BOARD OF APPEAL AND EQUALIZATION COUNTY OF SCOTT ...

PAGE 1BOARD OF APPEAL AND EQUALIZATIONCOUNTY OF SCOTT, MINNESOTAJUNE 22, 2010(1) Pursuant to the provisions of M.S. 274.14, the Scott County Board of Appeal andEqualization met in the Courthouse Board Room in the City of Shakopee, Minnesota, andconvened at 6:00 p.m. The following Commissioners were present: Richard Marks, Chair;Rachel VanDenBoom, Vice Chair; Wade Larson; Sandra Warfield; and Mark Fritz.(2) County Staff Present:A. Cindy Geis, County AuditorB. Jeanne Andersen, Assistant County AttorneyC. Michael Thompson, County AssessorD. Troy Pint, AppraiserE. Tom Wermerskirchen, AppraiserF. Dan Bethke, AppraiserG. Lance Link, AppraiserH. Terence Chacka, AppraiserI. Chad Bohnsack, AppraiserJ. Jennifer Blumers, AppraiserK. Jason Heitzinger, AppraiserL. Leslie Schroeder, AppraiserM. Kevin Ellsworth, Chief Financial OfficerN. Lezlie Vermillion, Deputy County AdministratorO. Tracy Cervenka, Deputy Clerk to the Board(3) Guests Present:A. David Haspal, Prior LakeB. Ahmet Arsan, Prior LakeC. Pete Giancola, St. Lawrence TownshipD. Darik Schultz, Blakeley TownshipE. Mark Kreissler, Prior Lake(4) Administer Special Board Oath:County Auditor Cindy Geis administered the Oath of office to the Special Board of Appealsand Equalization.(5) Reorganization:A. Richard Marks announced that he is the Chair and that Rachel VanDenBoom is theVice Chair of the 2010 Special Board of Appeal and Equalization.(6) Introductory Remarks:Chair Richard Marks provided details of the duties of the Special Board of Appeal andEqualization and the criteria that must be met by a property owner to be heard at the Board ofAppeal and Equalization.

PAGE 2June 22, 2010(7) Minutes:Ms. Geis announced that the County Board of Commissioners acted as the Board ofAppeal and Equalization in 2009. As such, at a County Board meeting this morning, the CountyBoard of Commissioners officially approved the minutes from the Board of Appeal andEqualization meeting held June 23 and June 30, 2009.(8) Consent Agenda:A. Commissioner VanDenBoom moved, seconded by Commissioner Larson to approvethe recommendations of the County Assessor’s Office for appealed property values listedbelow:PID TAXPAYER'S NAME ORIGINAL EMV* REVISED EMV*25-924-0025 Calvin & Beverly Chadwick $1,048,300 $1,230,40025-901-0230 Peter Knaeble $498,800 $434,00026-395-0010 Central Bank $140,000 $125,00026-395-0020 Central Bank $140,000 $125,00026-395-0030 Steven Anderson $140,000 $125,00026-395-0040 Central Bank $110,000 $90,00026-395-0050 Heatherton Ridge LLC $140,000 $125,00026-395-0110 First Resource Bank $140,000 $125,00026-395-0120 First Resource Bank $140,000 $125,00026-395-0150 Evans Holding LLC $140,000 $125,00026-415-2000 Trout Run Preserve LLC $252,700 $3,800ClassChange100 Resto 200 AgMotion carried unanimously.(9) Appeals of Scott County Property Owners:A. Peter Giancola, PID #10-001-0150, asked the Commissioners to reduce the marketvalue of his property located at 18281 East Sioux Vista Drive in St. Lawrence Township. Heinformed the Commissioners that he disagrees with the report submitted by County staff sayingthat his property is heavily wooded and submitted a copy of a map from Googlemaps thatshows approximately 10% of his property having trees. He also stated that he does not feel thecomparables listed are comparable as his home is a bi-level, and comparable 1 is a raisedranch style rather than a bi-level and he does not feel it was an arms-length sale. He stated thatthe appraisal he had completed indicates a value of $400,000, and that is the value he feelswould be appropriate.County Assessor Michael Thompson responded to Mr. Giancola’s comments. He statedthat the comparable sale noted by Mr. Giancola is considered an arms-length sale. He alsoexplained that St. Lawrence Township contracted with another assessor in previous years.Scott County recently began assessing properties in St. Lawrence Township, and reviewedevery property within the township. Some property values were found low and some high and

