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PROCEEDINGS OF THE CITY COUNCIL
OF THE CITY OF GRAND FORKS, NORTH DAKOTA
October 22, 2001

The city council of the city of Grand Forks, North Dakota met in special session in the council chambers in City Hall on Monday, October 22, 2001 at the hour of 7:00 o’clock p.m. with Mayor Brown presiding. Present at roll call were Council Members Brooks, Stevens, Hamerlik, Burke Glassheim, Gershman, Christensen, Kreun - 8; absent: Council Members Bjerke, Lunak, Kerian, Bakken, Martinson - 5.

Mayor Brown announced that anyone wishing to speak to any item may do so by being recognized prior to a vote being taken on the matter, and that the meeting is being televised and recorded.

Mayor Brown reported that the matter before the council this evening is the matter of permanent flood control assessments.

Howard Swanson, city attorney, reported that the special council meeting tonight is to consider the one item on the agenda, special assessments for permanent flood control project, District No.14, Project No. 4704, and briefly identified the role of the city council. The Special Assessment Commission has adopted findings, they have held their hearings and have taken their action and copies of the findings have been distributed to the council members. Under NDCC 43-23.15 the council is to hear any appeals from the action of the Special Assessment Commission and anyone who feels aggrieved by the actions of the Commission may appear and give the reasons they believe you should not confirm the action of the Special Assessment Commission;

COUNCIL MEMBER KLAVE REPORTED PRESENT

however, what you do is governed by State Law - the governing body shall hear and determine the appeals and objections, you may increase or decrease any assessment as you determine to be just, except that the aggregate amount of all of the assessments certified by the Commission shall not be changed, no assessment adjusted shall exceed determined benefits to the parcel as determined by the Special Assessment Commission. He stated that means that if the council raises an assessment on one parcel, you must likewise lower an assessment on another parcel or collectively, and the reverse is also true, if you lower an assessment, you must increase an assessment elsewhere, your total amount assessed must balance with the recommendation you have from the Special Assessment Commission. He stated whatever action the council takes would occur following the public comment.

The city auditor reported that the Special Assessment Commission met on September 25 and reconvened early in October to look at those areas that had been protested; that packets of information have been distributed to the city council but the Commission did make some recommendations for changes and did move those for a 30% reduction in ag property for future rights of way of special assessments, that meant that those properties that met the criteria had a total reduction of $440,061.24; a motion was made and approved to reduce cemetery assessments by 50% which was an amount of $102,512.48; and also looked at property north of Gateway Drive that was below 823 feet and gave zero benefit to any property that fell below that in that area, those adjustments amounted to $155,609.33, and with those reductions we will need to adjust other assessments and raise the other non-residential areas by those dollar amounts which is approximately $700,000 and will be doing that in the future, that is about a .0034 cent per sq.ft. adjustment.
Mayor Brown asked because of the number of people in the audience to limit their remarks to five minutes or less and may address the council once, and asked as they come forward to please give their names and addresses for the record and state their information.

Council Member Hamerlik asked if there were any precedents set in the state by either the Supreme Court or any court cases that set some ground rules or something they should know about, not specific action unless their determination had something specific to say on how the council acts or can’t act.. Mr. Swanson stated there are a whole series of Supreme Court decisions involving special assessments, many derived from the city of Grand Forks, and from city of Fargo, they are wide-spread and none that he is aware of that deal with flood control projects but it shouldn’t be determinative based upon the project. He stated that the court says that your role tonight is acting as an appeal body, that you have limited avenue to change the determination of the Special Assessment Commission; however, the total dollar amounts don’t change and that’s out of statute, you can take whatever information is appropriate from the public comments or from the action of the Commission, you are not limited to a particular form of special assessment, such as comments that you can’t do on a sq. foot or effective front foot or has to be based upon a real estate value that those cases don’t hold those principals; he stated he is struggling as to what guidance he can give without more particular questions or comments.

Council Member Glassheim asked if there was any format planned for the council, if they will hear comments/appeals and then act, act individually and how does the appeal process proceed. Mr. Swanson stated that is up to the council, in the past the council has heard the comments first, the mayor will formally open a public hearing and that public hearing would be closed, if the council makes motions on individual cases you may act on those, ultimately the council will be asked to certify the assessments to the County, whether as presented or as amended, and must act prior to November 1.

