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HomeMy WebLinkAbout4D - Tax Parcel Reclassifying AGENDA #: PREPARED BY: SUBJECT: DATE: INTRODUCTION: BACKGROUND: 8 (D) RALPH TESCHNER FINANCE DIRECTOR CONSIDER APPROVAL OF RESOLUTION 96-18 RECLASSIFYING CERTAIN TAX PARCELS FROM THE RURAL SERVICE TAX DISTRICT TO THE URBAN SERVICE TAX DISTRICT FEBRUARY 20, 1996 This agenda item requests the City Council to approve the reclassification of 246 tax parcels from the Rural Service Tax District to the Urban Service Tax District. The reclassification would be effective for property taxes payable in 1996 and an additional 12 tax parcels for payable 1997. Of the 246 parcels, 225 are platted lots within The Wilds development, 5 are SMDC (Shakopee Mdewakanton Dakota Community) lands and 16 are unplatted properties that have been split off. All but three of the 1997 parcels are SMDC lands. Approximately twenty five years ago the City was divided into two districts; a Rural Service Tax District and an Urban Service Tax District as established by Prior Lake Code 1-10-1. The Urban Service Tax District included all platted and unplatted parcels that were developable for residential, commercial or industrial purposes. This area is basically consistent with the boundaries of the municipal service area that was provided with water and sewer utilities. The Rural Service Tax District is comprised of those lands within the boundary limits of Prior Lake that were rural in character and meet the following two criteria: 1. Property receives no City services other than fire, police and planning services. 2. Land must be open and maintained in farm crops. The tax benefit relief received by those properties classified as being in the Rural Service Tax District is that these parcels receive a 30% tax break for the City share only of property taxes. This reduction in taxes only applies to the basic tax and excludes any reduction for taxes associated with debt levies. The original rational supporting this favorable tax treatment was the assumption that large open tracts of land did not demand and require the same level of city service expenditures as did more densely populated subdivision tracts. The Scott County Auditors' Office has established district codes whereby those properties classified within the Rural Service Tax District are taxed less for the city tax portion. It is the County's responsibility to maintain 16200 Eagle Creek Ave. S.E.. Prior Lake. Minnesota 55372-1714 / Ph. (612) 447-4230 / Fax (612) 447-4245 AN EQUAL OPPORTUNITY EMPLOYER DISCUSSION: these records. Over the years, on an occasional basis the County would review the list with the City and changes were made for those parcels that were split off for residential purposes. Overall the total number of changes were relatively few. However, at the end of 1995 the County sent a large list to the City which included all 225 lots within The Wilds that have currently been platted. These properties were scheduled to receive the 30% property tax break for the City share in 1996. Staff was under the assumption that as soon as a property became platted that the lots were automatically reclassified.by the County to Urban SeRvice Tax District for property tax purposes. The City received the list from the Auditor's Office just before the County was scheduled to make their final tax run for certification asking input from the City concerning which properties should be reclassified. This left Staff with a very short time to review the list. In future years Staff has requested that the County submit an updated list to the City each year before the TNT (Truth-in- Taxation) notices are sent out. Staff has prepared the attached letter to send out as an explanation to those property owners affected by the reclassification. The letter will further advise that these properties will experience a property tax increase above that stated in their original ~otice mailed back in November. Staff initially directed the County to change the classification from rural to urban on the five SMDC lands, all 225 of the platted lots within The Wilds and also on 16 parcels that were divided and represented less than 10 acres on the basis that they were of residential proportion as opposed to agricultural size. Subsequent to responding to the County concerning the reclassification, Staff became aware of a procedural requirement set forth in City Code 1-10- 2 which requires the City Council to authorize reclassification by resolution. Based on the foregoing it is necessary for the City Council to pass a resolution affirming the classification changes. Whenever any parcel of land is platted, in whole or in part, City Code Section 1-10-2 provides the Council with the discretion of reclassifying such parcels from the Rural Service Tax District to the Urban Service Tax District. The reason for reclassifying the properties listed on Exhibit A is that these parcels have been platted and currently enjoy the same level of service as any other lot within the City. The SMDC lands were included because they were no longer rural in character even though such designation does not impact them since they are property tax exempt. The 16 unplatted parcels were changed because they were under the 10 acre minimum lot size requirement of the City's subdivision code. Subsequently to Staff changing the above referenced 246 lots, a later second look resulted in 3 more unplatted parcels plus nine SMDC lands that are in trust. It was too late to change these parcels