06/09/1987 - City Council Special0
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SPECIAL CITY COUNCIL MEETING
BOARD OF EQUALIZATION
TUESDAY
JUNE 9, 1987
6:30 P.M.
I. ROLL CALL AND INTRODUCTORY COMMENTS
II. DAKOTA COUNTY ASSESSORS OFFICE COMMENTS
III. OTHER BUSINESS
IV. ADJOURNMENT
MEMO TO: HONORABLE MAYOR AND ALL CITY COUNCILMEMBERS
FROM: CITY ADMINISTRATOR HEDGES
DATE: JUNE 8, 1987
SUBJECT: SPECIAL CITY COUNCIL MEETING/BOARD OF EQUALIZATION
The Board of Equalization meeting is scheduled for 6:30 p.m. on
Tuesday, June 9, 1987, in the City Council Chambers. Because of
recent legislation requiring that market value for taxing
purposes be increased to a percentage that more accurately
reflects a true market value, many of the property owners in
Eagan received a substantial increase in their market value for
taxes payable in 1988. Residents are speculating that taxes
could increase $500 - $1,000 due to increases that have been
reported to this office, ranging from as low as $10,000 to a high
of $32,000. It is anticpated that the City Council Chambers will
be full tomorrow evening for the Board of Equalization meeting.
The City Council's role at a Board of Equalization meeting is
best described on pages 310 and 311 of the handbook for Minnesota
Cities, a copy is enclosed for your review.
In case residents are curious as to how their property tax is
distributed amongst taxing authorities, pie charts were developed
for each of the three school districts including all of their
taxing entities based on a 100% of net payable taxes. Please see
the attached handout.
Since I am planning to be in Rochester tomorrow evening, Bruce
Robertson, our Administrative Intern, will be present to take
minutes and arrive early to coordinate 'the work stations and
seating arrangement with representatives of the Dakota County
Assessor's office.
INFORMATIONAL
The depositions for the Bieter lawsuit were made available to the
media and any member of the public for public inspection,
beginning today. Rob Hotakainan of the Minneapolis Star and
Tribune and Murray Wolf of the Real Estate Journal were both
present at the Eagan City Hall to review the depositions this
morning. It was our understanding that Nancy Connor of the St.
Paul Pioneer Press and Dispatch and Paul Klauda of the
Minneapolis Star and Tribune were at the Dorsey Law Firm and
reviewed the depositions at that location.
I believe each member of the City Council was notified over the
weekend by Mayor Blomquist regarding the voluntary watering ban.
The watering
ban will be in force until July 15,
restricting
outdoor usage
by residents to the odd/even days corresponding
with street addresses.
Even numbered households
can water on
even calendar
days while
odd numbered households can
water on odd
numbered days.
Since the
watering ban is voluntary,
there is no
official action required
by the City Council.
Thomas L. Hedges
City Administrator
formerly considered exempt, the legislature has
authorized the taxation of state-owned residential
property in the same manner and to the same
extent 4s privately owned property of a like
nature.
Local governments in Minnesota may not
exempt any land from taxation for the purpose of
attracting or keeping industry 44 The governing
body of a city, however, may offer a developer a
deferral of property tax on property improvements
during the construction period until the improve-
ments are constructed and 50 percept of the area
of the building becomes occupied. Once the
improvements are constructed and 50 percent
occupied, the developer will be subject to the full
property tax plus the property tax on the property
at the time for which the deferral was applied,
multiplied by the number of years the deferral was
granted during the construction period.
Equalization Procedures
Once the assessor has completed his or her work,
it is reviewed and, within limitations, modified at
the city, county, and state levels of government.
During this review procedure, two kinds of cor-
rections are made: (1) the assessor's lists are
checked for accuracy, individual complaints are
heard, and any necessary adjustments are made;
and (2) the ratio of market to assessed market
values is equalized. The first of these functions
is the sole concern of the city board of review
while the county and state boards devote a greater
percentage of their time to the latter task.
When the entire procedure has been completed,
the county auditor puts the valuations upon his or
her records for use in making up the tax rate
figures. Only when the assessments have been
reviewed and equalized by all three levels of
government do they become the official assessed
values for tax purposes.
The City Board of Review
The city council may serve as the board of
review in cities which have been separated from the
town. In cities which have not been separated
from the town for assessment and election pur-
poses, the town board serves as the board of
review.
The city council may appoint a special board of
review to which it may delegate all of the powers
and duties the council would have if it acted as the
board of review.46 The members of the special
board of review serve at the direction and dis-
cretion of the council. The council determines the
number of members to be appointed, the com-
pensation and expenses to be paid, and the term of
office of each member. At least one member of
the special board of review must be an appraiser,
realtor or other person familiar with property
valuations in the assessment district.