Council Member Brooks asked if the comments by the city auditor were included in what went out, and if were to approve these additional dollars in the non-residential area; the city auditor stated those adjustments would not have been in the original presentation and notices to the public, and they would be able to reduce those that the Commission reduced but may have to wait until next year to add back that value into the other properties.

Mayor Brown opened the public hearing, and asked that they limit their remarks to five minutes, and may address the council once.

Gordon Caldis, attorney representing Hugo Magnuson, stated that the property was modified from $22,000 down to $4,600, but that there is no benefit, has no commercial value of any kind because it’s wasteland (no roads, no utilities no city services), that the English Coulee runs through the Magnuson properties and is a part of the flood problem, the assessor has placed a $5,800 real estate value on this entire parcel and even the land value should be abated; the elevation in the Coulee is 805 as contrasted with one of the elevations that you mentioned; that the assessment greatly exceeds the value of the land, land can’t produce any income and cannot be sold; that Mr. Magnuson is protesting the flood protection project as it relates to this particular parcel and respectfully requests that the assessment and all future assessments be abated and cancelled.

Mr. Caldis stated he also represented another land owner, John and Irene Campbell, that this is agricultural land and is another of the projects that has been recalculated, that the land is not commercial nor residential and whether either of those anytime in the future would be very speculative, small strip, 8.4 acres and 180 ft. wide and 2100 ft. long and this assessment has been recalculated from $24,000 to $16,000+ and if future additional assessments are the same as the first year would far exceed the value of the land and income from it. He stated that in this area the City has offered the landowner $700/acre; this land in 1997 had less than a foot of water in the eastern part of the lot with no water on the westerly part. He also stated that in the annexation of the property they were submitting that the property description is inaccurate which invalidates the assessment; the land in question is being farmed and will be farmed, the annexation because of the error in the description is invalid and therefore not annexed and outside the city limits and not subject to special to special assessments, and as far as annexation technicality is concerned there is an attached affidavit by the landowners indicating and swearing that they have no knowledge or information as to the service or notice of this particular annexation and a copy of that affidavit is submitted with the appeal; and the Campbell’s would respectfully request that you consider their appeal.

Roger Mattern, 4701 Golden Gate Drive, Gateway Terrace, that on behalf of the tenants of Gateway Terrace read a statement -- your opinion is that we will all benefit from the dike, agrees to that but doesn’t agree that they all receive equal benefit and as owners of Gateway Terrace, they disagree that they will receive any benefit or certainly not equal benefit from construction of the dike, there has never been any portion of Gateway Terrace that has come close to flooding, never been evidence from any engineering or consulting firms that Gateway Terrace would flood in the future, with or without, a dike; that there is no engineering evidence that Gateway Terrace will flood by some highly speculative cross-country flooding.
He stated that homeowners in the flood plain pay for flood insurance and that once a dike is approved by the Corps of Engineers they won’t have to buy flood insurance any longer, Gateway Terrace would not receive that benefit as they do not currently pay flood insurance. He stated a fair assessment would have been as follows: homeowners and businesses in the 100-year floodplain would have been assessed 60% of flood dike project, homeowners and businesses in the 500-year floodplain would be assessed 30% and homeowners and businesses beyond the flooded area be 10%. He stated that they would appreciate their looking into this situation.

There were a number of individuals from Gateway Terrace who protested the assessments which would cause an increase in their rental of $30/month as they stated they are in an area which would not benefit from the flood protection dike:
John Shafer, 5006 Coppergate Drive
Ed Nichols, Gateway Terrace
Donovan Mitchell, 4717 Silvergate Drive in Gateway Terrace Mobile Home Park
Warren Hursman, 4904 Silvergate Drive in Gateway Terrace,

