Committee Minutes

Minutes of the Grand Forks City Council/Board of Equalization
Monday, May 14, 2007 - 6:45 p.m.___________________________

The city council of the city of Grand Forks, ND was called to meet as the Board of Equalization in the council chambers on Monday, May 14, 2007 at 6:45 p.m. with President Gershman presiding. Present at roll call were Council Members Brooks, Glassheim, Gershman, Christensen, Bakken - 5; absent: none.

1.2 Comments by City Assessor.
Mel Carsen, city assessor, reported this is the annual City Board of Equalization where the city council sits as Board of Equalization to consider and eventually certify the assessment that they have placed on each property to the County Board. He stated that tonight they would accept formal protests, that a table has been set up in the hallway for people to sign up, need owner's name and property address, daytime phone number and comments and reason why think the valuation is too high.

He stated that on residential property they essentially re-assessed every house in Grand Forks and that was done based on 2006 sales, had about 700 residential and based on those sales they established a new pricing manual, runs like a cost approach as it assigns a certain sq. footage to that house and adds for the amenities (fireplaces, basement finish, additional bath in the basement, attached garages, etc.) and depreciates that based on the effect of age of the house and condition, and then adds the land value to that, and that becomes the final value. He stated they have used the cost approach like this for years but have not repriced this many homes in one year, that in the past they have indexed or factored by neighborhood and the reason they couldn't do that this year was there were so many variations in the inflation on certain types of homes, some homes inflated faster based on sales study than others, some were pretty flat market, and not by neighborhood but by type of homes, bi-level homes the market seemed to soften and had to reflect that; certain sized homes seemed to be softer market and had to reflect that, and are 2006 sales indicated that we were 7% below what they were selling for to bring them to 97%, and their manual was set at the 97% level to bring the homes to a 97% of what the homes should sell for based on 2006 market.. He stated their overall increase is not quite 7% and didn't achieve 97%, on commercial to be at 97% had to raise about 5.5% on an overall basis, but most of their commercial values were already very close to market, but some exceptions, for downtown property was low compared to the market, apartments, 4-plexes, 6-plexes all the way up seemed to be quite low compared to the market and they adjusted those most drastically, did some adjustments on some other commercial properties also, and have sent notices out to people whose increase was more than 7% over the 2006 value, and sent out about 5800 notices.

There was some discussion relative to insurance and assessed value of houses; and that some people look to assessed value for insurance purposes. Mr. Carsen stated insurance company's values are different than our values in most cases, most are based on a replacement cost premise, and doesn't believe they look at our values; however, look at it for refinancing purposes, banks will typically accept our value as a value that property owner could borrow against. Bakken stated at the cost we have it appraised at, is it replaceable at that cost; Mr. Carsen stated that the market would say it's at 97% of the replacement cost; that if insured for that, they may or may not get it replaced for that if had a total loss. Glassheim asked if replacement costs would be higher than market value, replacement would be the cost to build it today and that should be higher than market value. It was noted that replacement cost does not include depreciation; and the true replacement cost is what it's going to cost per sq.ft. for that place.

Council Member Brooks stated that assessed value is the house and the land and if house destroyed, still have land. Mr. Carsen stated the current value on a house, based on their numbers, is the replacement cost as developed by the market, and then depreciated for age and condition, so value would not be equal to the new house value, something less than that, unless you had a new house and then add the land to that.

Council Member Christensen stated we have a number of citizens who are protesting their taxes, and the notice stated that they have until today to protest, that we have the ability to extend that notice/protest period, that in speaking with the city assessor there is a possibility that they can extend the protest period until June 4, 2007. Mr. Carsen stated they could extend it to June 4 and during the interim if they do that, his department would work with each of the property owners that had protested and try to explain, resolve and come to some conclusion; and if still had a protest after discussions, they should protest at June 4 date, that it is easy to say the value is too high or increase is too much and what they are trying to do is represent a 2007 value, a reasonable market value for each piece of property; and it can best be refuted by an actual appraisal from an appraiser, and would suggest if don't come to some conclusion, that perhaps the owner should be considering getting an appraisal between now and then.

COUNCIL MEMBER McNAMARA REPORTED PRESENT

Council Member Christensen stated he would like to extend the protest period until June 4, 2007, and ask the assessor to assess all the homes and property at 95% of fair market value, which is the lowest we are allowed to do by State law; and that we have the power to do that. The assessor stated that the County would need to get the numbers by the end of June, and would suggest that the final Board of Equalization be June 18.

