Loading...
HomeMy WebLinkAboutLBAE O� p ���P ti � � U 4646 Dakota Street SE `�I�so� Prior Lake, MN 55372 CITY COUNCIL WORKSHOP AGENDA REPORT MEETING DATE: SEPTEMBER 23, 2013 PREPARED BY: JERILYN ERICKSON, FINANCE DIRECTOR PRESENTER: FRANK BOYLES, CITY MANAGER JERILYN ERICKSON, FINANCE DIRECTOR WORKSESSION TAX COURT / LOCAL BOARD OF APPEAL 8� EQUALIZATION TOPICS DISCUSSION: Introduction The purpose of today's workshop is to discuss the challenges that have been presented by changes to the property tax appeals process and to consider options to address these challenges. In addition, the Council should consider whether or not to continue having a Local Board of Appeal and Equalization (LBAE) versus an open book process with Scott County. Histo For over twenty years now the city has relied upon the Scott County Assessor's office to provide appraisal services for the community. Virtually every other community in Scott County does the same. The cost for these services are paid by the city's based upon a formula. Scott County is somewhat unique in this respect. For example cities in Hennepin County hire full time employees to provide this service. In addition to being more expensive, the proliferation of assessment departments in each city can result in inconsistencies in valuation practices. ', Scott County cities have the option of conducting their own LBAE or merging with the county in a single meeting. All Scott County Cities except Belle Plaine and Prior Lake have elected to be part of the County LBAE. Tonight's work session is intended to focus on the following two topics: Tax Court Scott County staff presented information about the challenges associated with the changes to the property tax appeals process to SCALE in February. The topic was discussed further with city staff members at SCALE meetings in April and June as well as the Scott County Board of Commissioners. A copy of the letter received from Mike Thompson, Scott County Assessor, which summarizes the options considered and the option being recommended by multiple agencies is also included with this report. In any case the cost of these services will go up for all participating cities to hire an additional appraiser to address the tax court challenges. If the Council agrees with the recommendation made by other agencies in the county, the Council should consider amending the JPA to reflect a change in Prior Lake's share of the cost for both 2013 and 2014. A sample amendment is included with this report. Loca/ Board of Appeal Prior Lake has acted as the LBAE for many years. In order to act as a LBAE, training is required. A copy of the LBAE Trained Member Clarification letter is included with this agenda report. The Council should consider whether or not it would like to continue having a LBAE versus an open book process with Scott County. Conclusion Council should provide direction to staff regarding the JPA amendment and the status of the LBAE. Attachments: 1) Scott County PowerPoint Presentation — SCALE — February, 2013 2) Letter from Mike Thompson 3) Draft JPA Amendment 4) LBAE Trained Member Clarification Page 2 . ,� "� SCOTT COUNTY COMMUNITY SERVICES DIVISION GOVERNMENT CENTER •200 FOURTH AVENUE WEST •SHAKOPEE, MN 55379-1220 July 1, 2013 Re: Assessment Services Costs Dear City Administrators and Managers, I would like to summarize our recent discussions surrounding the challenges Scott County Assessor and Attorney staffs are facing due to the increasing amount of resources that are being allocated to investigate ' and resolve property tax appeals through the Minnesota Tax Court process. It has become difficult to maintain the county's position regarding appeals and perform all of the necessary annual assessment duties with the existing compliment of resources. We currently have a backlog of approximately 140 pending tax court cases, many of which involve multiple assessment years. Although the majority of these cases will be settled or dismissed without a formal trial, they all require varying amounts of dedicated resources in order to resolve. When a formal appraisal analysis and trial are required, the process becomes extremely time-consuming. This workload has been very challenging to balance over the past few years. There have also been recent changes to the Minnesota Tax court process, and we anticipate more to come. These changes have forced us to review our approach and options to determine how we move forward. In summary, the following three options were identified as potential solutions: 1. Outsource Minnesota Tax Court appeal work This is an approach currently being taken by some metro-area counties and cities whereby private appraisers and attorneys are contracted to defend the assessment throughout the trial process. In these cases the county or city has already spent a great deal of time researching the appeal, but eventually have found that they are at an impasse with the petitioner and a trial is required. Information obtained from peer jurisdictions indicates that the typical private appraiser fee is around $30,000 to complete an appraisal, prepare for trial, testify during trial, and provide subsequent feedback. The typical private attorney fee is around $20,000. 2. Alter the county's position regarding Minnesota Tax Court appeals We believe that it is essential to the fairness and equitability of the assessment that we defend valuations when we have reviewed all of the relevant information and concluded the valuation to be accurate. If the required resources are not available to maintain this approach and complete the statutorily required assessment functions we would have to consider relaxing our general position when defending against appeals. . � '� SCOTT COUNTY COMMUNITY SERVICES DIVISION GOVERNMENT CENTER • 200 FOURTH AVENUE WEST •SHAKOPEE, MN 55379-1220 3. Hire additional Commercial Assessors on to the county staff An analysis was presented that illustrated the need for two additional Commercial Assessors. This wouid ensure that the likelihood of having to outsource trial appraisal work will be very low. This approach would also provide additional staff that can assist in the ongoing annual assessment duties, informal appeals, and MN Tax Court appeals. County staff first presented this information along with more detailed explanations to city staff inembers during the February 11 SCALE meeting in Belle Plaine. The topic was subsequently discussed