for 1996 so Staff followed up with a letter to the Scott County Auditors Office to change their designation effective for payable for 1997. These properties are also included on the list referenced by Resolution 96-18. Finally, for discussion purposes Staff would encourage the Council to consider if this section of the Prior Lake City Code remains appropriate since agricultural class properties already receive a tax break. Shakopee is the only other city in Scott County that has a similar ordinance. ALTERNATIVES: Because the final property tax abstract list has been finalized by the Scott County Auditors' Office, it is no longer possible for any changes to occur for 1996. Thus we are asking the Council to: Approve Resolution 96-18 Reclassifying Certain Tax Parcels From the Rural Service Tax District to the Urban Service Tax District for Property Taxes Payable 1996. RECOMMENDATION: The implication of passing this resolution is to increase the city portion of the property tax by 30% for the affected parcels only. What actually occurs is a redistribution of tax dollars over the entire community in order for the properties being reclassified to pay their fair and proportionate share of the cost of city services. The majority of these properties listed in Exhibit A and Exhibit B listed in the attached resolution are owned by a developer or a builder and affects only lot taxes because only a handful of homes were constructed in 1994 that will come on in 1996 under full property taxes. A few of these properties have models or extremely high valued homes constructed on them and will have a significant city tax increase. The important thing to remember is that if they were not changed all property taxpayers of the community would be subsidizing their taxes at a lower level. REVIEWED BY: ACTION REQUIRED: A9602. WRT 1-10-1 1-10-2 CHAPTER 10 URBAN AND RURAL SERVICE DISTRICTS FOR MUNICIPAL PROPERTY TAXES SECTION: 1-10-1 : 1-10-2: 1-10-3: 1-10-4: 1-10-5: Division of City Into Districts Transfer From Rural to Urban District; Exclusions Classification of Agricultural Properties Ratio of Benefits Between Districts Municipal Services to Rural Service Districts; Requirements 1-10-1: DIVISION OF CITY INTO DISTRICTS: The City hereby divides the area within its limits into an Urban Service District and a Rural Service District, constituting separate taxing districts, for the purpose of all Municipal property taxes except those levied for the payment of bonds and judgments and interest thereon.1 (A) Urban Service District Boundaries: The Urban Service District shall include all properties within the limits of the City, except those set forth by ordinance as Rural Service District. (B) Rural Service District Boundaries: The Rural Service District shall include only such unplatted lands which need not be contiguous to one another as in the judgment of the City Council, at the time of the effective date hereof, are rural in character, and not developed for commercial, industrial or urban residential purposes and for these reasons are not benefitted to the same degree as other lands by Municipal service financed by general taxation. 1-10-2: TRANSFER FROM RURAL TO URBAN DISTRICT; EXCLUSIONS: Whenever any parcel of land included in the Rural Service District is platted in whole or in part, or whenever application is made for a permit for oonstruction of a commercial, industrial or residential building or improvement; or 1. M.5.A. see. 272.67. 1-10-2 1-10-5 whenever such improvement or building is commenced without a permit, the governing body may make and enter an order by resolution transfering said parcel or part thereof from the Rural Service District to the Urban Service District. In areas platted without any immediate intention to develop by said owner and platted for the convenience of the City, the City Council shall have the discretion to leave said area as a Rural Service District. Any parcel located within a Rural Service District for ten (10) years without development shall be considered by the City for exclusion from said Rural Service District. By amendment hereof, such parcel shall be included in the Urban Service District if any area adjacent thereto is determined by the Council to be substantially developed as urban property. 1-10-3: CLASSIFICATION OF AGRICULTURAL PROPERTIES: There shall be no arbitrary size determination made upon said Rural Service District, and whether land actually is being used as an agricultural parcel shall be discretionary with the City Council. An effort shall be made by the City Assessor to coordinate the classification of Rural Service District properties with the classification of agricultural properties for assessment purposes. 1-10-4: RATIO OF BENEFITS BETWEEN DISTRICTS: In the judgment of the Council, the ratio which exists between the benefits resulting from tax supported Municipal service to parcels in the Rural Service District to parcels in the Urban Service District is thirty percent (30%) less, plus any Municipal property taxes levied for payment of bonds and judgments and interest thereon. 