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HomeMy WebLinkAbout1996 04-16 CCM Board of Equalization MINUTES OF THE PROCEEDINGS OF THE CITY COUNCIL OF THE CITY OF BROOKLYN CENTER IN THE COUNTY OF HENNEPIN AND THE STATE OF MINNESOTA BOARD OF EQUALIZATION APRIL 15, 1996 CITY HALL CALL TO ORDER The Brooklyn Center City Council met as the Board of Equalization and was called to order by Mayor Myrna Kragness at 7 p.m. ROLL CALL Mayor Myrna Kragness, Councilmembers Kathleen Carmody, Debra Hilstrom, Kristen Mann, and Charles F. Nichols, Sr. Also present were City Manager Michael J. McCauley, City Assessor Stephen Baker, Senior Appraiser Joe DaBruzzi, Assistant County Assessor Tom May, and Council Secretary Carla Wirth. STATEMENT OF BOARD OF EQUALIZATION The City Manager explained the purpose of the Board of Equalization is to review the assessment rolls as they are proposed by the City Assessor for assessed market value of the roe p P rt3' (taxes payable 1997). The Board must determine whether the property values are appropriate and whether all properties are treated fairly and equally. If not satisfied with the Board's actions, the resident may appeal to the Hennepin County Board of Equalization. REVIEW OF MINNESOTA PROPERTY TAX SYSTEM The City Assessor reviewed definitions relative to the classification of properties, which vary from agriculture to commercial and industrial properties, and how the tax capacity of each property is determined to formulate the tax levies and tax extension rate. He explained the system being used this year relating to the new tax levy determination and the area wide rate. The City Assessor reviewed Minnesota Statutes language defining how properties are evaluated, the term of the assessment year, and dates of various deadlines for activities relating to the assessment year. APPEARANCES BY TAXPAYERS WITH APPOINTMENTS A. George B. Morrow, 7212 Willow Lane North PID #25- 119 -21 -41 -0037 George B. Morrow, 7212 Willow Lane North, explained he is concerned his valuation has increased over $12,800 in one year. He stated he has contributed a lot to the community and school district in terms of tax contributions and questioned the higher valuations for property located along the Mississippi River. Mr. Morrow stated he understands the City Assessor has a set of rules to abide by which relate to the sale and value of neighboring houses; however, he is a senior citizen living on a fixed income and believes the taxation system should be based more on what he paid for the 04/15/96 _ 1 _ property ($100 /front foot or $10,000 /100 foot lot). Mr. Morrow advised in 1962, he paid $22,000 for the home and $10,000 for the lot, or $32,000 plus assessments. Mayor Kragness asked if an internal inspection of the home was made to determine valuation. The City Assessor advised on March 20, 1996, an inspection was made which indicated the initial valuation was in order. He explained an appraisal was prepared containing a two -part analysis; one for the structure alone ($75,000) and the second for the property ($75,000). Mr. Morrow asked if the City Assessor believes this is a fair means of determining taxes. The City Assessor explained this is the system as dictated by Minnesota State Statutes so it is not a matter of choice. Councilmember Nichols questioned where tax capacity comes in. The City Manager reviewed the formula used to determine the tax capacity each property is to pay. Councilmember Carmody stated she understands Mr. Morrow's suggestion regarding maintaining tax capacity at the purchase price; however, she does not support it and believes taxes must go with the market value. She concurred that $12,000 is a large increase but supports the valuation increasing according to the market value. Mr. Morrow stated he has lived at this property all of his life and plans to continue living there, so he is concerned about being forced out of his home due to taxes. Councilmember Carmody noted that most homeowners expect the valuation to increase, not stay the same or decrease. Mr. Morrow stated he purchased this property not as an investment, but to be a home to his family. He commented again on the taxes paid to the school district. Mayor Kiagness concurred with the concern regarding the various tax districts and their different tax rates. However, this neighborhood has higher valuations and this is what the Board is to consider. She noted Mr. Morrow does have the option to appeal the decision of the Board. Councilmember Hilstrom stated her concern for the tax system and hope that the Legislature will Y P g make revisions. However until that revision is made, she advised she will have to support the City Assessor's valuation. Councilmember Mann concurred and stated this is a beautiful neighborhood and she supports the suggested valuation. A motion by Councilmember Carmody and seconded by Councilmember Hilstrom to support the estimated market value of $146,100 for 7212 Willow Lane North, PID 925-119-21-41-0037, passed unanimously. Mr. Morrow reiterated his disagreement with the method for determining valuation. 