Mike Juntunen, attorney, 218 South 3rd Street, representing Mona Antique Auto Limited Partnership, which owns two lots behind Minnkota on North 6th Street, this property has RR R/W crossing it, four RR rights of way still crossing the property, purpose of this hearing is to appeal process, to indicate that we do not feel that you are assessing this property fairly, that the assessment is not in a just proportion to the total cost of the project, that approx. 60% of the lot is covered by these disputed easements, and they can be assessed separately for their own valuations and it appears that even though fair market value is not the issue tonight, it certainly is a factor as to what the property bears to the total cost of the project, they are talking about these particular two lots going to bear about 50% of its fair market value at the assessed value as its share of this particular property; that you have a RR track that runs down the middle of two lots that runs to Associated Potato and although they don’t use it a great deal, it is still something they have to contend with and they are under preliminary court order to stay 20 ft. away from the tracks and easement, and would like to have the council revisit that and review it as they didn’t get a very detailed response from the Commission at their hearing but cannot see that this is an equitable and a fair apportionment of cost to this particular property; the property is being used by BNRR, not by the owner of the property, granted there are three assessments in dispute but they can’t use it until those issues are resolved and may never be resolved.

Jim Malins, 3302 Primrose Court, stated he has property in Columbia Park 20th Addn., and received letter returning his request for reassessment down; it is a corner property on 34th Street, and had a utility easement that goes across his property as well, and sees an inconsistency with the way that utility easement was set up on his property, that he has 50 ft. of unusable space other than mowing, have fence around it so his kids can play in it but effectively cannot do anything with that property and would appreciate some additional consideration.

Beau Bateman, 6500 32nd Avenue South, stated he would like to address council on behalf of all agricultural property and would like the council to return the agricultural property to the designation it had prior to this specific tax and that is ag land; and would like them to consider that the agricultural land has less benefit accrued to it than does the commercial property or the residential property in the city. He stated there is not enough benefit to the agricultural property nor to achieve a benefit cost ratio of greater than one, that is to say more benefits than the cost of building that dike, even if they thought that property would be worth something more in ten years, again the result would be the same. He stated they would ask that the council reduce their assessment due to the recalculation of agricultural land, leaving it as agricultural and perhaps defer them without interest until the time in which they develop, and the reasoning based on benefits is that the Army Corps of Engineers produced a list of benefits that Congress had to act on, there are 9 listed, this is from the General Reevaluation Report of November 1998 and this is what they took to Congress which gave the city the dike - if you examine every one of those 9, none of them are benefits which are accrued by agricultural property; they didn’t calculate agricultural benefits in that ratio because they said it was too difficult, too varied, sometimes might be delayed in planting and that’s about it. He stated on the second page of his appeal he has included the 30% reduction that the Special Assessment Commission applied properly to agricultural, no streets are taxed so the Special Assessment Commission said that block of agricultural property will have to have public rights of way through it and can’t tax that and that what they deleted was the 30% for roads, infrastructure, etc. He stated they will pay their just cost, and will also submit that in 5 or 10 years, if they develop this property, they will pay according to the calculations the City has come up with either through the engineering department or assessing department that the City is going to apply to any future development. He stated that the Special Assessment Commission did not act on that specific request, they gave ag property owners the 30% because of the right of way but would not reduce them down to zero because they said if they did that then no future assessments would apply to their ag land and would be granting them a free ride when they went to develop, and would accept that future tax that the City will put on any new business that comes to Grand Forks. He stated if the council wants an unbiased opinion the Army Corps of Engineers has four pages on how you can list benefits accrued to agricultural property based on flood control projects, they will do that (won’t do that for the farmers because they asked them and stated they would pay for it) but they will do it if the City submits the request and the Corps will come up with a list of benefits that agricultural property has and may add those to the list of benefits that they have already produced for the City, add those together and they will pay their proportion of that total benefit and unbiased.