The board of review meets in the office of the
city clerk. The city assessor and the county
assessor must also attend this meeting with their
assessment books and papers. These latter officials
may take part in the proceedings, but may not
vote.
The meeting date of the board of review, which
must be between April 1 and June 30, is fixed by
the county assessor on or before April 1 of each
year by giving written notice to the city clerk.
Upon receipt of the notice, the clerk must give
published and posted notice of the meeting at least
10 days before the date set for it.
A majority of the members may take action at
the board of review meeting and may adjourn the
meeting from day to day for a period of 20 days
until the work of the board has been completed.
After 20 days from the date of its first meeting,
the board has no authority and any action taken is
invalid unless the commissioner of revenue has
granted an extension.
In fulfilling its role, the boa d of review has
three main functions to perform: 7
-310-
1. It must review the assessor's list, making
sure that all taxable property in the city
has been properly placed upon it.
2. It must review the assessor's valuations,
striving to standardize the ratio between
market value and adjusted market value for
each individual piece of property. To
accomplish this, the board may raise or
lower valuations on individual properties,
but increases in valuations cannot be made
without first notifying the property owner
and giving him an opportunity to be heard.
3. The board must hear and settle the com-
plaints of individual property owners
regarding the valuations which have been
placed upon their property.
If a person fails to appear in person, by counsel,
or by written communication before the board of
review after being duly notified of the board's
intent to raise the assessment of his or her pro-
perty, 'or if a person feeling aggrieved by an assess-
ment fails to apply for a review of the assessment,
he or she may not appear before the county board
of equalization for a review of the assessment,
except when an assessment was made subsequent
to the meeting of the board of review or when it
can be established that notice of the market
value was not received at least five days before the
local board of review meeting.48
The local board of review may not reduce the
total or aggregate amount of the assessment
retu4ged by the county assessor by more than
1%. This means that compensation must be
made for reductions in assessed values by making
comparable increases in assessments against other
parcels of property.
After the final adjournment of the board of
review, the city assessor is authorized to make
additional assessments but the board cannot make
further review. Complaints on these later assess-
ments can be heard by the county board of
equalization.
County Board of Equalization
The county board of equalization is composed
of either the 56ounty auditor and the county
commissioners or a special board of equalization
appointed by the auditor and the board of county
commissioners.51
County boards of equalization are to meet
commencing the first Monday following the fourth
day of July, or if the first Monday following the
fourth day of July is a legal holiday, the first
Tuesday following the fourth day of July, and
complete their work on or before the tenth follow-
ing working day, when it must adjourn.52 No
action taken subsequent to adjournment shall be
valid unless a longer session period is approved by
the commissioner of revenue who can extend the
session period to August 10.
Although the county board of equalization may
decrease and, after notice to the taxpayer, increase
individual valuations, its primary task is to equalize
the ratio between market value and assessed
market value in the various districts. The board's
main purpose is to secure uniformity of assessed
value from district to district with only occasional
attention to uniformity J) tween taxpayers within
any one of the districts. It may not reduce the
aggregate valuations of either real or personal
property in the county below the amounts re-
turned to it by the assessors, but it may increase
these amounts. Upon application by the owner,
the board may change a property's homestead
classification or reduce its market value by as much
as $3�?, reducing or refunding any taxes levied or
paid. 4
The State Board of Equalization
The commissioner of revenue sits as the state
board of equalization and gcts in this capacity on
August 15 in each year. The commissioner's
primary assessment task is to secure uniformity of
valuations between counties, although authority is
also given to make adjustments of valuations
between districts in counties and between classes
of property. The commissioner may also raise or
lower individual assessments, but may increase
individual assessments only after the taxpayer has
been notified and given an opportunity to be
heard. In this capacity, the commissioner may not
reduce the aggregate value of all property in the
state by more than one percent below the total
reported by the county boards of equalization.
The commissioner may order a reassessment of
property in any district in which it is deemed
necessary.
Appeal to the Tax Court
T!ie tax court is the sole, exclusive and final
authority for the hearing and determination of all
questions of law and facts arising under the pro-
perty tax laws of the,5tate, except for an appeal to
the Supreme Court. The tax court has jurisdic-
tion in cases dealing with property taxes only after
the taxpayer has appealed the valuation or assess-
ment to the town or city board of review, and to
the county board of equalization, except for those
taxpayers whose original assessments re deter-
mined by the commissioner of revenue.5 The tax
court has no jurisdiction involving an order of
the state board of equalization unless a taxpayer
contests the valuation of his property.