04/15/96 -2- B. Robert H. Bradley, 1600 -67th Avenue North. PID #35- 119 -21 -11 -0012 Robert H. Bradley, 1600 -67th Avenue North, stated he owns an industrial building which increased in valuation $637,000, or 22% over the prior year. He reviewed the amount of taxes due and explained that leased industrial space is broken into square feet to determine rent value. Mr. Bradley reviewed rent per foot rates from other similar properties. He stated that on this property, operating costs (including real estate tax and common maintenance) are $2.01 per square foot. He compared this to a property in Bloomington with operating costs of $1.46 per square foot and another with $1.72 total of operating costs. Mr. Bradley reviewed the competitive analysis prepared by the City Assessor based on market value and asserted buildings are sold based on income analysis which values that property at slightly over $2 million. He questioned the market value, noted the City Assessor's memorandum indicating an average increase of 7.4 %, and asked why his valuation increased 22 %. Mr. Bradley questioned the competitive situation of commercial real estate in Brooklyn Center and stated if taxes are increased to $1.70 per square foot in 1997, it will not be competitive with other areas. The City Assessor explained the 7% figure is an average as a group with industrial percentage increases across the board not considered; properties are looked at individually. Mr. Bradley stated two of his properties increased by 22 %. The City Assessor assured Mr. Bradley this is pure coincidence and explained how the new value was generated based on typical income generated by the property annually which is then capitalized to arrive at the value. The City Assessor stated he used $3.50 per square foot on warehouse space. Mr. Bradley reviewed the actual revenue generated by this property. The City Assessor noted Mr. Bradley owns the primary tenant of the building which reflects on the ability to generate the actual income value of the property, since it may not be reflective of actual market values. The City Assessor reviewed a chart containing median office and warehouse rents. Mr. Bradley noted the leasehold improvements must also be factored in. The City Assessor stated most times the tenant is responsible for making leasehold improvements. Mr. Bradley stated the tenant in the building is paying $3 per square foot and the new one proposed to pay $3.25 per square foot, so the argument about owning the primary tenant is not valid. Mr. Bradley asserted that a 22% market value increase is not valid and commented on the resulting negative impact on the ability to offer competitive rents. He then reviewed his experience with previous tax abatements and the cost to do so. Mayor Kragness asked how many other properties increased by 22 %. The City Assessor stated there were a fair number over 15% and if resolved on a three -year tax appeal basis, it may average out. Mr. Bradley asserted the only one making money on appeals are attorneys. Councilmember Nichols asked if other buildings were increased by 22 %. The City Assessor stated there were others in that range but he is unsure exactly which ones. 04/15/96 -3 - L Councilmember Hilstrom asked if information on previous tax abatements is available on this property. The City Assessor stated he did not bring this information to the meeting tonight but could supply it. With regard to the value of $2 million he pointed out Mr. Bradley owes $14 per square foot on this space which is beyond that range. Mr. Bradley asserted the City Assessor's numbers are not valid. Councilmember Carmody pointed out this is in the Brooklyn Center School District and there were a lot of tax abatements two years ago which hurt them. She requested more of a "comfort zone" so this does not occur