Grant Shaft, 2850 24th Avenue South, attorney representing Useldinger Brothers Farms and Conte Luna Foods, both entities owning agricultural land, and that they join in Mr. Bateman’s presentation and agree with the comments made, and want to tag on an additional consideration re. the future benefit of the land, and viewed an aerial map on the screen showing the location of the agricultural land currently being farmed by Useldinger Brothers Farms (in the area beyond Wal-Mart, Sam’s Club, new golf course, Middle School) and his clients (Useldinger Brothers Farms) have been assessed for this project based on land that was annexed, which was a small strip of land which was part of the 140’ overlay that came in with the annexation for the park area and the development of the SuperTarget Store and they have been assessed pursuant to 140 ft. strip annexation along South Columbia Road and the street that’s been placed there along with some undeveloped area that was annexed at that same time. Both of these parcels came into the city as a result of significant improvements to the city in the last couple years and that he wanted to address the future benefit - that if there is arguably a benefit for agricultural land, that benefit is going to be a future benefit, that at the present time the agricultural land isn’t receiving any benefit - that in the future all of this property has some future possibility of development, probably commercial on the corridor, and when this land was annexed discussed leapfrogging concept; that typically annexation comes with the orderly development of real estate in a city, and when land becomes contiguous to the developed property in a city, it is annexed so that there can be orderly development in the future - and want to avoid leapfrogging, that run into a problem with leapfrogging concept is that the land cannot be developed for a significant time down the road and an inability to pay taxes and assessments. The Useldinger land that is being assessed exists approx. a mile to a mile and a half south of commercially developable area present in Grand Forks (he noted that the development that occurred between 17th Avenue South to Wal-Mart was a 20-25 year process to develop that couple miles), now malls and major hotels complexes have been developed, event centers developed and those major developments exist and may slow down the future development to the south corridor. He stated if this land is assessed for future benefit, and the future benefit in this particular case is too far down the road to look at this reasonably as commercial property, it is agricultural property with no benefit except for a possible future benefit and stated that his clients (Useldinger Brothers) assessment for this year and future assessment on the dike project is going to be approx. $400,000, and find that his clients and some of the other clients who have these 140 ft. strips of land that are being assessed commercially are going to be left at no choice but to let the land go for taxes because it’s not going to be viable for them to pay these taxes; and asked that the council consider the agricultural lands as a future assessing district, where these properties are assessed for the dike project when the benefit accrues, when these properties are developed - there are a number of ways the council could address this if the council did feel there was some small benefit to the property, there could be a situation where these assessments paid interest only for a period of time until the properties were developed, that the council really needs to look at this and see if there is a way to address this assessment so that agricultural land can carry the assessment without the risk of losing the property until such time as it is developed.

Dee Phaneuf stated she was with the properties, Deacon’s Development and R.J.Zavoral & Sons, that they own Deacon’s Greens which is next to King’s Walk Golf Course and that neighborhood has the dike assessment properly assessed because the streets are in, lights are in and lots are ready for development, houses are going up and that is fine; that they also own two other parcels of land, 16 acres under the water tower which is agricultural land and east of the golf course about 35 acres and those are undeveloped parcels with about $150,000 dike assessments, and hoping it could be deferred like any other agricultural land.

Mark Curran, Naporville, IL (formerly of 412 S. 9th Street), stated that he is one of the owners of Curran’s First Subdivision on South Washington, and basically agrees with the other speakers with regard to the agricultural land, their land has been in their family for well over 100 years and would not want to sell it to pay the taxes. He stated there are a couple homes that are on the frontage on Washington Street, that land was sold earlier by their father and they no longer own that property. He stated in the community he lives in, the common way for developing properties is by recapture agreements - that you develop land that is contiguous to the city and here with the School District making the decision to develop as far out as they did and leapfrogged all of them, not fair and appropriate that they should have to handle all of these assessments before developing the property, should have been able to upfront the cost and go ahead and collect on a recapture agreement, which is the appropriate way to do this. He stated on the dike assessment it is appropriate that when the land is developed is when you should be charging the landowners for it. He thanked council for their consideration.

Council Member Glassheim questioned what a recapture agreement was or how they are structured. Mr. Curran stated the way they are structured is that the people developing the land when they leapfrog over other property owners is that they have to pay for the assessments upfront (assessments for water, storm sewer, etc.) for their facilities, and as the land is developed behind it, they recapture the money with interest - the City collects, reimburses the property owner that developed the land when they leapfrogged out; and seems like a much fairer way to do it.

