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04/11/2011 BOE - 29396LOCAL BOARD OF APPEAL AND EQUALIZATION MEETING CITY OF FRIDLEY APRIL 11, 2011 The Local Board of Appeal and Equalization meeting for the City of Fridley was called to order by Mayor Lund at 7:04 p.m. ROLL CALL: MEMBERS PRESENT: Mayor Lund Councilmember-at-Large Barnette Councilmember Saefke Councilmember Varichak Councilmember Bolkcom OTHERS PRESENT: William Burns, City Manager Fritz Knaak, City Attorney Scott Hickok, Community Development Director Darin R. Nelson, Finance Director Mary Smith, City Assessor, stated this meeting is held in accordance with Minn. Stat. §274.01, and the purpose of the Board is to establish a consistent procedure. Only appeals for the January 2, 2011, assessment year will be heard tonight. Ms. Smith stated as the Board, the City Council has the opportunity to change values, and they may affirm, reduce, or keep the same as far as the value goes. In reaching a decision, if the owner of the property feels the Board did not properly assess his property, he may go to the County Board of Appeal and Equalization which will be held at 6 p.m. on June 13. Ms. Smith stated the responsibilities of the local board is to have a majority of the members in attendance to be a quorum. There must be at least one member of the Board at each meeting who has attended the Appeal and Equalization course developed by the Department of Revenue. If the property is omitted from the tax rolls, it may be added by the Board. The Board cannot give a class of property an increase or decrease. It can only change an individual property. If the Board makes reductions to individual properties, the amount of the reduction cannot exceed 1 percent of the citywide aggregate value. Ms. Smith stated if the Board finds a case of undervaluation, it may raise the value of the property; but it must notify the owner. The Board must complete and adjourn within 20 days from the time it convenes. Procedures for the Board of Appeal and Equalization will be to hear the property owner's concerns and accept the information from the appellant. The Board may then direct staff to reappraise the property and report back at the ne�t meeting. Written appeals will be read once the property owners who are present have completed their appeal. Once read, BOARD OF APPEAL AND EQUALIZATION MEETING OF APRIL 11, 2011 PAGE 2 the Board may affirm the 2011 estimated market value, giving the property owner the opportunity to take it to the County Board. Ms. Smith stated the 2010 appraisal consisted of viewing 1,800 properties within the City. These properties were located in the western and center areas of the City. Each of these properties was initially visited and, if the owner was not at home, tags were hung asking the property owner to give them a call. If there was no response from the owner, they would assume some improvements had been made and add value for them. In order for these property owners to appeal their value, staff must go through their property and physically view it. Ms. Smith stated there were 309 residential sales that occurred in Fridley from October 1, 2009, through September 30, 2010. These sales involved single-family homes, townhomes, doubles, and condominiums. Of these sales, 117 were arms-length sales. Arms-length sales that occurred from October through September are used in the State sales ratio study. To bring the City's assessment within the State's recommended range of 90-105 percent, there were decreases on all properties' values. Ms. Smith stated single-family structures received a reduction of approximately 5 percent depending on the style. Townhouses decreased by an average of 4 percent while condominiums decreased 5 percent. Double bungalows received a decrease of approximately 5 percent. This reduction brought the assessment within the State and County's recommendation ratio. These adjustments resulted in an overall decrease in residential properties of 3 to 4 percent. Ms. Smith stated the commercial and industrial sales within the County indicated that values were decreasing. All these properties experienced an average reduction of 5 percent in structure. There was also a decrease in land values of 5 percent. This created an overall average decrease of 1 percent. As a result of apartment sales within Anoka County, decreases were made to the apartment rate. This resulted in an average decrease of approximately 6 percent. Councilmember Barnette asked what an arms-length sale was Ms. Smith replied, a good arms-length sale is where there is no underlying conditions; such as, a buyer needing to sell it right away. A good arms-length sale is between a willing buyer and a willing seller. 