') 1111 CITY OF CIlANHASSEN 690 City Cmt" Drillt, PO Box 147 Chanhl1S5en, Minnesota 55317 PhoTll 612.937.1900 Grn"al Fax 612.937.5739 Engin,rting Fax 612.937.9152 Public Safety Fax 612.934.2524 Wéb UlWUI.ci.chanhl1S5en.mn.UJ October 13,2000 Mr. AI Klingelhutz 8600 Great Plains Blvd. Chanhassen, MN 55317 Mr. Steven Berquist 7207 Frontier Trail Chanhassen, MN 55317 Mr. Gayle Degler 1630 Lyman Boulevard Chanhassen, MN 55317 Mr. Willard Johnson 1660 West 63rd Street Excelsior, MN 55331 Re: Rural Tax District Ordinance Gentlemen: In 1995 you were asked to sit on a special Task Force to review the City's "Rural Service District" ordinance. Your recommendations to revise the definition of the rural service district, reduce the number of eligible parcels, and to modifY the tax rate was unanimously approved by the City Council. The Council's action was to be effective for five years--1995 through 2000. As 2000 is rapidly coming to a close, we are asking you to re-serve as a Task Force member in updating your previous recommendations of reviewing eligible parcels and to determine if the ordinance should be continued or not. Any action by the City Council cannot legally become effective until 200 I for tax collection in 2002. I have set the first, and hopefully last, task force meeting for 4:00 p.m., October 26 at City Hall. I will call you the first part of next week to verifY your willingness to serve and your availability. Please call me at 937-1900 ext. 110 if you have any questions. s<t2lfi-Q2J Don Ashworth Economic Development Director DA:k Attachment: Rural Service Tax List rh, Cir¡ o(Challhassell.A fiTOUlinycommullity Ulith clean lakes, ...lit> schools, a charminrdowntoUln. thrivinr busin,,,es. and hrautifùl oark". A mat '/Dr' " Ii'Jr. work, and, '. . A-?!" CITY OF CHANHASSEN CARVER AND HENNEPIN COUNTIES, MINNESOTA ORDINANCE NO. 245 AN ORDINANCE AMENDING CHAPrER 2, ARTICLE ill OF 'l'HE CHANHASSEN CITY CODE CONCERNING URBAN AND RURAL SERVICE DISTRICTS THE CITY COUNCIL OF THE CITY OF CHANHASSEN ORDAINS: SECTION 1. Section 2-32 of the Chanhassen City Code is amended to read: Sec. 2-32. Urban and Rural Service Districts. (a) The City is divided into an urban service district and a rural service district, constituting separate taxing districts for the purpose of all municipal property taxes except those levied for the payment of bonds and judgments and interest thereon. The urban service district includes all properties within the Carver County limits- in the city except those set forth by ordinance as the rural service district. The rural service district shall include only such unplatted lands which need not be contiguous to one another, as in the judgment of the council at the time of adoption of the ordinance are rural in character, and are not developed for commercial, industrial, or urban residential purposes, and for these reasons are not benefited to the same degree as other lands by municipal services financed by general taxation. The Council finds that only property put to the following uses is rural in character: a parcel on which ninety percent (90%) of the tillable land is used for growing corn, grain, or seed crops; a parcel where the principal use is raising poultry, cattle, sheep, or swine; a parcel which is enrolled in the Federal Conservation Reserve Program. Rural in character specifically does not include property served by public sewer or water, tree farms, nursepes, hobby farms, and property whose principal use is residential, A dwelling on land that does not qualify for taxation under the Minnesota Agricultural property tax law shall be considered urban residential. (b) The City Council finds that as of the date of the adoption of this ordinance the parcels identified on a list dated November 13 , 1995, entitled "Rural Service Districts" on file with the City Clerk are in the rural service district. (c) Whenever any parcel ofland included in the rural service district is platted, in whole or in. part, or whenever application is made for a permit for the construction of a commercial, industrial, or urban residential building or improvement to be situated on such parcel or any part thereof, or whenever such building or improvement is commenced without a permit, the ç:ouncil shall make and enter an order by resolution transferring 27323 ~1'II'IOH'1f: such platted or improved parcel from the rural selVice district to the urban selVice district. (d) In the judgment of the Council, the ratio that exists between the benefits resulting from tax supported municipal selVice to parcels in the rural selVice district to parcels in the urban selVice district is sixty percent (60%), plus any municipal property taxes levied for payments of bonds and judgments, and interest thereon. SECTIOrs: 2. This ordinance shall be effective immediately upon its passage and publication. PASSED AND ADOPTED this 13th day of NDvember Council of the City of Chanhassen. , 1995, by the City ATIEST: ~ ~l2 (J5f:J /J. .~: ¿ Don Ashworth, Cler Manager D~ld J. Ch 'el, ayor , (Published in the Chanhassen Villager on NDvember 30 , 1995). 