PAGE 3June 22, 2010the appropriate adjustments were made. He noted that the difference in the appraisals is$17,000 which is approximately four percent.The Commissioners voiced their support of the market value assigned by Scott County,stating that the comparables must be a certain type of sale, that the appellant’s appraisal isfrom a refinanced transaction and there is no letter of release, that the comparable is a bi-levelhome and not a raised ranch, and that there is additional living space included in the County’svalue that was not included in previous years.Commissioner Fritz moved, seconded by Commissioner Larson to affirm the value of PID#10-001-0150 at $417,700. Motion carried unanimously.B. Troy Borreson, PID #01-930-0012 and #01-930-0013, was not in attendance.C. Darik Schultz, PID #02-909-0021 and #02-909-0023, distributed copies of documentsto the Commissioners regarding his properties and reviewed the information in them. He statedthat the County’s information shows he has 6-8 poultry on his property, but he does raise manymore free-range chickens on the property, and he also boarded a horse last winter. Hecompared his property to a property owned by “Anderly” that was determined to be anAgricultural class due to rent and pasturing cattle. He showed his 2008 income tax statementthat included income due to sales of livestock and other items.Mr. Thompson stated that staff can only go by what they saw during the inspection. He alsostated that he cannot comment on the income information presented as he has not seen it priorto this meeting. The income information does not break down what piece of property it wasfrom. The information available to County staff shows that this property does not qualify for anagricultural classification. Ms. Geis noted that according to Minnesota Statute relating to thisclassification, poultry must be confined.Mr. Schultz, Mr. Thompson, and Ms. Geis responded to questions and comments from theCommissioners. Mr. Thompson stated that staff across the state has met with the Departmentof Revenue about how to implement the statutes consistently. The classification for thisproperty has been changed to Agricultural Classification. Following discussion about theproperty, Commissioner Warfield inquired about the language in the statute for property aboveten acres compared to below ten acres. Commissioner Fritz noted that he does not feel that thestatute is clear relating to property with ten or more acres. It simply states “poultry product” butdoes not say “confined.“ Ms. Geis responded that staff can talk with the Department ofRevenue regarding their interpretation of free range chickens as it relates to this specificinstance. In response to Commissioner Warfield’s inquiry, Mr. Schultz stated that the chickenshave 12.6 acres to roam.Commissioner Larson moved, seconded by Commissioner Warfield, to ask Mr. Schultz toprovide the information to the Assessor he gave to the Commissioners and to ask theAssessor’s Office staff to look at additional information and get an interpretation from theDepartment of Revenue. Motion carried unanimously.

PAGE 4June 22, 2010Mr. Thompson clarified that the Commissioners would like to have staff look at the twoparcels as one piece of real estate, ask the Department of Revenue if free ranging chickens areconsidered productive acres for property above ten acres, and provide information on whatconstitutes commercial boarding of horses.D. Ahmet Arsan, PID #25-406-0330, asked for a reduction in his assessed value. Hestated that the value was reduced from $107,600 to $100,700 after the Prior Lake Local Board,but he feels it should be lower. There are a limited number of condominium sales in the areathat could be used for comparables as many sales are based on foreclosures, which cannot beused. Mr. Arsan stated that while he understands the reason behind not using foreclosures toreflect the market, for condominiums, at this time foreclosure sales are the market. Hisappraisal states that in this market, all sales must be considered. His appraisal lists a marketvalue of $93,000, which he agrees would be a fair value.Mr. Thompson stated that County staff does understand that foreclosures are a large partof the market for condominiums in this area. However, they do need to look at overall sales forthe type of property. Foreclosures accounted for 75% of the condominium sales in Prior Lake.After the adjustment to the value of this property, the median ratio was 90.4% for those thatwere fair market sales. There was an overall 15% decrease in the values for condominiums. Incomparison to Mr. Arsan’s appraisal of $93,000, the County’s appraised value of $100,700 iswithin the 90-105% requirement.Commissioner Fritz stated that two of the comparisons are from a senior community, whichis a restricted community and he would not consider that an open market sale. He inquired ifthe state specifically says foreclosed sales cannot be used. Mr. Thompson read informationprovided by the Department of Revenue stating the requirements for consideration ofcomparables to estimate market value, which includes the statement “Not all sales arerepresentative of the market. Some sales such as foreclosures, sales between relatives, orsales where the seller or buyer is acting under undue duress, are not considered open market,arms length transactions, are not used in the sales ratio studies, nor are they used ascomparables in estimating market values of similar properties.” The state statute also haslanguage referring to not considering sales that are affected by any undue pressures. He statedthat the State of Minnesota does not list any percentage of sales in the area related toforeclosures. There have been articles relating to this, but there has been no talk relating tostatutes changing to list a percentage. Commissioner Larson summarized that according to theDepartment of Revenue, foreclosed properties cannot be used in evaluation of the assessment.Commissioner Marks inquired if there were other sales within Scott County that could beused in the appraisal. Scott County Appraiser Troy Pint stated that there was only one qualifiedsale in Scott County that could be used. He noted that one of the comparables in Mr. Arsan’sappraisal was not a qualified sale. Commissioner Marks asked why there was no adjustmentfor location considered in the value as the other comparables were in Dakota County. He notedthat both appraisals listed a comparable in Prior Lake with the same value of $90,725.00.Commissioner Fritz moved, seconded by Commissioner VanDenBoom to set the value forPID 25-406-0330 at $93,000.Commissioner Warfield stated that she feels there should be some discussion broughtforward about what point foreclosures can be used as qualified sales. Ms. Geis stated that staffcan have conversations with the Department of Revenue about scenarios such as this. MAAL

