St. Louis County properties not added to tax rolls cost others moneyNEWS TRIBUNE INVESTIGATION: Hundreds of homes and businesses in St. Louis County went for years either off the tax rolls or significantly undervalued, a News Tribune investigation has found.
A $240,700 building on resort property near the Boundary Waters Canoe Area and Voyageurs National Park. A $559,800 four-season lake cabin that rents for $5,250 a week in Cook, surrounded by state forest and with stunning views of Lake Vermilion. A $439,000 addition to the Ziegler Caterpillar Dealership in Buhl.
What do those three buildings have in common?
They, like hundreds of others in St. Louis County — homes, garages, barns, cabins, campers and businesses — went for years either off the tax rolls or significantly undervalued, a News Tribune investigation has found.
Because of that, the rest of the county’s property owners paid more in taxes than they should have, possibly by hundreds to thousands of dollars.
A News Tribune analysis of St. Louis County property records and audits found that building projects worth at least $16 million either weren’t taxed for nine years or were appraised for much less than their actual worth.
But the actual number is far higher. Records the county provided to the newspaper include hundreds of other properties that were undervalued or weren’t taxed at all.
The News Tribune also has learned that the State Department of Revenue is investigating whether an assessor in St. Louis County did not include 51 other parcels worth an estimated $4.2 million on the tax rolls.
”There is no excuse for this,” said Mark Monacelli, the St. Louis County public records and property evaluation director, who oversees the assessment process in the county. “It’s disturbing.”
For years, Monacelli and the county assessor’s department have been aware of the problems with the allegedly missed assessments, the county recorder said. After several attempts to solve the problem, the county formed a blue-ribbon panel to address it.
But, though the county is responsible for how assessments are done, officials have little oversight over the independent assessors hired by small cities and townships.
Among the News Tribune’s findings:
The overwhelming majority of incorrectly assessed properties in the county were done by assessors hired by small municipalities as independent contractors. The local assessors aren’t required to have the training of a county assessor.
Each year, the county is required by law to audit each independent assessor’s work. But if the county finds mistakes, the assessors don’t have to fix them. The county’s only recourse is to have its staff do the work and bill the city or township.
Only the State Department of Revenue can discipline assessors, but only twice since 2005 has the department taken that action — and both times were when assessors failed to pay child support.
The county also can’t tell towns and townships whom they should hire to assess properties, so the townships often go with the lowest bidder, even if county audits show that assessor has incorrectly assessed other properties for years.
Such is the case with the assessor the county’s records show is responsible for inadequately assessing more properties than any other assessor since 2003 — Rick Vidmar. At one point, Vidmar was responsible for appraising more parcels than any other St. Louis County appraiser or local assessor.
Reached for comment, Vidmar, who is now retired, said the records provided to the News Tribune from the county are inaccurate. He said the assessments were done but the county didn’t allow him to enter the records into its electronic database.
“I was locked out of the computer,” he said.
He also threatened to sue the News Tribune.
“If you want to dig this up, you better have one hell of an attorney,” he said.
Many of Vidmar’s assessment issues were first reported by former county assessor Mary Durward, who in 2004 compiled a 100-plus-page report recounting dozens of properties that she said Vidmar under-assessed, didn’t put on the rolls, or said he examined but didn’t.
Vidmar began working as a St. Louis County employee in 1990 and retired from his position as a real estate appraiser in 2003.
Around 2003, the County Board raised the fees the county charged cities and townships for assessment services, said Mel Hintz, who was county assessor from 2004 to 2008.
When he retired, Vidmar started his own assessment business, Vidmar Appraisals, and offered his services to cities and townships throughout St. Louis County.
“Everything was prepped for Rick to go out and do these assessments,” Hintz said. “Here comes an assessor that still has the county brand on him. He has the credentials, and was willing to do it for less.”
By 2004, Vidmar was responsible for appraising more than 10,000 parcels throughout the county. The reason he got so much business, said County Commissioner Mike Forsman, was simple: He charged less than the county.
“(Townships) said, ‘Rick gives a really good deal, much cheaper than the county would give us,’ ” Forsman said.
But with St. Louis County encompassing more land than any other county east of the Mississippi River, Hintz wondered whether Vidmar took on more properties than he could handle.
“I’m not sure if it was humanly possible for the best assessor in the world to handle that workload,” he said.
Durward’s report, which was provided to the News Tribune, alleged that Vidmar also missed more assessments than any other assessor in the county. She wrote that she and two other county employees, Clayton Breimon and Hintz, confronted Vidmar about the problems in early 2004 and told him he was “severely deficient” in several of his jurisdictions.
(Disclosure: Mary Durward worked as a temporary news assistant at the News Tribune following her employment with the county, but did not disclose or discuss the report to News Tribune employees.)
“You indicated that you were aware of the deficiencies, and we expected you to comply,” Durward wrote to Vidmar.
But a month later, Durward wrote that Vidmar still had not made “significant progress” on evaluating hundreds of properties.
Durward’s report documented millions of dollars in property allegedly missed by Vidmar: A car wash and bank in Cook, several new construction projects in Floodwood, cabins in Crane Lake, and numerous homes and cabins in Beatty Township.
“One of our staff (members) in Virginia and I spent a day in Beatty Township,” Hintz said, “and found over a million dollars in new construction that had been built under building permits, so it was right out there in the public arena but had not been added to the assessment.”
County or municipal officials would add properties after reviewing building permits or doing something as simple as driving past the parcels.