27323 C ITY OF CHAHHASSEH 3 ^ 32- - 690 COULTER DRIVE. P.O. BOX 1'47. CHANHASSEN, MINNESOTA 55317 (612) 937-1900 . FAX (612) 937-5739 MEMORANDUM TO: Mayor and City Council FROM: Don Ashworth, City Manager DATE: November 9, 1995 SUBJ: Rural/Urban Tax District, Finalize Ordinance Amendments Following the last city council meeting on this item, the mayor established a citizen task force to make recommendations as to how the ordinance should be amended and which parcels should benefit ftom that amended definition (see attached letter). The task forcemade quick order out of the definition task-farms in, everything else out. The city attorney has been requested to modifY the ordinance to reflect the task force's recommendation and send that directly to council members prior to Monday evening. If the ordinance is to be modified and become, effective for taxes payable in 1996, action to finalize the ordinance has to occur Monday evening. The second part of the task force's assignment was also relatively easy. That's not really surprising recognizing the number of "community years" of the membership. In actuality, a few of the parcels were determined to be "viewed" recognizing that property lines don't necessarily follow creeks, bluff lines, or stands of oak. A secondary meeting of the task force is scheduled to occur prior to Monday evening and a final recommendation as to which parcels should be in the rural district willlikêly be distributed Monday evening. ~\n':'_': - \~~-?t,,:~~ ,,;còp Ironically, the task forc~sPl:I1t the largest amount of time trying to figure out wh(). should receive a rebate. Two members offue auditors office also attended that meeting and stated that they would attempt to do the calculations. I wouldn't hojd my breath waiting fór that report as the only way to carry out that type of calculation 'YÍll b~, manùàJly. As noted, I find it ironic that the largest amoun\tJ.~e was spent on discussing rebates. It is ironic because it was not one of the tasks assigned by the mayor and as: ' . We Don't Have the Money: Residential taxes are calculated by multiplying the first $72,000 in value times I % and everything over that at 2%. I am absolutely confident that someone at some time mistakenly entered an amount of $82,000 vs. $72,000. If that did Mayor and City Council November 9, 1995 Page 2 bappen, the city, county and school district received exactly. what they should have received--not a penny more or a penny less. At issue is the fact that one group of owners paid a greater share of the tax than other owners. Our 90% error vs. 75% is exactly the same. The city did not receive $1 more orless than what had been certified for 1991-1995. At issue is that one group of owners paid more than another group; and · What Error Was Made? We seem to be dwelling on 90% vs. 75% as kind of the only error. I am confident that if either this office or the city council would have seen a listing that showed that Prince, Gedney, Fleet Farm, and numerous development corporations were receiving tax breaks, we all would have said, "Whoa, this isn't right." To me, that represents the most significant error that occurred. The amount that was over taxed by true "farmers" is pale in comparison to the under tax payment by owners that really shouldn't have been given a tax break; and · State Law: If an abatement is to be considered, then the property owners involved in seeking that abatement should and must conform to the statutorily prescribed process through which abatements are considered. I am not confident that the courts would side with the group seeking that ahatement. Specifically, a similar type of tax error occurred in Shakopee and the court simply said make the correction in calculating next year's taxes to properly conform with tax Jaws and no abatements were considered; and · Let's Do It Anyway: I understand that the committee considered this course of action. Both the city attorney and myself strongly urge that you not follow this course of action in light of the fact that in that a statutory process has been established and to knowingly deviate from statute is far worse than almost any other solution that can be conceived; and · Who Gets the Check? Assuming that auditor's office does make the rebate calculation, and assuming that we had the money, and assuming that we flaunted state law, you are still left with a major decision--who gets the check? Do we send a check to the National Weather Service/Jehovah's Witnesses, or Betty O'Shaughnessy's development group that owned it the year before that, or to the farmer who owned the land in 1991? A similar question arises as to the residents who live in Stone Creek, Trotter's Ridge, Windmill Run, Royal Oak Estates, and Shamrock Ridge. Do they get the check? Or does the development group that purchased the land in 1992 or 1993? Or does the farmer who may have been leasing the property in 1991? SOLUTION Is there a solution out there? I think the answer is yes, although it probably will not be endorsed by all groups. Specifically, I would recommend that the city council: Mayor and City Council November 9, 1995 Page 3 L Accept the task force's recommendation regarding the defWtion of properties that should receive a tax