PAGE 5June 22, 2010is a statewide organization that helps to drive a revisit of practice and/or technical changes.Staff can initiate discussions through that organization. Commissioner Warfield noted that theappraisal guidelines do recognize the changing market.The motion carried on a vote of four ayes, with Commissioner Larson dissenting.E. Commissioner Larson stated that he would need to abstain from voting on the nextitem, and left the room.David Haspel, PID #25-406-0430, noted that his appeal is similar to the previous case. Thefirst two comparables are located in Dakota County, and he feels that they are not goodcomparables. The other comparable is on Tranquility Court, and shows a cost per square footof $80. Using that amount times the correct amount of his square footage, which is 750 squarefeet and not 808, he comes up with a market value of $60,000. In addition, he has an appraisalat $50,000 done for Wells Fargo in December of 2009. He feels that the $85,000 current valueisn’t close. The 68 square foot difference is for a storage area. In response to Chair Marks’inquiry, Mr. Haspel maintained that the storage area is common area and is not part of theliving space. Mr. Ahmet concurred with that statement.Mr. Thompson noted that staff had not previously been informed of the difference in thesquare footage. Mr. Haspel stated that he would be willing to have the space re-measured byCounty staff. Mr. Thompson stated that he does not feel that taking a flat price per square footfrom one property and applying it to another is an appropriate methodology to determine thevalue. He noted that the comparable on Tranquility Court shows a value of $81,825, which isvery close to the assessed value of $85,400. Mr. Haspel argued that there are no othercomparables to use, and that he feels the $80 per square foot is the only way to determine thevalue.Mr. Pint responded to inquiries from the Commissioners. He stated that comparables 4 and5 were not used in determining the value as they are senior housing, but are there to show onebedroom and similar square footage. Mr. Thompson informed the Commissioners that therewas not available information to extract from sales of condominiums in Scott County to helpdetermine the difference in value for a one bedroom versus two bedroom unit. CommissionerFritz asked if that information would be available from sales of condominiums in Dakota County.Commissioner Fritz made a motion, seconded by Commissioner Warfield to revisit theanalysis of this property with a further adjustment for the value of an extra bathroom and extrabedroom, and an adjustment for location. The motion carried on a vote of four ayes, withCommissioner Larson abstaining.F. Wayne Tonsager, PID #08-915-0183, was not in attendance.G. Chair Marks stated that he has prepared an appraisal for Mr. Kreisssler, so would needto abstain from voting on this item. He turned the meeting over to Vice Chair VanDenBoom,and left the room.Mark Kreissler, PID #25-449-0010, advised the Commissioners that the assessed value forhis commercial property in 2010 was originally $1,950,000. County staff toured the building andthe value was reduced by the Prior Lake Board of Appeals to $1,850,000. He feels it should bereduced further. Universal Valuation Services completed an appraisal, which came back with a