The tax court is required to hold hearings at any
place in the state so that taxpayers may appear
before the court with as little inconvenience and
expense to the taxpayer as is practicable. The tax
court is to be allowed to use the district coTIA
and county courtroom in all of the counties. 88
The small claims division of the tax court has
jurisdiction in any case concerning the valuation,
assessment, or taxation of residential property
homesteaded by the taxpayer; or any other case
-311 -
concerning the tax laws in which the amount in
controversy does no. � exceed $2,500, including
penalties and interest.
At the same time that notice of the assessment,
determination, or order of the commissioner or the
appropriate unit of government is given to a
taxpayer, the taxpayer must be notified in writing
of his rights to appeal to the tax court, and if
applicable, to the small claims division. In any
notice of assessment, determination or order
dealing with property valuation or assessment for
property tax purposes, the taxpayer must be
notified in writing that an appeal must be made to
the town or city board of equalization and to the
county board of equalization before appealing to
the small claims division of the tax court, except
for those taxpayers whose original assessments ar�
determined by the commissioner of revenue.bb
Summary
It will be seen that assessments are subject to
review by the city, the county board of
equalization, and the state board of equalization.
Further review in the courts is also possible after
the assessment and tax levy process has resulted in
a tax liability.
B. LOCAL GOVERNMENT AID
Generally, local government aid is a state aid
to local governments, which the legislature enacted
in 1971 and amended to its present form. The
local government aid program has replaced most of
the individual taxes, such as cigarette, liquor,bank ex-
cise, and gross earnings taxes which were previously
distributed to local governments under various laws.
The Legislature in 1983 made extensive changes
to the formula for distributing the aid. The
Commissioner of Revenue must notify taxing
authorities of their aid amounts for the following
year, as well as the data factors used to calculate
their aid amount, by August 15 of each year.
Cities who disagree with the Commissioner's
calculations have 60 days to appeal the certifi-
cation. See Appendix L for more detailed calcula-
tion information. The total appropriation for aid
distribution to cities in calendar year 1984 is
$246.2 million.
The formula is intended to reflect a city's
fiscal need minus. its fiscal capacity. Each city's
preliminary aid amount will be equal to its local
revenue base minus the product of 10 mills times
the city's equalized assessed valuation. (Local
Revenue Base) minus (10 mills X Equalized
Assessed Valuation) = 1984 Preliminary Local
Government Aid.
The preliminary aid amount cannot be greater
than 106 percent of the 1983 local government
aid, or less than the 1983 aid minus the amount
raised in the city by three-quarters mills times the
equalized assessed value. Finally, all the aid
amounts will probably have to be proportionally
adjusted since the total appropriation will probably
be inadequate to "fully fund" the formula.
A city's equalized assessed valuation is defined
as its previous year's taxable valuation, adjusted
for fiscal disparities in the metropolitan area and
minus the captured value in any tax increment
financing district, divided by the city's aggregate
sales ratio covering the period ending two years
prior to the year of aid distribution. A city's
sales ratio is a percentage figure employed by the
Department of Revenue that essentially is derived
by dividing the assessor's market value figure by
the actual selling price for property sold during the
year. This sales ratio is designed to equalize the
assessed value of property in one taxing juris-
diction to make it comparable with other taxing
jurisdictions throughout the state. This figure is
very significant to cities and the legislature in
1983 has made it easier for a city to appeal the
sales ratio determination. While the administrative
framework of the appeal procedure is not yet in
place, the law provides that no sales ratio study
shall be conclusive or binding on a court; and
allows any party to introduce evidence of its unrelia-
bility including, but not limited to, evidence of inade-
quate adjustmentofsale pricesfor terms of financing.
A city's local revenue base (the fiscal need
factor) is calculated differently depending on
whether its population is greater or less than
2,500.
For cities over 2,500 start with the local revenue
base used in the 1981 formula minus any amount
added to that base for bonded debt for streets,
curbs, gutters, storm sewers, and bridges. The
resulting figure is then multiplied by a factor
of 1.208 (inflation factor) and also by a factor
equal to the estimated 1981 population divided by
the 1980 census population provided the factor is
greater than 1.0 (population. growth factor). To
this figure add the amount certified for 1983
attached machinery aid payments, the amount
certified for 1983 reduced assessment credit
payments, plus any amount which would have
been received in 1983 under the reduced assess-
ment credit statute for a project approved by the
Minnesota Housing Finance Agency (MHFA), the
United States Department of Housing and Urban
Development (HUD), or the Farmers Home Ad-
ministration (FmHA) prior to March 1, 1983 had the
project been completed and subject to taxation based
upon full market value for taxes payable in 1983.
-312- 1983
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