Council Member Christensen moved that we extend the protest period to June 4 at 5:00 p.m., and that we instruct the city assessor to assess all the property at 95% of fair market value. Council Member Brooks seconded the motion.

Council Member Brooks stated that this action in essence that we are impacting the total tax picture for the city, not just in relation to the city portion of the final property taxes. Mr. Carsen stated it would impact the total valuation used by the School District, Park District, the County and the City.

Council Member Christensen stated that we give the citizens the lowest possible value on their homes for the taxing authorities then to determine what they are going to do as far as the mill increase, we have said that the starting point is less than what it is today, we will do our part as a City when we come up with our mill levy, that if the School District thinks that they need to have more money, the School District will assess the mill they think are appropriate after they get $3.1 million from the State, and if the County thinks they need more money, they will assess more mills, but that is their budget and that is what they have to do, but all we can do is instruct the assessor to assess at the lowest fair market value the State law allows; and will see what the rest of the taxing authorities do when they do their budgets.

Council Member Glassheim asked what the impact is of lowering the assessed values to the bottom amount and impact in the future, if we have ever been that low, and his preference is to handle things by lowering the mill rate but not by lowering the valuations. Mr. Carsen stated they have used 97% for a number of years and haven't received any other direction from the City Board, County Board or State, other than that the State wants us to be at least at 95%; the long term impact - that if reduce everybody equally it doesn't give them any tax break because the mill levy would have to be adjusted up to cover the 2% reduction but would be more defendable. Mr. Christensen questioned why do we have to assess it at 97% when have the leeway to take it down to 95%; that we have the ability to find money from other sources, like enterprise funds, fees.

President Gershman stated that the residential real estate went up 8.29% and if we were to back off, 2%, the taxing entity still would still have 5 or 6% increase because of the valuation, and if inflation is 3% and getting 5% or 6% instead of 8.29%, there still is some room for them to have some money without raising mills, but we can't have any control over other entities. Mr. Carsen stated the increase is about 8.3% and that is a very tentative valuation but if reduced by 2% would be a net increase over last year's value of about 6.3%

Council Member McNamara stated he has been told the Park District maxes out the mills they levy (they are at their cap), and if we make our valuations at 95% of fair market value, do we cut the Park District budget. It was noted that this won't cut budget because they still have 6% rather than 8%, but the citizens are saying they don't want any more money coming out of their pockets for property tax and maybe King's Walk will have to increase their rates and Center Court Fitness increase their rates. Mr. McNamara stated his only concern is the Park District and what we do to their budget.

Council Member Bakken stated that only 24% of your tax bill is the City's, small portion of tax bill actually comes to the City of Grand Forks - but this body doesn't control very much of it except what goes to the City.

COUNCIL MEMBER KREUN REPORTED PRESENT

Council Member Glassheim asked what the 2% decrease in valuations means for the City assuming the mills were held equal, how much losing in revenue. Mr. Carsen stated it would take the increase of 8.3% down to 6.3% - decrease of about $275,000 or 2.5 mills.

Upon call for the question and upon voice vote, (to extend the protest period to June 4, 2007 at 5:00 p.m. and ask the assessor to appraise values at 95% of fair market value rather than 97%) the motion carried 7 votes affirmative.

Council Member Christensen moved that we instruct the city assessor (and to Info. Office) to get information out to the citizens more than once and on Channel 2, how people can protest, that every citizen has the right to their file as to how they developed the assessed value of your home, that they can call the assessor's office and get a copy of it; that after doing that take it to your realtor and ask for a market analysis and they will give you an assessment of what they think they can sell your house for; and third thing is if you think your assessment is really too high, go to an appraisal office and get an appraisal (price between $200-500); and gives you something to negotiate with when talking to assessing department or if decide to protest and come before committee, will have someone else's opinion as to value and that is how you develop some evidence to come before a body to say it is wrong., and will get that out to the citizens again within the next week. It was stated they do not need motion but to do administratively.

Council Member Brooks stated he has gone through this several times and $300 to $500 lot of money to get an appraisal but first talk to assessing staff, they will review it and maybe some adjustment - bur first sit down with them as they will listen to your questions and review assessment with you.

Council Member Kreun stated to use realtor as a guideline to get information but that won't be the last bit of information you will need, if feel it is different and realtor gives you different info than what assessing has, then use as a guideline or go to your appraiser; that we won't use a realtor's estimate as an appraisal.

1.3 Receive formal protests and refer to finance/development standby committee.
President Gershman reminded those who wished to protest that there is a sign-up sheet available outside the council chambers, that tonight is to receive protest information and not to hear specific cases, that will come if you go before the finance committee; he noted that we are extending the protest period to June 4, that the finance committee will set up meeting(s) and information will be given to everybody.

