Several business owners attended the City of Sandstone Truth in Taxation meeting last Wednesday to ask why their taxes were going up so much in the coming year.
Most of the increase can be attributed to one thing — the increase in valuation in commercial property in the city.
Representatives from Sprouts, Movies and More, Sandstone Ace, and Arlen Krantz Ford were all in attendance in the meeting. Later in the meeting, the council approved a levy increase of 2 percent. The county has a levy increase of 6.5 percent this coming year.
Rick Maitrejean, who spoke for the business owners, said increases made this coming year were not reflective of the real valuation on the commercial property in the city. Recent commercial property sales may have skewed the value of property, he said. At the end of 2014, the old Medich Pharmacy building on Main was sold for $146,000 for the new Anytime Fitness business. Also, toward the end of 2014, Casey's bought the old bp gas station property for $470,000. At the time, the county valued the property at $58,600.
The new assessed value on that property has now increased to $422,400. The county previously valued the old Medich building at $133,000 which has increased to $176,600 after an extensive renovation.
Maitrejean said he told the assessor also that if he thought his building was now worth that amount, he could certainly buy it from him for that amount.
County Assessor Kelly Schroeder said the increases were not just based on sales, however, and it was "because these properties were completely erroneously valued previously."
So how much increase in valuation did some Sandstone business owners see in one year?
•Arlen Krantz Ford, increase of 158 percent.
•Transmission Plus, increase of 131 percent.
• Movies and More, valuation increase of 119 percent.
• Amy's Country Cafe, up 88 percent.
• Sprouts, increase in valuation of 71 percent.
• Kettle River Grafix, increase of 55 percent.
Upon physically reviewing the properties in Sandstone, Schroeder said the county "found these properties were significantly under assessed." The county is supposed to physically review the properties every five years which had not been done.
Schroeder said that one functioning commercial property in Sandstone was valued at $4 per foot, which she said was "at least four times two low."
"For example, a typical unfinished pole building is valued at least $10.50 per square foot," she said.
The Department of Revenue is the oversight agency for Pine County assessed values and determines what is considered an "arm length" transaction or a sale that should influence the valuations in a given area. Foreclosure sales, like the old Ben Franklin building, are not included in the determination.
"We completely understand these are very large increases and are difficult to deal with; however, we believe that these values much more accurately reflect what these properties are worth," Schroeder said. "It is the purpose of our department to attempt to equability value all properties within the county; these corrections have resulted in a much more equitable system for the other citizens whose properties have been accurately valued."
Schroeder said she understands that answer will still not ease the burden on property owners, but they had significant savings for several years.
Those property owners who believe their valuation for taxes payable 2017 are incorrect need to appeal their values through the tax court process. More information on that can be found at https://mn.gov/tax-court/forms/
Overall in the county, the value of commercial property increased 5.1 percent this past year. Residential property raised 8.6 percent, according to a handout provided at the Truth in Taxation county meeting last week.