Committee Minutes

Minutes of the Grand Forks City Council/Board of Equalization
Monday, April 21, 2008 - 5:30 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, April 21, 2008 at 5:30 p.m. with Mayor Brown presiding. Present at roll call were Council Members Hutchison, McNamara, Glassheim, Gershman, Christensen, Bakken, Kreun - 7; absent: none.

1.2 Comments by City Assessor.
Mel Carsen, city assessor, reported this is the annual City Board of Equalization to consider valuation of assessments placed on taxable property in Grand Forks. He stated he put together a report that was placed on desks of each council member and reviewed some of the numbers in the report. That Chart #1 is comparison of 2007 taxable valuation with the 2008 total taxable valuation for the city of Grand Forks, with an increase of almost 5% and that the new taxable valuation would be $136,500,000, that 1 mill being worth $136,500. The increase of 5% or 36% of that is made up from all changes other than revaluation, and the 64% of the increase is from revaluation. Chart #2 is a breakdown of where the valuation changes come from, there is a total increase in market valuation of over $127 million and of that revaluation is $86,000,000, and taxable to exempt there is a negative $24 million which is a larger number than normal and three reasons for that: Canad Inn was partially complete last year and taxable and taxable exemption does not start until the property is in full operation and that accounts for approx. $13 million, the Stadter Center Psych Hospital, Phase 2, was complete last year and fully taxable and exemption would not start until they actually started operation and that started in late 2007, and 2008 is the first year of that exemption; and the Grand Forks Housing Authority asked for exemption on all the property that they own and because governmental entity there is no choice but to exempt them, and quite often there is a payment in lieu of tax or some arrangement made to recover a part of that tax loss but is not a real estate tax issue as much as it is an agreement with the Housing Authority. The other numbers are relatively small, new construction is about $53.5 million. After they have done all the revaluation and all the new construction Chart #3 shows where they are at when measured by the State to see what the compliance is - the chart shows how the calculation is made but the number under commercial is 96.2% and that means we are 96.2% of what the property sold for as indicated by the 2007 sales, and under residential we are testing out at 95.6%. He stated they were targeting 96% but when starting off to target always fall short or slightly over that mark; State mandates that we have to be at least between 95% and 105% and we are slightly over the bottom tolerance level. Chart #4 is the State law governing the City Board of Equalization.

Council Member Glassheim stated his calculations are that the average increase in value across the city, residential and commercial, is about 3 1/3 % and average for residential is either at or below inflation. Mr. Carsen stated that average on residential would be between 2 and 3% and commercial average increase of between 3 and 4%, and being either at or below inflation would be a true statement.

Council Member Gershman stated on Chart #2 under new construction $53 million if that is net of the exemptions, and that we will receive about $1 million in taxes on that property. Mr. Carsen stated that is new construction that was built during 2007 and added for the first time in 2008 and would be 2.2% of $53 million is new tax money. He also stated that the taxable to exempt off-sets that - would be $30 million in new construction because off-set by $23 or 24 million and also a positive off-set of almost $12.5 million so new taxes approx. $800-900,000.

1.3 Receive formal protests and refer to finance/development standby committee.
The city auditor reported there are protests to the assessed valuation of property, and for the record his office has received written protests from Wal-Mart on Sam's property, Paradigm Tax Group representing all of the properties owned by Investors Real Estate Trust, and from Paradigm Tax Group representing Columbia Mall.

Mr. Carsen reported that two individuals that have signed in on the sign-up sheet in the council chambers: M.J. Whitcomb, 1105 29th Avenue South, and J.R. Petel, 2201 Gateway Drive.

Mayor Brown asked if there was anyone in the audience who would like to file a protest or address the Board of Equalization, there were none.

Council Member Christensen stated the Paradigm Tax Group appears to be an organization that undertakes the protesting for profit, the city auditor stated that could be. Mr. Carsen stated their intent is not to supply any information at this point to support their claim for reduction, but want to preserve their right to go to the County and to the State in case they find that there should be a challenge on a certain property, that he has not talked with them but that is what the letter seems to imply, and will talk to them tomorrow.

Mr. Carsen stated that they have two protests, one residential and one commercial, and have Sam's Club and the possibility of those by Paradigm, the only one that might be time sensitive would be the Wal-Mart property, that they imply in their written statement that they intend to resolve the problem with the assessing department but if that failed, would like to have a formal hearing with a two-week notice to schedule air fare from Arkansas to Grand Forks, have to be done by the first Tuesday in June, but could hear these people if the finance/development standby committee would meet the 21st of May and would give him time to work with Sam's Club and the others to see if they even have any protests, if didn't wouldn't have to schedule anything, and could have final Board of Equalization May 27.

It was so moved by Council Member Christensen and seconded by Council Bakken that we recess to May 27, 2008. Carried 7 votes affirmative.

Respectfully submitted,




John M. Schmisek
City Auditor