PAGE 6June 22, 2010value of $1,775,000 for this year. He reviewed background information on previous values onthe property. He had met with staff in previous years, but was not able to have the valuereduced. He feels that Scott County should be more proactive about current market conditionsand he questioned staff’s not lowering the value to that of his appraisal.Mr. Thompson responded to Mr. Kreissler’s comments, stating that staff is able to visitapproximately 20% of the county’s properties each year. Between visits, staff makes everyattempt to adjust values based on market conditions. Appraiser Chad Bohnsack reviewed theinformation he used to determine the market value for Mr. Kreissler’s property. He noted thatthe building is an office warehouse building. In determining the value, he did take intoconsideration the 9,000 square foot mini-golf course which does not have a concrete floorunder it and the 2,400 square feet of batting cage area that has sloped floors. These areaswould generally require a level concrete floor for a typical warehouse user. Thus, there was anadjustment made that reduced the value by $100,000. He looked primarily at income analysis,but supported that by looking at comparable sales as well. Both approaches support the valueof $1,850,000.Commissioner VanDenBoom commented that the value of the property did decrease overthe past couple of years. Mr. Thompson confirmed that there is a pending tax court case on the2009 valuation for this property. In response to Commissioner Larson’s inquiry, Mr. Kreisslerstated that the building was designed to be able to convert to office warehouse at some point,though he does not intend to do that at this time. In reviewing the property owner’s appraisal,Mr. Bohnsack stated that the appraisal states a blended rate of $5.40 per square foot comparedto the County’s blended rate of $5.32 per square foot. The appraisal uses a 10% vacancycompared to the County’s vacancy of 5%. The County’s analysis does not include amanagement fee as a tenant would generally pay the management fee. Commissioner Fritznoted the difference in the amount of office space listed in the two appraisals. Mr. Kreissler’sappraisal has 5,422 compared to the County’s appraisal with 2,588 square feet. Mr. Bohnsackstated that he was not able to determine how they arrived at a square footage of 5,422 in theappraisal. He stated that they could have classified the area currently being used as an arcadeas office space.Commissioner Fritz made a motion to set the value of PID #25-449-0010 at $1,805,000.The motion failed for lack of a second.Commissioner Warfield made a motion, seconded by Commissioner Larson to affirm thevalue for PID #25-449-0010 in the amount of $1,850,000. The motion carried on a vote of threeayes, with Commissioner Fritz dissenting and Commissioner Marks abstaining.Commissioner VanDenBoom moved, seconded by Commissioner Warfield to recess themeeting at 8:29 p.m.Chair Marks reconvened the meeting on Tuesday, June 29, 2010 at 6:00 p.m.H. Mr. Thompson provided additional information staff has obtained since the June 22meeting regarding PID #02-909-0021 and #02-909-0023. He reviewed an e-mail from LarryAustin at the Minnesota Department of Revenue, stating that the property would not qualify foran Agricultural classification. Chair Marks read into the record the e-mail from Mr. Austin. Inpart, the e-mail noted that the total acreage is greater than 10 acres and it does not have anintensive or exclusive use of agriculture. On the 46 acres, there are four acres of hay and an

PAGE 7June 22, 2010undetermined number of chickens. It stated that the recommendation to the County Board ofAppeal and Equalization should be to uphold the current classification. The next avenue ofappeal for the property owner would be to file a petition in Tax Court.In response to Commissioner Larson’s inquiry, Assistant County Attorney JeanneAndersen stated that Mr. Schultz has not provided income information other than theinformation provided on June 22, and it does not relate to the year in question. Chair Marksinquired about some specific items and their qualification for an agricultural classification. Mr.Geis stated that staff does work directly with the Department of Revenue and the Department ofAgriculture on clarification for specific items. Commissioner Larson asked Mr. Schultz todescribe any activity that takes place on his property. Mr. Schultz talked about equipment thathe has on his various properties, noted some typical activities such as maintenance of treesand fences, reinforcement of crop in the hayfield that was done last year, and supplementationof feed for the poultry.Mr. Schultz asked for clarification on how much income is necessary. Mr. Thompson statedthat each case is different. You need to show that you are making a living off of farming. Hestated that there were no receipts showing the source of the income, so there is no way todistinguish which parcel any income came from. The income was not a consideration in thedecision. Chair Marks commented that while the Board would like to find a way, there is no waywithin the law to classify this property as Agricultural.Commissioner Warfield made a motion to uphold the Assessor’s recommendation toclassify the property as Agricultural. The motion failed for lack of a second.In response to Commissioner VanDenBoom’s inquiry, Ms. Geis and Appraiser Dan Bethkereviewed the Rural Vacant Land classification and Rural Preserve Program, though Mr. Schultzwould not currently be eligible to enroll in that Program. In response to Chair Marks’ inquiry, Ms.Geis stated that staff can appeal a decision of this Board to the Department of Revenue, whocan overturn a decision. In response to Commissioner Fritz’ questions, Ms. Geis reviewedForest Management, another alternative for Mr. Schultz to apply for through the Department ofNatural Resources.Mr. Schultz showed a document talking about potential changes. Ms. Geis clarified that thedocument is regarding the Green Acres statute. The requirements regarding income have beenremoved since that time. Mr. Thomson reiterated that income was not taken into considerationin the classification. He recommended that unless there is something that makes you thinkotherwise, based on the Department of Revenue’s, you should uphold the classification.Commissioner Warfield moved, seconded by Commissioner VanDenBoom to uphold theclassification for PID #02-909-0021 and #02-909-0023. The motion carried on a vote of fourayes with Commissioner Marks dissenting.I. Commissioner Larson recused himself from voting on PID #25-406-0430.Mr. Pint reviewed additional information on this property, stating that he was able to findtwo new comparable sales to this property. They both have similar bedroom and bathroomcount to the subject and the square footage is closer to the subject property. Based on the newinformation, he recommended that the Commissioners reduce the value to $75,000.

PAGE 8June 22, 2010Commissioner Fritz moved, seconded by Commissioner Warfield to set the value for PID#25-406-0430 at $75,000. The motion carried on a vote of four ayes, with Commissioner Larsonabstaining.Commissioner Fritz moved, seconded by Commissioner Warfield to adjourn the meeting at6:45 p.m.