1. Fridlev American Le�ion Post 303. Mayor Lund asked Ms. Smith whether she or Lynn Krachmer reviewed the statements from Mr. Watson before tonight's meeting. Ms. Smith replied, yes, she has reviewed the letter. Everything looks okay as far as staff is concerned. She does not see any reason to apply a decrease. Mayor Lund asked if it was her recommendation that it was at fair value now. Ms. Smith replied, yes. BOARD OF APPEAL AND EQUALIZATION MEETING OF APRIL 11, 2011 PAGE 3 Malcolm Watson, Fridley American Legion Post 303, stated he took a look at possible income opposed to value and it came in at such a ridiculously low value that he discarded it. He did look at the neighborhood, and that is one of the factors they take into account. They are across from the trailer park They also have some used car lots or salvage yards in the neighborhood. Their location in his estimation justifies some obsolescence--locational or economic obsolescence. That is a factor difficult to measure, but if they attempted to sell their post, they would have people looking at it as a commercial site; and it would not be very high on anyone's priority because it does require almost constant maintenance. About every other meeting they are finding some more repair work that has to be done on the old building. They have done fairly well as a post, but all of them are hurting and some have closed. Mr. Watson stated they are stuck with tax bills from the state, federal, etc. The one from the City is very minor, but he does feel that their property should be lowered somewhat more than what is proposed at this time. He put in figures based on what he has observed. As a building value about $40 a square foot. It is depreciated value in its current condition, and the land value (the locational obsolescence) at about $5 for a total value of $632,205. The members of his post asked that he appear on their behalf because they are struggling to stay open. They have been there for charitable purposes. Mayor Lund stated they certainly do not want to see the American Legion Post 303 go by the wayside. He cannot use the benefit that the American Legion provides as a consideration for the valuation. The numbers make sense to him. He does not know offhand from looking at this if it should be $5 per square foot. Mr. Watson made a good argument about the obsolescence and the location. It would be more valuable if it were located on Central Avenue. He hoped the appraisers would take that into consideration. Ms. Smith said they have looked at the building and the land and determined the valuation is fair. Mayor Lund asked if it was commercially zoned. Ms. Smith, replied, yes. Mr. Watson stated he was looking at the locational obsolescence, which factor is difficult to measure. You have to find something in an identical-type situation. They are across from the trailer park and the auto park storages, etc. That gets away from the objective which they have to use as appraisers. They are getting into subjective there to some e�tent. They want to be treated appropriately although recognizing that it is a post. It is considered commercial property, but if the post were to fold up and they put a"For Sale" sign out there, that is what they have to look at. He thought they would be lucky to get something over $600,000 for that property, given the location and all other things taken into account. Mayor Lund stated he would hope the appraiser does take that into consideration. They are valid points. He asked Ms. Smith if those elements have been reviewed in her assessment of the valuation of the property. Ms. Smith replied, she feels they have. When it comes to the land value, they basically look at the map and go parcel by parcel. When she heard from Mr. Watson, she queried all the BOARD OF APPEAL AND EQUALIZATION MEETING OF APRIL 11, 2011 PAGE 4 American Legions/VFW's, that type of thing, throughout Anoka County to see where Fridley sat as far as value per square foot. They are right in the middle. She felt looking at that part of it, the City was okay also. She asked Mr. Watson if he was aware of the non-profit exemption that they can use which is due every year by May 1. Mayor Lund stated the City wants to try and be kind to the Legion and other non-profits to the best of their ability. He asked if the value would increase with a new more expensive facility coming in across the street? Ms. Smith replied, no, it would not affect the value. Unless something went from Old Central onto Highway 65, really the land there has pretty much stabilized. Mayor Lund stated, therefore, having older things that exist there now should not bring it down. Mr. Watson replied that is the halo effect. Councilmember Bolkcom asked how much is the Legion's building per square foot. Ms. Smith stated it looks like they have $52.06 per square foot on the building currently. Councilmember Bolkcom stated she does not have anything in front of her saying what it has been valued at. Ms. Smith apologized and stated she did not prepare anything. Councilmember Bolkcom asked if they needed to table this or if she was comfortable with it. Ms. Smith replied, actually she did look at the