again. Councilmember Carmody asked if a decision can be tabled to later in the meeting so more information can be provided by the City Assessor. Councilmember Nichols concurred with this suggestion. Councilmember Carmody noted that an increase of 22% is quite high considering nothing has been done to change the building. Mr. Bradley stated he would accept a 7.4% increase. A motion by Councilmember Carmody and seconded by Councilmember Mann to table consideration of 1600 -67th Avenue North, PID #35- 119 -21 -11 -0012, until 9 p.m. tonight passed unanimously. The City Manager advised that with more complicated cases such as this, negotiations can occur between now and the Board of Equalization meeting. Councilmember Hilstrom requested information specific to past tax abatements and impact. C. Polo Investment CoMpMy (Robert H Bradley) Vacant Land PID #35- 119 -21 -11 -0002 Mr. Bradley advised this is a 3.5 acre vacant parcel with a proposed increase of 22% but he has received a letter from the City to purchase the property for $350,000. Councilmember Hilstrom asked if Mr. Bradley had accepted the offer. Mr. Bradley stated he rejected the offer. Councilmember Hilstrom asked, if the vauuation is $389,000, would he be willing to sell the property for less than that amount. Mr. Bradley stated he might and is waiting for a purchase agreement. Councilmember Carmody noted that due to the decrease to a valuation of $389,900, it is no longer a 22% increase. The City Manager noted a conversation indicating the asking price for this property is in the $5 per square foot range which is well above the suggested valuation. 04/15/96 -4- CORRECTION A motion by Councilmember Hilstrom and seconded by Councilmember Carmody to support an valuation of $389,900 for PID #35- 119 -21 -11 -0002, passed unanimously. D. Robert E. and Margaret L Davis, 5415 Fremont Avenue North PID #01- 118 -21 -33 -0162 Robert and Margaret Davis were not present. To allow an opportunity for them to attend, Council determined to delay consideration until later in the meeting. E. William R. Kenny, 7036 Willow Lane North PID #25- 119 -21 -44 -0023 William R. Kenny, 7036 Willow Lane North, thanked the Board for the opportunity to appear regarding this issue. He explained he owns an unusual property with 22 feet of river frontage and asserted that part of the problem in determining valuation is that the year built is incorrect. He advised his house, formerly owned by Robert and Erma Sheer, was constructed on an existing basement in 1958, and is significantly older than others in the neighborhood. Mr. Kenny explained a building permit was not pulled so it is difficult to determine age, but the basement is at least ten years older than the home. Councilmember Mann noted Mr. Kenny purchased in 1991 for $109,000 and asked if he does not believe the value has increased to $110,200. Mr. Kenny stated this is a significantly older house with brick deterioration problems. Since the brick cannot be replaced, he questioned whether the property itself is increasing in value. Also, there is a slope towards the outside of the house which he believes effects marketability. Councilmember Mann inquired if the slope of the house appeared after Mr. Kenny purchased the property. Mr. Kenny answered it did not. A motion was made by Councilmember Mann to support a valuation of $110,200 for 7036 Willow Lane N., PID #25- 1.19 -21 -44 -0023. Mr. Kenny pointed out the comparable homes used by the City Assessor were newer homes and he believes a better comparison is the similar next door home (which has larger river frontage) which sold in July of 1995 for $93,000. Councilmember Hilstrom asked if the year built is indicated on the title. Mr. Kenny advised he purchased the home on a contract for deed. Councilmember Carmody pointed out that most buyers do not purchase a home based on the year built but, rather, based on the condition of the property and square footage. She noted Mr. Kenny purchased this property in 1991 for $109,000 and now it is valued at $110,200. Councilmember Carmody seconded the motion and it passed unanimously. 