In other instances, the report accused Vidmar of not reassessing properties that were assessed at too high a value or classified as a non-homestead when the home could be taxed at the lower homestead rate. The report also claimed that Vidmar didn’t verify hundreds of property sales — a crucial measure in keeping assessments accurate.
Durward sent her report to the Minnesota Department of Revenue, which ultimately oversees disciplinary actions against assessors, saying that in addition to missing properties, “he just doesn’t know how to do the work.”
“He has no experience in assessment of commercial and resort properties,” she wrote. “Regardless of the reasons, the assessment service is not getting done at an acceptable level, and in many cases, not getting done at all.”
She asked the state to “initiate action” against Vidmar for failing to comply with his duties and state law.
That didn’t happen.
John Hagen, director of the Department of Revenue’s Property Tax division, which received Durward’s 2004 report, was asked why no action was taken against Vidmar.
“I can’t recall,” Hagen said. “I honestly cannot recall exactly how that was resolved.”
Some staff members from the Department of Revenue did come to St. Louis County and met with county assessors and some township board members, Hintz said, but they never met with Vidmar.
“What they said when they left was they wanted to meet with Rick, and they wanted to schedule some audit meetings with them, and they wanted to sit in on those audits,” Hintz said. “I did get those scheduled, but then Revenue said they couldn’t make it, so they never followed through on it. So it basically ended there.”
Monacelli, who has been county recorder since the late 1980s, said that when he took over as head of the assessment department in August 2010, he asked the state why no action was taken against Vidmar.
“They said it was a violation of county policy, not state statute,” said Monacelli. “I don’t see how not doing the work or not getting the work done is a violation of county policy.”
‘A terrible situation’
Cities and townships continued to hire Vidmar, and he continued to undervalue or miss improvements, according to county audits and other records.
“The problem never went away,” Hintz said. “Along the line, Rick had a couple of health issues … but the point is that doesn’t excuse the assessor from doing the work. That’s one of the dangers when all these jurisdictions hire a local assessor. You put all your eggs into one basket, and if that person has some health issues, you still have an obligation to make sure the assessment is completed. Whereas, with the county staff, if someone goes down, the work is still going to get done.”
In e-mails he sent to Hintz and other county assessors, Vidmar blamed his health for not meeting for audits.
“I have not refused to come in for the audit,” Vidmar wrote in one e-mail to Hintz in February 2008. “After the hell I was put through by you and your self-serving schedule last fall, my blood pressure goes through the roof when I hear your name or see it written.”
Hintz said the St. Louis County Board was told of the problems but nothing changed.
“It was really frustrating,” Hintz said. “The county is responsible for this, but you’d ask for help, and you didn’t get it.”
Forsman, the St. Louis County Board member who represents a large portion of the area with the unassessed properties, said he first remembers being told about the problems sometime in 2005.
“I was of the belief that the assessor’s office was taking action to correct these things, and taking action to correct these deficiencies as soon as they were made aware of them,” Forsman said.
To make sure properties were eventually put on the tax rolls, the county would send its own staff to assess parcels. They continued to alert Vidmar to missed properties during audits, but by about 2007, records show that Vidmar refused to respond to county assessors’ e-mails asking why work wasn’t getting done, and he wasn’t meeting county assessors for audits.
“And that year there had been very little work done at all,” Hintz said. “He is required to meet with us, but he said, ‘I’m just not going to do it.’ ”
In 2008, letters were sent to all Vidmar’s cities and townships, alerting them of the situation and saying the county would do the work and bill the municipalities.
“Our only recourse was to let town boards know these infractions were taking place,” Monacelli said.
When called to town board meetings, Vidmar would get into debates with County Assessor Dave Sippila, Monacelli said. Some townships would continue to hire Vidmar, who was still assessing by mid-2011, records show.
“The finger was pointing in many different directions,” said Monacelli. “Our assessor’s office was trying to take action, but nothing was being resolved.”
When he took over in August 2010, Monacelli said he met with Vidmar to try to resolve the problems, even going to his home and fixing his computer.
“But we still did have some issues, and at that point things were winding down,” Monacelli said. “If there was work to be done in a township, we’d just go in and do it.”
By the end of 2011, St. Louis County had assessed 17 of Vidmar’s cities or townships, charging them for the work.
Many of the townships appeared to have taken the money they paid the county out of the money they owed Vidmar. That’s the action Cherry Township took against Vidmar, said town Clerk Stephani Hartzell.
“We had problems with him from the get-go,” she said. “A lot of stuff that he said was getting done wasn’t. We had a lot of complaints from residents.”
However, she said the township still paid Vidmar for some of the work he did, rather than fight to get all of their money back.
“The Board of Supervisors felt we’d just be spending more money on lawyers and court fees,” Hartzell said.
Only once, in 2008, did a township ask for its money back from Vidmar, when Clinton Township sued Rick Vidmar for about $5,000 claiming he “did not do the work as contracted.”
“He did not do the work, based on our records, and did not provide the township any evidence that he had done it,” Hintz said.
A judge found for the township.
Several owners of property that didn’t make it onto the tax rolls said they’ve never been told what happened, and that they thought they were paying the appropriate amount.
“It seems like I visited with an assessor every year,” said Karen Whisler, who, with her husband, built a $250,000 home in Beatty Township near Cook in 2006 that wasn’t added to the tax rolls until 2009. The Whislers paid taxes on the property but weren’t assessed for the house until 2011, records show.
Monacelli said it’s unlikely that property owners who didn’t pay enough in taxes would be ordered now to pay their share, nor would there be a rebate for taxpayers who paid too much.
“There’s no way we’d be able to calculate the value,” said Monacelli. “It’d be a terrible situation.”