Yvonne Curran Jacobson, 708 Granger Road, Detroit Lakes, MN, stated she was here to speak on behalf of her mother, Ruth Curran, Seattle, WA, her brother Dean, Grand Forks and her brother, Richard, Mounds View, MN, and agreed with Mr. Shaft and Mr. Bateman who proceeded to give you an idea of where they are and how they feel as agricultural land, that this really has to be treated differently, that they cannot as a businessman could, pick up their business in an unfavorable climate of taxes and leave - the land is their asset and it is what her mother lives off of, this is what they have to have for her income, that they can’t do away with it, can’t take it and move, that this land was paid for 100 years ago and asked for their consideration.

Kenneth Davidson, 530 Terrace Drive, stated that he is a disabled WWII veteran with multiple health problems, that he retired 16 years ago due to his health, and very concerned about the assessment on his property; the assessment will be a real burden on him because of the heavy loss he took on his home and property because of the 1997 flood and the windstorm this year; and not sure what he will do with the extra assessment for the dike; and would appreciate any help that he can get from the council to help him with his problem.

Jim Carlson, 702 Horizon Circle, stated he feels he is outside of any part of the of the floodplain and that he is being assessed at exactly the same rate as the houses that are immediately in the floodplain; that the process of using the special improvement district with its requirement that the benefits be assessed against the properties that are benefited and those that have greater benefit have larger assessments is not being followed when you assess by the lineal foot or sq. ft. without any relationship to value; part of the problem that everyone is raising here is that the fair market value of the property is not being reflected in the assessment, the benefit is obviously related to the value of what is being protected and the flood insurance that would have to be purchased reflects this value as well, and this should have been a general obligation bond, and should have been assessed against everyone’s fair market value. He stated that by changing this you are taxing the $300,000 house with 100% chance of flooding in the floodplain exactly the same as a $40 or $50,000 house with the same lineal frontage in an area that simply cannot be flooded and that’s not the way special assessment districts are supposed to be done.- this is not a reasonable conclusion that assessing everyone the same is not the way this should be done; the floodplain is clearly defined and mapped, there are going to be 3 assessments, the current floodplain would have been a fine basis for this and the future assessments could have used future floodplains.

Rick Nygaard, 924 South 11th Street, stated he was here as the president of the Grand Forks Cemetery Assn., representing Memorial Park Cemetery, that their superintendent did talk to the Assessment Commission and they were given a 50% break, however, based on that they are still looking at approx. $150,000 worth of assessments on property that they feel has no real value, their proposal was that they be assessed based on their property that maintains their buildings and residences and not on the cemetery itself because that’s the only property they are interested in protecting, that they don’t have any way of recouping the costs, that they were hit very hard in the windstorm and during the flood and that this will put an undue pressure on the Cemetery Assn. and very possibly put them out of business, that they wouldn’t be opposed to being assessed based on the residence and on the buildings but believe the property itself has no real value.

Rodney Gibbons, 1792 Buffalo Avenue, county of Grand Forks, representing the Calvary Cemetery Assn. which has been in operation since 1878 and that the only income they have is from the opening and closing of a grave, there is no future development of their land to give them any future benefits, the cemetery itself belongs to the Diocese of Fargo and they have not given him a word on which way they would go, that it is not the policy of the Diocese to abandon any cemetery and that is not their proposal, the cemetery doesn’t generate funds to pay any assessment as they were assessed, the Cemetery itself will probably complete most of its operation within the next five years and looking at purchasing more property for a future cemetery, that there are approx. 11,500 grave spaces in the Calvary Cemetery and a little over 10,000 have been used.

James Fail stated he was representing his mother, Odile S. Fail, 3229 Royal Drive, reported that a letter had been sent to the city auditor (which had been received and copies had been distributed to council members) and read the letter appealing their decision to include her property within the flood protection project, that the assessment shall not exceed the benefit and that her property does not benefit from the construction of the flood protection project; that the special assessment is invalid as the Special Assessment Commission has not met the requirements by law and have not looked at and determined the benefits to each of the lots and parcels of land that will be especially benefited by the construction of the work for which such special assessments are to be made, and without the personal inspection by all members of the Commission they cannot certify that her property or any property is being assessed according to the specific benefit of her or other properties will receive.