04/15/96 -5- F. Richard J. Armstrong 5602 Logan Avenue North PID #02- 118 -21 -41 -0076 Richard J. Armstrong, 5602 Logan Avenue North, reviewed the City Assessor's memorandum regarding his property, attempts to contact him, and desire to inspect his property since it currently has an assumed value due to lack of response to requests for inspection. He asserted his property has been excessively evaluated, knowingly, by the City Assessor's Office for a number of years. Mr. Armstrong stated in the middle of March, he obtained data on the sales of all properties in his area on Logan Avenue noting the average price of a home such as his is $65,370. He reviewed specific details regarding these types of homesteads relating to the square footage, type of lot, size of garage, etc. Mayor Kragness reviewed the dates of sales on the comparison being reviewed by Mr. Armstrong and pointed out the most recent is May of 1995. Mr. Armstrong continued to review comparable sales, dates of sale, and purchase price. A motion by Councilmember Hilstrom and seconded by Councilmember Carmody to support a valuation of $93,500 for 5602 Logan Avenue North, PID #02- 118 -21 -41 -0076, and direct staff to schedule an internal inspection passed unanimously. Councilmember Nichols asked Mr. Armstrong if he would make the property available for inspection. Mr. Armstrong assured the Board he would. It was noted if the Board moves to not change a valuation, then the only option after tonight is to appeal to the County Board. Internal staff is unable to revaluate based on inspection. The City Manager noted if staff reviewed the property, they would make a recommendation to the County for a reduction, if applicable. The City Assessor noted any new inspection will be used for future :valuations. G. Ahmed Omar. 5201 Drew Avenue North PID 410 -118 -21 -12 -0020 Ahmed Omar, 5201 Drew Avenue North, was not present. A motion by Councilmember Hilstrom and seconded by Councilmember Carmody to support a valuation of $72,100 for 5201 Drew Avenue North, and allow Mr. Omar to appeal to the County Board passed unanimously. D. Robert E. and Margaret L Davis 5415 Fremont Avenue North PID #01-118-21-33-016? Robert E. and Margaret L. Davis were still not in attendance. A motion by Councilmember Hilstrom and seconded by Councilmember Carmody to support a valuation of $81,900 for 5415 Fremont Avenue North, and allow them to appeal to the County Board passed unanimously. 04/15/96 -6- APPEARANCES BY TAXPAYERS WITHOUT APPOINTMENTS A. Michael Masica. 5006 Lilac Drive North PID #10- 118 -21 -13 -0031 Michael Masica, 5006 Lilac Drive North, explained he purchased this home three years ago and believes the proposed valuation increase of $9,000 is too high because the house faces Highway 100 and this aspect only received a reduction of 3 %. He advised that the valuation for last year was $66,100 and now is proposed to increase to $75,300. Mr. Masica advised regarding noise from trains, vehicles, and air traffic. He stated he purchased this property from a widow in 1993 for $67,900 because she was unable to care for upkeep and he has not made any improvements. Mr. Masica stated he purchased this home based on location and work accessibility. Mayor Kragness stated Highway 100, the airport, and railroad were in place when the home was purchased so noise is not a new factor. Mr. Masica agreed but commented on the increase in traffic levels on Highway 100. Councilmember Hilstrom requested details on the comparisons used to determine this valuation. Mr. Masica stated one was a HUD home. Councilmember Carmody noted there was an average increase of 4% on residential homes and questioned why this one increased more. The City Assessor stated he was unable to review information on this property since Mr. Masica just called late this afternoon and the valuation was computer generated. Councilmember Hilstrom asked Mr. Masica if he would be agreeable to an internal inspection. Mr. Masica answered affirmatively. A motion by Councilmember Carmody and seconded by Councilmember Nichols to approve a valuation of $75,300 for 5006 Lilac Drive North, PID #10- 118 -21 -13 -0031, and direct staff to schedule an internal inspection passed unanimously. B. Donna Siska, 5455 Brooklyn Boulevard Donna Siska, 5455 Brooklyn Boulevard, asked why there was such a terrific increase in property values in one year. The City Assessor explained sale prices increased throughout Brooklyn Center and while there had been a period of relative stability the last few years, this year showed a significant shift in what properties sold for. Therefore, an increase was necessary to stay within State -set parameters. He noted that some residents may have been pleased to see their property valuations increase; however, the other side is higher taxes. Ms. Siska asked where the additional millions of dollars generated by higher taxes is going. Councilmember Carmody explained the process of the City's budgeting process and areas which are included. Mayor Kragness pointed out the valuation is for taxes payable in 1997, not 1996. 