1-10-5: MUNICIPAL SERVICES TO RURAL SERVICE DISTRICTS; R EQ UlR EMENTS: (A) No City service beyond that normally provided by the townships of Scott County will be provided by the City in a Rural Service District, except fire, police and planning services; (B) Land in a Rural Service District must be open, rural in character and maintained in farm crops or seeded; (C) Grading is not considered as development, provided grading is such as to hold storm runoff on the land and not produce storm runoff problems and provided graded acres are cropped or reseeded within one year; (D) Any fill hauled in shall be graded off and seeded at least once a year. (Qrd. 73-6, 5-7-73) February 22, 1996 Prior Lake Resident Address Line 1 Prior Lake, MN 55372 Re: City of Prior Lake 1996 Property Tax Statement Change Notice PIN # Dear Property Owner: This letter is to advise you that your property, identified by the above referenced PIN number, has been reclassified within the City of Prior Lake from Rural Service Tax District to Urban Service Tax District. The reason is Prior Lake City Code 1-10-1 requires the City to reclassify property that has been either platted or divided and no longer qualifies for a reduced municipal property tax rate. Therefore, the City portion of your actual 1996 property tax statement may be 30% higher than indicated in the preliminary property tax statement notice that you received earlier in November from the Scott County Auditors' Office. Typically when a property is platted or divided into smaller acreages for residential purposes as opposed to crop land utilization the property is re-classified to the urban category. This usually occurs before proposed property tax estimates are mailed. However, the classification changes were processed at a very late stage this past year. The City is taking this opportunity to provide you updated property tax information. The intent of the truth in taxation notification process is to provide the tax payer with the approximate amount of their upcoming payable property taxes. Please direct any questions regarding this explanation to my attention by contacting my office at 447-4230. Sincerely, Ralph Teschner Finance Director City of Prior Lake LET04,WRT 16200 Eagle Creek Ave. S.E.. Prior Lake. Minnesota 55372-1714 / Ph. (612) 447-4230 / Fax (612) 447-4245 AN EQUAL OPPORTUNITY EMPLOYER RESOLUTION 96-18 MOTION BY: SECONDED BY: WHEREAS, the City of Prior Lake has divided the area within its boundary limits into Rural and Urban Service Tax Districts; and WHEREAS, the Rural Service Tax District shall include only such unplatted lands that are rural in character and maintained in farm crops; and WHEREAS, . the Rural Service Tax District shall include such unplatted lands that are not presently served with municipal sewer and water utilities; and WHEREAS, the purpose of a Rural Service Tax District is to grant property tax relief to such qualified parcels by reducing the city portion of the property tax by 30% less, excluding taxes associated with the payment of bonds; and WHEREAS, the City of Prior Lake has examined the attached lists referenced as "Exhibit A" for payable 1996 property taxes and "Exhibit B" for payable 1997; and WHEREAS, the City has determined that the parcels on Exhibit A and Exhibit B no longer qualify for continuation within the Rural Service Tax District because they have been either platted into residential lots or divided into smaller unplatted parcels. NOW, THEREFORE, BE IT RESOLVED by the Mayor and City Council that the parcels of the attached "Exhibit A" and "Exhibit B" be transferred from the Rural Service Tax District to the Urban Service Tax District effective beginning in the years 1996 and 1997 as stated. Passed and adopted this 20 day of February, 1996. YES NO Andren Greenfield Kedrowski Mader Schenck Andren Greenfield Kedrowski Mader Schenck Frank Boyles City Manager City of Prior Lake {Seal} 16200 Eagle Creek Ave. S.E.. Prior Lake. Minnesota 55372-1714 / Ph. (612) 447-4230 / Fax (612) 447-4245 AN EQUAL OPPORTUNITY EMPLOYER EXIDBIT A (Effective Payable 1996 Property Taxes) PIN Number 25 297 001 0 thru 25 297 045 0 25 297 051 0 thru 25 297 075 1 25 297 078 0 thru 25 297 085 1 25 297 087 0 thru 25 297 089 0 252970910 thru 25 297 096 0 25 297 098 0 thru 25 297 102 0 25 306 001 0 thru 25 306 009 0 25 307 001 0 thru 25 307 089 0 253110010 thru 25 311 013 0 25 303 001 0 thru 25 303 019 0 25 901 008 5 25 922 006 0 25 922 008 0 25 922 008 2 259230111 259230130 25 923 014 4 25 924 002 3 25 932 007 1 25 932 008 1 259320170 25932017 1 259320172 25 933 001 1 25 933 001 2 25 933 001 3 25 933 001 4 25 933 008 1 25 933 008 2 25 933 018 0 259340172 Subdivision The Wilds The Wilds The Wilds The Wilds The Wilds The Wilds Sterling North at The Wilds Sterling South at The Wilds Preserve at The Wilds Villas at The Wilds 1st Addition 1.00 Acres in 01-114-22 1.05 Acres in 22-115-22 (SMDC) 10.0 Acres in 22-115-22 (SMDC) 10.5 Acres in 22-115-22 (SMDC) 2.00 Acres in 23-115-22 9.19 Acres in 23-115-22 8.00 Acres in 23-115-22 9.07 Acres in 24-115-22 4.60 Acres in 32-115-22 4.05 Acres in 32-115-22 6.93 Acres in 32-115-22 1.37 Acres in 32-115-22 1.50 Acres in 32-115-22 0.88 Acres in 33-115..22 0.87 Acres in 33-115-22 0.99 Acres in 33-115-22 0.74 Acres in 33-115-22 8.95 Acres in 33-115-22 (SMDC) 2.15 Acres in 33-115-22 0.62 Acres in 33-115-22 (SMDC) 2.25 acres in 34-115-22 EXHIBIT B (Effective Payable 1997 Property Taxes) PIN Number 259280111 25 928 013 0 259280131 259280132 25 933 001 0 25 933 005 0 25 933 005 1 25 933 008 0 25 933 0111 259330181 25 934 002 0 25 934 002 1 Subdivision 40.0 Acres in 28-115-22 (SMDC) 10.0 Acres in 28-115-22 (SMDC) 20.0 Acres in 28-115-22 (SMDC) 10.0 Acres in 28-115-22 (SMDC) 11.0 Acres in 33-115-22 (SMDC) 34.2 Acres in 33-115-22 (SMDC) 120.5 Acres in 33-115-22 (SMDC) 10.4 Acres in 33-115-22 (SMDC) 20.0 Acres in 33-115-22 (SMDC) 4.39 Acres in 33-115-22 7.17 Acres in 34-115-22 6.30 Acres in 34-115-22