A.J. Miller, 2115 10th Avenue North, stated she purchased her house based on her income, small house on a 60 ft. lot, $40,000 house, and questioned why she should be paying more than a person who can afford a larger house, that her payments will increase and assessment should be based on value of the property, and should rethink the assessments

Richard Olson, attorney representing Gibbs Investments, stated he had provided notice of appeal and hand delivered it today and copies were provided to the council, and stated that Gibbs Investments owns a lot with an addition and provided map showing location of the area; he also indicated the part that they feel is unusable because it is former city landfill, a portion of the area was dropped out because it was an area that was below 823 ft. and 827 ft. for elevation; that they have a building area (warehouse) and are asking that the council consider the fact that this is the only usable area of their property that they can build upon and utilize and asked for reduction in their assessment of $27,492.21 to approx. $12,000, which would be the amount of assessment for the area where the building site is and where they can still drive pilings. He stated that property is along North Mill Road and north of 27th Avenue North, and that area is unusable property except for storage of metal and only thing they put on there is inert materials, and are requesting that the council look favorably upon the fact that they are willing to pay for the land that they feel has value, either developable or saleable value, and the rest has no value. Council Member Gershman stated that if they use if for storage of inert material; Mr. Olson stated they do store materials there.

Mr. Olson, attorney representing Dakota Mill Road, LLC dba Agsco Chemicals, Inc., owned by Brown Properties, stated the concern there is with the assessment which is considerably more than the value of the land, that his clients do not feel that the land is currently developable or marketable and asking the council to reconsider the assessment of $35,296.27 on the property which is currently being used for cold storage on a seasonal basis and that’s the only beneficial use of the property, and asked that the council consider a reduction to a sum of $10,000 which would be still greater than the annual taxes on a yearly basis; he stated that prior to the spring of each year if there is any chance of flooding they haul everything out to their southern plant.

The city auditor reported that since there appears not to be anyone here from the Morley Law Firm representing White Properties, Inc. (copies of their letter had been distributed), and need to enter that into the record that they are appealing their flood assessments on five parcels of property, which are attached and detailed: Property No. 3113.324.0200; Property No. 3113,324.0300; Property No. 3113.324.0400; Property No. 3316.002.0000; Property No. 3316.003.0000.

Shurke Swanke, 1506 South 15th Street, stated he was in favor of the dike project which has been desperately needed, he stated his $615 assessment is a small consequence and willing to pay it, expects to pay it and his concern is for the future, at this point he has not heard what the total cost of this dike project is going to be. The city auditor stated that the estimate of this project for this year is 38.9% of what they project to be the total assessment that will come over the next 4 to 5 years, and anticipate there will be an assessment next year due in 2003 and final assessment if the project moves along accordingly in 2004, payable in 2005. Mr. Swanke stated that the answer was given in terms of projections and if things move along, knows how quickly projects get out of control in this town and would hate to think they would see 30% cost overruns on this project, and asked if there were any assurances that there will be no cost overruns and if any other unnecessary projects that could be put on the chopping block to make more money available for the dike project. Council Member Brooks stated at this point all they can do is give projections, the projections how well we stay within budget will determine if those are ultimately the amounts and hopefully stay within those projections.

Mayor Brown asked that they keep their comments relevant to the special assessments that we are dealing with tonight. Mr. Swanke stated he was looking at the council’s spending habits in relation to the projections of a most expensive project, a necessary one, but most afraid of what’s going to happen in the coming years with the history. Mayor Brown stated that the item on the floor is the actual assessment, not the project.

Council Member Kreun asked for an explanation on what will happen to a property that is annexed into the city at a future date, how assessed and how will the money be utilized. The city auditor reported that the way that has been discussed and which will need confirmation by the council in the future, is that they will bring in annexed properties and they will be assessed according to the same formula as we now have and that money would go towards this project, and we would have to go back and recalculate and credit back to other property owners who are in the district. Council Member Kreun stated as property is annexed that the reduction in special assessments for the existing property owners in the district.

Mayor Brown closed the public hearing.