The process in the next 2 to 3 weeks citizens will meet with someone from assessing office to review specific concerns, if correct can withdraw your protest, if not correct can come to the finance/development standby committee meeting to present information and finance/development committee will make a recommendation to the Board of Equalization which will meet on June 18, 2007 and if finance committee recommended against you, you can make a presentation to the entire Board of Equalization and a final vote; after that can still go to the County Board of Equalization and the State Board.

Nancy Ryan, Circle Hills Drive, reported their home was assessed with increase of $41,700, and about $50,000 over what their realtor had said they could list it for, that she called Assessing and they were very nice, two came out and reviewed, they called back and did adjust their taxes and is not a lost cause, that they do make mistakes and willing to reassess; and not a difficult experience.

There was a question on the 10% from the State on the taxes for the City, and how this works, if off State taxes or if don't pay State taxes do you get a voucher. Council Member Glassheim stated that you include the request for the 10% rebate in your State taxes, if you don't owe any taxes you can either apply it to the next year's taxes or you can get a voucher. For next year's assessment you take it to the County Treasurer and pay your property taxes with it, and subtract from your next year's property taxes what you owe; one year later. He noted that you don't do the taxes until April, and when you get your property tax bill in December, then bring it down and will be subtracted from what you owe on your next year's property taxes. He stated they won't know the amount the mills will be lowered until August, that School, County, City and Park each do separate budgets, and thinks there might be some lowering of the City's mills but can't speak for the other entities, and thinks the average increase will be less than the 6%.

An individual stated that when a person is working there is no problem paying the taxes, but when retired and on fixed income and that it is getting harder all the time. Mr. Carsen stated there have been some changes in the Senior Citizens Tax Credit by the 2007 Legislature and are planning to get some notices out to the public. Income used to be $14,500, total income minus medical expenses for the previous calendar year, and that was increased to $17,500 and will help some more people than previously.

Council Member Christensen stated that we are good for 24% of it and we realize that we are the Board of Equalization, but the other entities have meetings but if people would go to their meetings and probably have more effect than on us because we are cutting mills.

President Gershman thanked people for coming to the meeting and will do what we can on the mills.
President Gershman stated that protests are referred to the finance/development committee to hear the protest and concerns, that committee will make recommendations to the Board for the ultimate vote, and anyone protesting will have a chance to speak before the full Board if they so wish.

Protests were also received from the following individuals:
Agnes Hagstrom410 - 24th Avenue So.
David Egstad2036 Westminster Ct.
Raymond Sevigny620 North 6th Street
Richard Mont274 Grassy Hills
Judy and Wayne Swisher420 Franklin Avenue
Dennis Denault1319 University Avenue
Randall Cordell
Evelyn Hager Hill912 Sunset Drive
Donald Johnson707 South 22nd St
John Brewinski3800 Simonview
Mary Simonson200 - 34th Avenue South
Jeff Bye3611 Chestnut Street
Dudley Benson1609 - 2nd Avenue North
Richard Ferguson611 - 24th Avenue South
Ray Fischer3122 West Elmwood Dr
Fred Stewart216 Windward Hills Ave
Mike & Sandy Swanson2250 Springbrook Ct
Sandra Montgomery3411 Belmont
Art Huot1803 - 8th Avenue North
Nancy Ryan289 Circle Hills
Carol Hansen1727 - 12th Avenue North
Earl Schneider3404 Cherry
Jeff Yunker285 Grassy Hills Lane
Keith Danks, Jr.1518 Mill Road
Keith Danks, Jr.5515 University Ave
Keith Danks, Jr.1601 South 38th Street
Brian Wischer270 Grassy Hills
Brian & Susan Poykko3712 Belmont Road
Jerome Youngberg3514 - 10th Avenue No
Mark Gray5455 Omega Circle
Robert Labine16 Inland Hills Ct
US Foodservice, inc4601 - 32nd Avenue
Loren & Annette Shane1922 - 11th Avenue No
Suellen Bateman
It was moved by Council Member Kreun and seconded by Council Member Glassheim that the Board of Equalization recess to Monday, June 18, 2007 at 6:45 p.m. Carried 6 votes affirmative.

ADJOURN

It was moved by Council Member Kreun and seconded by Council Member Glassheim that we adjourn. Carried 7 votes affirmative. (The meeting adjourned at 7:35 p.m.)

Respectfully submitted,



John M. Schmisek
City Auditor