with city I staff members at SCALE meetings on April 8' and June 10` In addition, the information was presented to the Scott County Board of Commissioners, who through board action approved the option of hiring two additional commercial appraisers. After presenting the existing and new concerns, along with the available options to the various affected parties, each group has come to the same conclusion that option three is the best solution for this existing problem. I have also included a copy of the PowerPoint show that was presented during the February SCALE meeting. This presentation includes additional information regarding the new and ongoing challenges. Please feel free to share whatever information you deem necessary with your council. Enclosed you will find the invoice based on the original assessment fee. In addition, I have provided an amendment to the original contract to compensate for the increased 2013 and 2014 assessment costs. Once we have received the signed amendment and have fully executed it we will send an additional invoice for the prorated difference in 2013. I will be out of the office, returning on Wednesday,luly 10` If you any questions please email or call and I will reply as soon as possible upon my return. Sincerely, .�`�.�.� r - ,_;' � i . ,_ � <.�`'" ` .--�_ � � - Michael Thompson Scott County Assessor mthompson@co.scott.mn.us 952.496.8972 AMENDMENT TO JOINT POWERS AGREEMENT 121231 This Amendment to the Joint Powers Agreement by and between the County of Scott and the City of Prior Lake, Minnesota, approved on November 1, 2011, effective for assessment years 2012, 2013, and 2014, is made and entered into by and between the County of Scott, through the Taxation Department, hereinafter referred to as the "County," and the City of Prior Lake. WITNESSETH THAT: WHEREAS, the City of Prior Lake has entered into a joint powers agreement with the County, effective for assessment years 2012, 2013, and 2014 for the provision of Assessment Services; and WHEREAS, the City of Prior Lake and the County find it to be to their mutual benefit to revise the terms of the aforementioned Agreement; NOW THEREFORE, in consideration of the mutual covenants contained herein, the parties hereto agree that the aforementioned Agreement is amended as follows: 1. CLAUSE THREE, SHALL BE AMENDED AS FOLLOWS (deletions stricken and additions underlined): 3. In consideration for said assessment services, the City of Prior Lake hereby agrees to pay the County of Scott the sum of $116,700 for assessment year 2012, $�A8 124 000 for assessment year 2013, and $�AA 132 500 for assessment year 2014. Such payments are to be made to the Scott County Treasurer on or before June 1, of the year of the assessment. 2. OTHER CONTRACT PROVISIONS All provisions of the aforementioned Agreement approved and not specifically amended hereto shall continue with full force and effect. 1 IN WITNESS WHEREOF, the parties hereto have set their hands on the date written below. SCOTT COUNTY BY: , Chair of the Board DATE: ATTEST: Gary Shelton, County Administrator APPROVED AS TO FORM: Jeanne Andersen for Pat Ciliberto Scott County Attorney DATE: CITY OF PRIOR LAKE BY: Name and Title DATE: 2 MINNESC7TA� REVENUE Memo Date: July 31, 2013 To: All Assessors From: Andrea Fish, Supervisor Information and Education Section Subject: Local Boards of Appeal and Equalization Trained Member Clarification The purpose of this memo is to clarify our interpretation of Local Board of Appeal and Equalization (LBAE) trained member requirements under Minnesota Statute 274.014, subdivisions 2 and 3. Subdivision 3(a) states in part: "A ciry or town that does not comply with these requirements is deemed to have transferred its board of appeal and equalization powers to the county be ig nnin� with the ollowingvear's assessment and continuing unless the powers are reinstated under paragraph (c) [emphasis addedJ. " In previous year, our understanding of M.S. 274.014, subdivision 3 was that the jurisdiction would lose their board automatically for a minimum of 2 years. Based on an updated interpretation of the statute, we would like to clarify the provisions of subdivision 3, paragraph (a). When subdivision 3, paragraph (a) refers to "the following year's assessment", the law is referring to the assessment year that follows the December 1 training certification deadline. For example, on December l, 2012 a board must certify that it has a trained member. If a jurisdiction does not have a trained member on December 1, they lose their board for the 2013 appeal season. The jurisdiction would be able to certify a trained member on December 1, 2013 to be able to hold a regular LBAE for the 2014 appeal season. Therefore, the jurisdiction loses its board for a minimum of one year, and may be reinstated as long as the jurisdiction can certify a trained member by December 1 of the same year that they lost their board. However, if the jurisdiction had certified a trained member by December 1 and the board is scheduled to have a LBAE meeting, but the trained member is not present and/or there is not a quorum, then the meeting will be switched to an open book meeting for 2013 and the jurisdiction will additionally lose their board for the "the following year's assessment". Example: A board proves compliance on December 1, 2012. The LBAE meeting is scheduled for a date in 2013. At the meeting, the trained member and/or a quorum is not present. The meeting must switch to open book for 2013 and the jurisdiction loses their board for the following year (2014) as well. This means the jurisdiction has lost its eligibility for a minimum of two years. In summary, a board that does not certify a trained member on December 1 loses the LBAE for a minimum of one assessment year. However, for a board that meets but does not have a trained member or quorum, the board is lost for two years (the year that the board switches to open book as well as "the following year"). This clarification goes into effect immediately. If a jurisdiction lost the LBAE in 2013 due to not having a trained member and proving compliance on December 1, 2012, the jurisdiction can send someone to training this year in order to prove compliance on December 1, 2013 and hold their meeting in 2014. If you have any questions or concerns regarding this clarification please contact Jessi Glancey by email jessi. lancey_(a�state.mn.us or by phone 651-556-6104.