Mr. Swanson stated for council’s information that property owned by political subdivisions, such as School District or Park District, is included in the special assessment and they pass their assessments on through their mill levy, however the one exception is that property owned by the State of North Dakota, the State has adopted a specific statute that prohibits you from assessing any State owned property unless they waive their own exemption. He stated with the determination of benefits and assessments the requirement of a personal inspection by the Special Assessment Commission is no longer required, NDCC 40-23-07 was amended in 1999 and specifically deleted that requirement of personal inspection. He stated as far as how does the Commission or how does the council go about determining benefit and assessment, the courts have clearly stated there is no precise formula for quantifying benefit, it is a matter of judgment, that in the documents filed by the Special Assessment Commission, the Commission has determined a value for benefit as well as assessment for each parcel; that their role and council’s role is to determine whether it is a fair, just and equitable method of spreading the assessments and determining the benefits and the statement of having been made which is a correct one, that the assessments are not to exceed the determined benefits but you are not limited to the existing use, development or market value of property, and in theory special assessments differ from the market by determination. If there were an action in district court, an appeal from the action taken by the city council, the trial court would determine on a standard of what is arbitrary, capricious or unreasonable, they are not to substitute their judgment for you and there has to be a determination of whether there is substantial evidence, and substantial evidence means is that it doesn’t have to be persuasive evidence, doesn’t have to be a preponderance of evidence, it only has to explain the decision that was reached, even if its debatable the court is to uphold it. The action that the council would take tonight ultimately is to confirm, whether with amendment or without amendment, the report provided by the Special Assessment Commission and then to certify the assessments for collection to Grand Forks County.

Council Member Gershman stated that while the State of North Dakota exempts its property, the State of North Dakota did issue $52 million to Grand Forks to assist us with this dike, and they are paying a fair share of that.

Council Member Hamerlik questioned if the federal government also does not pay special assessments. Mr. Swanson stated that federal property in most cases is exempt, there are some very unique exceptions, but generally speaking, can conclude federal property is exempt from those assessments.

Council Member Hamerlik stated that several individuals have talked about their ability to pay, but that is not a factor for us. Mr. Swanson stated that ability to pay has not been recognized as a factor or method of determining the payment of special assessments, special assessments are in practice and in theory to reflect benefit received by real property, not necessarily the present owner or the present use.

Council Member Hamerlik stated that we previously determined the special assessment district, and also passed a motion having to do with the method and manner on how that was to be done. Mr. Swanson stated that the council had determined the district on August 21, 2000, only that property that lies within the district is subject to special assessment and it assessed irregardless of whether it is a non-profit organization or for profit or even whether they are taxable for general property tax. As far as a determination of the manner in which the assessments would be spread, that being square footage or effective front footage, that was a determination by the Special Assessment Commission, but the council did direct the dollar amount for the assessment to be spread by the Commission.

Council Member Brooks stated they have had a number of people speak and he has received telephone calls from people in Gateway Terrace, and the cost involved to them, that people have received their assessments as to what the cost are going to be, and that he is not coming up with $30/month per lot and his concern is that the people are stating that the City has put an unfair burden on them.

Roger Mattern, Gateway Terrace, stated that since Congressional housing put in, they have had various special assessments against Gateway Terrace and most with no benefit to them, including lift station which was over $63,000; looping two watermains where line ran on Gateway Terrace’s property, about $24,000; Park District is going to rebuild and tax increase of 6.6% to cover other things, etc.; sidewalk along his property after pressure from businesses on the other side of the street, $24,000; and the dike assessment only about $5.00/month to Gateway Terrace tenants, but following years assessments; and another special assessment for the overpass and for the water treatment plant, dump site; and taking all those into consideration when he informed the tenants of either $20 or $30/month; and that he is looking at things he has on paper and not anything coming in the future. Council Member Brooks stated that the figures for Phase I are $5.00/month per unit. Mr. Mattern stated that the City requires that he have 500 sq.ft. per lot and not pay for flood assessment on each lot.