assessments they had on there. She looked at the different elements of the structure and felt comfortable where she was. She also compared it to other Legions and VFWs throughout the County, and they came in right in the middle as far as value per square foot. Overall she feels comfortable saying the value looks okay to her. Councilmember Bolkcom asked what the City's assessed value on the building was. Mrs. Smith replied it is not separated. She has it as $816,400. Councilmember Bolkcom asked what the price of the land normally was per square foot. Mrs. Smith replied on Highway 65 it could be $10 per square foot. As it goes on the secondary streets, it becomes less. In industrial sections where it is strictly light and heavy manufacturing, it usually runs about $3 to $4 a square foot depending. Councilmember Bolkcom asked, do they need to review this more and bring it back? The number was $816,400; and she asked Mrs. Smith whether they feel comfortable with what they have there? BOARD OF APPEAL AND EQUALIZATION MEETING OF APRIL 11, 2011 PAGE 5 Mrs. Smith replied, she feels comfortable with what she has. She could go back. Councilmember Bolkcom stated, no, but Mr. Watson has it separated out into the building vs. the land, and normally they just see a total. MOTION by Councilmember Varichak reaffirm the valuation of PIN No. 12-30-24-13-0083, the Fridley American Legion Post No. 303. Seconded by Councilmember Barnette. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. 2. Tashitaa Tufaa, 7847-7893 Elm Street NE Mr. Tufaa stated these properties were purchased approximately five years ago for a value of a little over $1 million. They actually purchased them to use as a storage warehouse, and the City of Fridley had zoning issues and they did not use it. They had to leave the property they purchased as a result of zoning and moved back to Coon Rapids where they purchased another property and are running out of that property. When they moved out they had to list it for sale. They listed it for approximately $1.1 million. After four years they have decreased the value to $750,000. They cannot use the property because of the zoning. The property has been empty now for many years. The value is not there. Mayor Lund asked what the valuation on his property was currently. Mr. Tufaa replied, they listed it for $750,000. Councilmember Bolkcom asked what it was on the tax statement. Mr. Tufaa replied it is about $1 million. He apologized he did not bring it with. He stated he actually spoke with Mr. Sutherland, and he told him they should come here. Ms. Smith asked if they are not already taken care of this. Mr. Tufaa replied they did not. Mrs. Smith replied because she thought Mr. Sutherland had called her. She looked into it, made adjustments and got back to him. The changes did go through. Mr. Tufaa said there were actually four different properties listed. One is just an empty lot they have no clue about it. He has a hard time understanding paying taxes on it. It does not have an address. The explanation he was given was when the City of Fridley had the establishments it was a way to divide the lots, not the building. Mrs. Smith stated she remembered there were several lots, but she would like to go back to her office and take a look because she knows she dealt with this property within just the last few months. BOARD OF APPEAL AND EQUALIZATION MEETING OF APRIL 11, 2011 PAGE 6 Mr. Tufaa stated his understanding is the value of the lot that existed without any address on it was what was being taken care of, but actually the value of the property did not go down to $600,000. It is very frustrating for him because he will not be able to use the building for anything, and he cannot sell it. Mayor Lund stated he is going to recommend they give City staff some time to see if it should be reconsidered for a reduction. Councilmember Bolkcom asked if they were also talking about a vacant lot. Mr. Tufaa stated there is one property in there that does not have an address but it does have an ID number. Mayor Lund asked Mr. Tufaa to make sure the City got all the ID numbers. Mr. Tufaa stated he was told one of the buildings is divided into two lots. Councilmember Barnette asked what the zoning was. Mrs. Smith said it was industrial. MOTION by Councilmember Barnette to postpone this item until the April 25, 2011, Board of Appeal and Equalization meeting. Seconded by Councilmember Saefke. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. MOTION by Councilmember Bolkcom receive into the record the letter from Malcolm Watson. Seconded by Councilmember Varichak. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. MOTION by Councilmember Bolkcom to continue the Local Board of Appeal and Equalization Meeting to Apri125, 2011. Seconded by Councilmember Saefke. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. Respectfully submitted, Denise M. Johnson Scott J. Lund Recording Secretary Mayor