break-fanners. Again, Roger Knutson will have redrafted the ordinance to reflect that definition, and the first action should be to adopt the amended ordinance, and 2 Accept the task force's recommendation as to which parcels meet the new definitions included in the modified ordinance. Again, I sincerely believe that that list will be here by Monday evening; and 3. By taking actions 1 and 2, we will have shortened the list to probably 30- 40 parcels that truly benefit. We will also have identified those same 30-40 parcels as the ones who should not have been taxed at the higher level in previous years. To offset the burden that those individuals incurred, I would recommend that the 15% of the city portion of the taxes that they were over taxed in 1991-1995 be compensated for by establishing the tax rate for those same parcels at 60% for the tax years 1996-2000. Hopefully some of us will be around in the year 2000 to inform the city council at that point in time that they should junk this ordinance and thereby eliminate future pain. ;-0'7-1 ~ Qß~ CITY OF CHANHASSEN 690 COULTER DRIVE. P.O. BOX 147. CHANHASSEN, MINNESOTA 55317 (612) 937-1900 . FAX (612) 937-5739 October 25, 1995 Mr. Al Klingelhutz 8600 Great Plains Blvd. Chanhassen, MN 55317 Councilman Steven Berquist 7207 Frontier Trail Chanhassen, MN 55317 Mr. Gayle Degler 1630 Lyman Boulevard Chanhassen,MN 55317 Mr. Willard Johnson 1660 West 63rd Street Excelsior, MN 55331 Re: Rural Tax District Ordinance Gentlemen: By this letter, I would request that you, along with Bob Generous from our Planning staff, act as a special task force to review the existing definitions within the rural tax district ordinance (copy attached). I believe I speak for the entire city council in stating that there is a definite interest in ensuring that property owners still involved in agricultural pursuits, i.e. cropping, dairy farming, etc., should continue to receive a reduction in their city tax rate. However, those wishing to purchase property solely for "estaÙJ~type" dwellings should not receive this same benefit. Other properties currently within the rural district which are higJùy questionable include properties owned by Mills Fleet Farm, Gedney, various development corporations that are not using the property for agricu¡'fural purposes, etc. I am attaching a memorandum from the City Manager further OutliningJ.Þ~~tory and current problems with the rural taxing district. ""''<:+-'47:{;,'';,,,:- Once your committee has'rei!C::hed agreement on how to define "agricultural purposes," your next assigmnent should be to review the existing 88 parcels that are currently within the rural district. (The list includes 112 parcels, but 24 of those are tax exempt. An additional 24 were check marked by city staff as not meeting the previous <::riteria.) Using the standards that you will be developing for defining agricultural, each ofthesêparcels should be reviewed to determine whether they meet that qualification standard or not. Again, Bob Generous, as a member of your task force, can provide maps showing the location of each of these parcels. I am confident that with the combined years of knowledge of Chanhassen properties represented on the task force, I October 25,1995 Page 2 sincerely believe that your ability to get through the 88 parcels (description of parcels attached) can occur within a very short time ftame. At least I am hoping that is the case. It is my personal belief that the issue of establishing a tax rate for the rural district is a responsibility of the Chanhassen City Council. Should your committee wish to discuss this issue, you are welcome to do such. . I have set the flI"st and hopefully last meeting of the task force for Wednesday, November I at 4:30 p.m. at Chanhassen City Hall (Courtyard Conference Room). I am very hopeful that you will accept the nomination to this task force and that your efforts will be productive. Sincerely, ~~4~~ Donald J. Chmiel Mayor DJC:k Enclosures: Ordinance Property Owners List Memorandum from Don Ashworth, City Manager c: Bob Generous, Planner II CITY OF CHANHASSEN City Center Deiv" PO Box 147 ',anhaß'n, Minnesota 55317 Phon! 612.937.1900 ~rnrral Fax 612.937.5739 gin,rring Fax 612.937.9152 ìlit Safety Fax 612.934.2524 ?b www.ci.chanhassen.mn.us November 14,2000 Me. Al Klingelhutz 8600 Great Plains Blvd. Chanhassen, MN 553 I 7 Mr. Gayle Degler 1630 Lyman Boulevard Chanhassen, MN 55317 Re; Rural Tax District Ordinance Gentlemcn: Mr. Steven Berquist 7207 Frontier Trail Chanhassen, MN 553 I 7 Me. Willard Johnson 1660 West 63rd Street Excelsior, MN 5533] Attached please Jind the report which I anticipatc being prest~nted to the City Council for action on Novembcr 27, 2000. Shou]d this report ditfer ìÌ"om your recollection of ta.>k force actions, please tèel free to contact me. Please call me at 937-1900 ext. 110 if you have any questions. S;"71 [k9;è- Don Ashworth Economic Development Director DA:k Attachment: Rural Service District Report Ïty of Chanhassen. A fTOwin'{ community with clean lakes, aualitv schools. 11 charminr downtown, thrivin{F husine.ufs, and hetlutifù! fJdrk... A (lffl1t tJ/flre to !i1Ie. wnrk, ¡¡rid "ll1v