Council Member Glassheim stated that a number of people asked why this wasn’t done by a general obligation bond or value rather than front foot and asked what rationale was. Mr. Swanson stated whether it should be a general obligation bond or not, was a decision by the council of how much would be special assessed. With respect to the special assessment determination on the valuation, each of the council members should have a copy of the Commission’s Findings, that on page 5, paragraph d, the Commission determined that assessment based upon a parcel’s value is not a viable option because the present value of a parcel does not accurately reflect the benefit received from the project, that the market value subject to variation due to market functions, depreciation, maintenance, damage and other items, that the utilization of a market value acts as an ad valorem tax and not as a special assessment as benefit to the property itself and would have been done without consideration of debt limits or statutory protections or procedures which raises legal issues on attempting to use valuation. They also identified that tax exempt property, those properties are not assessed upon a fair market value and although market value perhaps can be determined, it doesn’t readily exist for the city at this point in time; those were the findings of the Commission. Council Member Glassheim asked if there was a legal problem with doing it by the value of the property as opposed to the front footage. Mr. Swanson stated there is no case law in ND that authorizes the use of market value in a determination of special assessment and benefit, there is case law in other jurisdictions that finds to do so violates debt limitations, public authorizations, etc. of a municipality and takes it out of the realm of a special assessment and places it into an ad valorem tax, and upon advise by himself to the Special Assessment Commission, they chose not to push the envelope to be the first city in the state of North Dakota to have a judicial determination as to whether or not market value is a suitable basis to determine benefits. Mr. Swanson stated he was aware that Ramsey County is presently considering the adoption of a special assessment utilizing a component of fair market value, and aware that some Water Resource Districts have utilized as a component fair market value, there is no case law and those have never been challenged, one of the difficulties is that your benefit, if you base it upon fair market value, will fluctuate in a short period of time if the structure is damaged by fire, flood, poor repair, intentional acts, and does not allow you to have uniform and continuous application of benefit and those were items that the Special Assessment Commission was aware of. Mr. Swanson also stated that if the council chose to fund it as a general obligation debt, could have done so within your debt limitation. Council Member Burke stated we have done so with dike debt and some sales tax monies as well. Mr. Swanson stated they are funding this from a multiple sources for local share. He stated as far as a determination of special assessments, he finds that there is an insufficient law in the State of North Dakota to make a determination that fair market value is an accurate assessment of benefit; and lies within their discretion.

Council Member Christensen stated that we as a community have to get away from me and focus on we, that he understands the problems the agricultural community is having, the problems the cemeteries are having, and believes that our standard is to act as a quasi judicial body to review the findings of fact that the Commission has prepared in light of the protests we have received to make a determination as to whether or not there is a sufficiency in the pleas these people have presented which would change the assessment in light of the findings of the Commission; and if we find there isn’t then it is incumbent upon us, albeit we may not like the effect of the first round of assessments, to move forward and adopt the findings of the Commission, and moved that we adopt the Findings of the Commission and adopt their findings of fact as they currently have been made and approve the assessments as made. Council Member Burke seconded the motion.

Council Member Christensen thanked the Commission for the time they’ve spent and for the problems presented with this as a community, have done an incredibly admirable job; and that Mr. Swanson has done a great job in preparing these findings. He also stated that he personally wants to explore when they finish this the general obligation because we have 60% left of the project to deal with, and wants to explore whether or not we can change the next district for the second and third rounds of financing, which would then remove the agricultural people from this and only have 40% but have to move forward with this and as a body should go forward and explore some of these issues.

Mr. Swanson stated that on page 7 of the Findings, paragraph 17, specifically relates to the alteration the Commission did for agricultural property and Findings number 18 specifically addresses the issues regarding cemeteries, and asked if Mr. Christensen and Mr. Burke would include in their motion the specific certification and confirmation of the assessments. Council Members Christensen and Burke agreed to include that these assessments be and are hereby accepted and confirmed, and that they be levied against the property benefited in 20 annual installments of principal, to be collected with other taxes by the proper authorities.

Upon call for the question and upon voice vote, the motion carried 9 votes affirmative.

ADJOURN

It was moved by Council Member Hamerlik and seconded by Council Member Brooks that we do now adjourn. Carried 9 votes affirmative.

Respectfully submitted,



John M. Schmisek
City Auditor

Approved:
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Michael R. Brown, Mayor