04/15/96 -7- Ms. Siska asked if there is a "grandfather clause" in Brooklyn Center to protect seniors, living on fixed incomes, from taxes rising unreasonably high in one year. The City Assessor informed there was discussion about this option at the State Legislature but the bill did not pass. He informed regarding other refund programs specifically targeted to delay increases to those who cannot afford it. Ms. Siska expressed her concern about this trend and advised that she is working a - P g part-time job at minimum wage so it becomes very discouraging for seniors when taxes are increased. Mayor Kragness noted the City Assessor must abide by State Statutes and urged Ms. Siska to contact and encourage her senators and legislators to support that type of legislation. Councilmember Nichols agreed with Mayor Kragness that seniors need to become involved and talk with their senators and legislators. He commented on the negative impact of increased taxes resulting in seniors having to move out of their homes. Ms. Siska commented on other discussions about instituting a "freeze" on tax and other cost increases for seniors. Mayor Kragness noted the amount of affordable homes in Brooklyn Center and ability for first -time buyers, with the lower interest rate, to purchase a higher - priced home. Ms. Siska stated her support for a senior tax protection system and to have spread the tax increase ' over more than one year. APPEARANCES BY TAXPAYERS WITH APPOINTMENT - CONTINUED B. Robert H. Bradley. 1600 -67th Avenue N PID #35- 119 -21 -11 -0012 The City Manager reviewed data provided to the Council regarding Mr. Bradley's property and previous abatement approved. The City Assessor provided a more detailed review of the valuations and percentages of increase which indicated other properties that received a similar increase. Mr. Bradley asserted "two wrongs do not make a right" and reiterated the negative impact higher taxes will have on the ability to rent industrial space competitively with other communities. The City Assessor stated other city's taxes and assessments are likely to be different for 1997, as is under discussion tonight. Mr. Bradley stated his per square footage taxes today are $1.40 and next year will be $1.70. The City Assessor reviewed the requirement for valuations. Mr. Bradley pointed out this is a 19 -year -old industrial building in a neighborhood that is not improving due to theft. The City Assessor explained that values are not affected until occupancy is also impacted. Councilmember Carmody questioned abatements which were considered. The City Assessor reviewed the abatement calculations and explained the primary difference between now and then is 04/15/96 -8- that occupancy has significantly improved which is evident in that speculative industrial space is once again being constructed. It was noted this building was highly occupied during pervious times and one consideration is that the owner is the major tenant. Councilmember Carmody stated several years ago there were several abatements which significantly impacted the Brooklyn Center School District's budget and questioned if this is the same area. The City Assessor stated he would have to study the files for that particular year but assumes the abatements were scattered and perhaps more in the office and commercial properties rather than industrial. He commented on the additional impact of falling outside State guidelines and loss of State Aids. Mr. Bradley asserted that many building owners will share his concern once they view the valuation cards and realize the tax increase. The City Assessor explained the process used for tax abatement which results in shifting taxes to other properties. Mr. Bradley stated in the past, he has been able to reach an agreement with the Assessor prior to the abatement going into court. Councilmember Nichols noted that if a property tax is reduced, the budget still needs the funds so the tax portion is spread out onto other properties. The City Assessor indicated this is correct and can sometimes be addressed by "belt tightening" but if not possible, falls to other properties. A motion by Councilmember Carmody and seconded