News Tribune investigation follow-up: St. Louis County Board mixed on assessment fixSt. Louis County commissioners are weighing how to fix major holes in the property-tax assessment system across the county, but it’s still unclear what, if any, changes will be made.
By: John Myers and Brandon Stahl, Duluth News Tribune
St. Louis County commissioners are weighing how to fix major holes in the property-tax assessment system across the county, but it’s still unclear what, if any, changes will be made.
County commissioners have wrestled with the issue for more than 20 years without taking action, and current commissioners appear mixed on whether an overhaul is needed.
The problem, underscored in a county “blue-ribbon” commission report last month and highlighted in News Tribune stories earlier this week, involves hundreds of properties in the county not being assessed, leading to millions of dollars’ worth of property being left off the tax rolls. The result is that some property owners are not paying their fair share of taxes while others are paying too much.
Commissioner Steve Raukar of Hibbing acknowledged that the assessment problems have been brought to the board’s attention several times since he was elected to the body in 1989. But he said the often-proposed solution — moving to a single county-run system of assessment — has never been acted on because there wasn’t overwhelming evidence that the system needed to be completely changed.
Instead, he said, pieces of the system may need to be tweaked.
“We knew there were problems; that’s why we appointed the blue-ribbon commission to look at it and identify where some trouble spots are, where things are broken,” Raukar said. “But it’s premature for me to say we need to change everything. We aren’t going to throw the baby out with the bath water.”
The commission Raukar refers to was set up last summer and in February recommended that the county take over all assessments, ending the roles played by township and city appraisers.
The panel’s report showed large amounts of property have been left off the tax rolls and that some municipalities, including Duluth, take years to reassess property that should be checked regularly.
Assessments are conducted by a patchwork of private, city and county assessors, depending on where people live.
Millions of dollars of property were entirely missed by local assessors in some rural townships. The state Department of Revenue is investigating some of the cases, including an assessor the county believes left $4.2 million worth of property off the tax rolls.
County commissioners are set to discuss the issue at a board workshop Tuesday, with some already calling for the change to a uniform system. Others remain hesitant to scrap the current system.
Commissioner Steve O’Neil of Duluth said it’s clear that enough problems exist to warrant moving to a single, county-run system as the majority of the advisory commission suggested in their final report to the County Board.
“The committee has raised a lot of serious concerns,” O’Neil said. “I’m hoping we can follow their recommendations.”
O’Neil said he has talked with Duluth city officials, hoping the city will agree to come under county jurisdiction for assessments. State law allows Duluth to have its own assessment system, while the county can demand other towns and cities to come on board.
Commissioner Peg Sweeney of Proctor, first elected in 1996, said evidence is mounting that the mix of assessors across the county isn’t working. She said county taxpayers are demanding that everyone be assessed fairly. Similar problems were raised in past years, but the board never followed up, she noted.
“The more I’ve heard, the more I think we need a change. It may well be time now to put this (assessments) all in one place to so we know where the responsibility is,” Sweeney said. “There are clearly compelling reasons we need to do things differently.
“Personally, as a property tax payer, after seeing how much property wasn’t taxed at all, I feel robbed by the people who aren’t paying their fair share.”
But Commissioner Mike Forsman of Ely, first elected in 1994, said he hasn’t seen any evidence that local assessors as a group do worse than city or county assessors. Forsman said he won’t support a single county-run system. Local assessors are more accountable to local residents and elected officials, and they better understand local property values, he said.
“And I’m not sure this is going to save any money at all. I think it could send the cost of assessments way, way up,” Forsman said. “This puts way too much power in one place, with the county assessor’s office.”
Forsman said the vast majority of complaints in the report are against one private assessor, Rick Vidmar, who was a county staff assessor until retiring in 2003, when he started his own business serving rural cities and townships.
“The county assessor’s officer praised him as a great example, and now they are dumping on him like he’s evil, now that’s he not on their staff,” Forsman said.
However, officials note that Mark Monacelli, who oversees the St. Louis County assessment process as its public records and property evaluation director, said that while working as a government employee, the county could more easily monitor Vidmar’s work and could correct him if it was found that he wasn’t correctly assessing properties. That wasn’t true after Vidmar retired and became an independent assessor.
The county can audit independent assessors, but only the state Board of Assessors has the authority to fire or suspend them for poor work
Former St. Louis County Assessor Mary Durward said county commissioners have known for nearly 20 years that serious issues plagued several local assessors. The county conducted a study on the problems in the mid-1990s, said Durward, who held the post from 1985 to 2004 when she resigned, in part because of her frustration with the system. Even then, she said, commissioners ignored major problems, including one local assessor who entirely missed eight cabins on one island on Lake Vermilion.
Durward said she brought the concept of a single county-run assessor system to the County Board on several occasions, but commissioners nixed the idea each time at the board workshop level. The plan never got as far as a board resolution, she said.
“This is nothing new. The commissioners who were on the board back then, like Forsman and Raukar and Peg Sweeney, certainly know what the issues are and what the problems have been. But nothing has changed,” Durward said. “Sweeney was supportive … but the Iron Range commissioners have been willing to put up with the (inequities) because they support the local assessors. The local assessors know a lot of people and they scream really loud when this issue comes up.”
Durward said some commissioners wanted to keep local assessors, even if they were doing a bad job, because the commissioners believed they would value local residents’ property lower than county assessors might.
In 2004, Durward and the county conducted an investigation on Vidmar and sent its findings that he omitted hundreds of properties from the tax rolls to the State Department of Revenue, which does have oversight over local assessors. But the state declined to take action against Vidmar, cities and townships continued to hire Vidmar, and he continued to undervalue or miss improvements, according to county audits and other records.
Mel Hintz, who served as county assessor from 2004-08, said that during his tenure there was no major effort to change the system to a single county-run system and that he never brought a proposal to the County Board.
Hintz laid most of the blame for recurring problems with local assessors on the lack of state agency action when problems were reported. Only the State Board of Assessment can discipline a local assessor.
“A lot of the pressure now seems to be on the County Board. But the real problem here is that the State Department of Revenue and the state Board of Assessment didn’t take action,” Hintz said. “We would report the problems, but the state dropped the ball.”
But John Hagen, director of the Department of Revenue’s Property Tax division, and who took part in the investigation against Vidmar, said he disagreed with Hintz.
In a story published in Sunday’s News Tribune, Hagen said he could not “recall how the situation was resolved.” But in an interview on Friday, he said the state met with Vidmar and determined that suspending him would be unwarranted because they couldn’t determine who was at fault for the missed assessments.
“There has to be a pretty high bar, that it has to be almost intentional neglect of duty or malfeasance where the assessor is purposefully not doing the job,” he said. “There were instances where other local assessors were missing new construction. There were instances where the county missed new construction.”
“It is not just a state responsibility. The county has a responsibility to look at an assessment and correct it as much as they can,” Hagen said.
Missing properties ‘Unconscionable’
Regardless, County Board Chairman Keith Nelson of Fayal Township, first elected in 2002, said it is “unconscionable that we’re missing properties” in rural townships.
Nelson said he’s considering all the issues raised by the advisory committee but hasn’t formed an opinion yet on a county-run system. Nelson noted that the advisory committee’s recommendation was a split decision and not unanimous. Local and Iron Range city assessors on the advisory committee voted against the change.
“We certainly have some issues out in the townships,” Nelson said, but added that Duluth has assessment problems just as serious as missing property — namely, that some industrial property is going a decade or more without being reassessed. He said that any single county-run system must include Duluth to be truly fair across the board.
“I’m certainly hopeful Duluth will engage St. Louis County on this,” Nelson added.
Duluth Mayor Don Ness said the city stands ready to look at a countywide system once the county has a proposal. But he said the plan has to make sense for city taxpayers.
“We’re certainly very open to the discussion. Our interest is having a fair and consistent assessment system across the county. It’s not in Duluth’s interest to have those kinds of discrepancies up north,” Ness said.
Ness said Duluth is moving to address its own issues, such as adding staff and getting current on assessing commercial-industry property within the city.
“We know that’s an issue and we have a plan in place to catch up,” Ness said.
First-term Commissioner Frank Jewell, the newest board member, said he’s waiting until after the March 20 board workshop on assessments before forming an opinion on where to move.
“I certainly have a sense now that we have a problem. The question is how we resolve them so it’s fair to everyone?” he said. “I don’t know the answer yet.”
First-term Commissioner Chris Dahlberg of Duluth said no one should argue with the goal of getting to a fair, timely and equitable system of assessments.
“I see the problem. But a lot of where we go depends on Duluth. It seems logical to have Duluth in this with us,” Dahlberg said. “Nobody likes taxes. But it’s about fairness. If the system isn’t fair, people won’t trust it.”