by Councilmember Mann to support a valuation of $3,559,000 for 1600 -67th Avenue N., PID #35- 119 -21 -11 -0012, based on the following rationale: 1) No other businesses are present to raise similar objection, 2) The proposed valuation increase is not out of line based on comparable, and 3) Lack of written documentation by Mr. Bradley to substantiate his assertions. Motion passed unanimously. APPEARANCES BY TAXPAYERS WITHOUT APPOINTMENTS - CONTINUED C. Dan Remiarz, 6201 June Avenue North Dan Remiarz, 6201 June Avenue North, stated he did some improvements and does not object to the proposed increase but is surprised, disappointed, and appalled that neither assessor lives in Brooklyn Center. He asserted that valuations from community to community are not equal and the City Assessor should live in Brooklyn Center. Councilmember Nichols noted that this issue, as it relates to public employees and teachers, was addressed in the courts and not supported. Mr. Remiarz asserted this is not true in the City of Minneapolis. 04/15/96 -9- D. Richard Drummon. 5338 Morgan Avenue North Richard Drummon, 5338 Morgan Avenue North, stated he lives one -half a block from Minneapolis and has witnessed a lot of deterioration with neighboring properties and crime. Also, he owns a smaller home with an alley and believes it has experienced devaluation based on these conditions. E. Chuck Hurley, 7013 Humboldt Avenue North Chuck Hurley, 7013 Humboldt Avenue North, stated he hopes his valuation continues to increase and expressed his appreciation to Senior Appraiser DaBruzzi. He stated he disagrees with a 7.3% increase since he has only done cosmetic improvements such as siding and eves, and the other improvements were Code improvements. Mr. Hurley noted the average increase is only 4 %. Mayor Kragness noted the overall increase in valuations is based on the type of home involved. Mr. Hurley stated he did construct a deck but the valuation contained the incorrect size (correct size is 12' by 12' not 12' by 16). Councilmember Carmody stated she lives in this area and her property valuation increased by over 5 %. She asked if this area increased more than other areas of Brooklyn Center. The Senior Appraiser explained in the northeast neighborhood, the overall percentage was 4 %. But, the area east of Highway 252 had factors included in past years that had to be excluded which dropped their value 'and reduced the overall percentage for the entire area. Therefore, a 5% increase in Mr. Hurley's area was common. The City Assessor noted the land values were reviewed and Mr. Hurley's increased which impacted the higher percentage. Mr. Hurley stated he does not object to an increase of assessed value at a fair rate, not an outlandish rate. F. George B. Morrow. 7212 Willow Lane North PID #25- 119 -21 -41 -0037 Mr. Morrow reappeared before the Board and stated that after listening to other resident's statements, he wonders why a motion is not made to hold this year's valuations based on the valuation of last year. He requested a freeze on valuation until something is figured out with the State Legislature which could take five to six years. Mayor Kragness commented it behooves all residents to attend those legislative meetings to make g g them aware of this important issue. Mr. Morrow encouraged the Mayor and Council to use their power to get something done. CONSIDERATION OF WRITTEN APPEALS The City Assessor reviewed the written appeal from Elsie R. Hawthorne, 5706 Logan Avenue North, PID #02- 118 -21 -14 -0002, and read it into the record. It was noted that Ms. Hawthorne is out of town and requests the ability to maintain the right to appeal to County Board of Equalization. 04/15/96 _10- A motion by Councilmember Hilstrom and seconded by Councilmember Carmody to support a valuation of $65,900 for 5706 Logan Avenue North, PID #02- 118 -21 -14 -002, and to attach Ms. Hawthorne's letter to the formal record passed unanimously. MOTION TO AFFIRM THE BALANCE OF THE ASSESSMENT A motion by Councilmember Carmody and seconded by Councilmember Hilstrom to approve the balance of the 1996 assessment and accept the City Assessor's recommendation on the properties appearing at the Board passed unanimously. ADJOURNMENT A motion by Councilmember Hilstrom and seconded by Councilmember Carmody to adjourn the meeting at 9:15 p.m. passed unanimously. Alf A City Clerk Mayor Recorded and transcribed by: Carla Wirth TimeSaver Off Site Secretarial 04/15/96