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12-04-2000 CCMMINUTES TRUTH IN TAXATION HEARING DECEMBER 4, 2000 The meeting was called to order by Mayor Torgerson at 5:30 p.m. Present: Mayor Marlin Torgerson, Council Members Jim Haugen, John Mlinar, Kay Peterson and Duane Hoversten. Also present: City Administrator Gary D. Plotz, Finance Director Kenneth B. Merrill and County Assessor Hal Kirchoff. Kirchoff explained the process used to determine the market values and taxes. He also reported on the formulas set by the State of Minnesota regarding tax capacity. The City takes the tax capacity and divides it by the budget amount to arrive at a tax rate. Roger Krantz, 1272 Rolling Oaks Lane NW, inquired how a home would be evaluated that had not been sold for many years, and also how the Assessor would determine the estimated market value. He also wondered how the County rated lots. The County Assessor responded that he would use a cost manual that was set up by square footage and graded according to the quality of the home less depreciation. He noted that the older the home, the harder it was to estimate the depreciation. Economic factors could also affect it. Kirchoff stated there were different lot values throughout the City, and based upon the area, the lots would sell for different amounts. The County Assessor invited individuals to contact him at the Courthouse to request a personal property evaluation. LeRoy Haggart, 1070 West Shore Drive SW, stated his tax had increased $1,100. The Mayor stated this hearing was not for the purpose of discussing property evaluation and tax increases, but rather it was for taxation. He further noted that the residents needed to look at the three entities of school, city and county that affect their taxes. Bob Gehlen, 1110 Hwy. 7 East (business), stated his tax increased 7% although there had been no improvement or change to the property in five years. He asked if there was an average. Gehlen noted that the property located around his business went up 5% and 10 %. Frank Motts, representing the Odd Fellows building, commented that the tax went up on this structure. Merrill informed the audience that the County Assessor would be sending out notices again in spring 2001. Then a Board of Review would be held to review the property values. TRUTH IN TAXATION MINUTES — DECEMBER 4, 2000 Kirchoff reported there are 23 taxing districts within McLeod County, but Hutchinson is the only one where he attends the hearing. Since Hutchinson is the largest city in the county, it is understood that there will be more questions on evaluations. The Mayor stated that after the $76,000 threshold is passed, the tax would go up another percentage. He noted that the evaluation and market value of property are discussed at a public hearing held in the spring. The budget report is presented at the Truth In Taxation hearing. Kirchoff reported that in 1996 -97, the Legislature reduced the commercial and residential property taxes, which created a 15% to 20% tax drop. However, recently the shift has gone to the issuance of large agricultural grants, and the impact has caused a tax increase on commercial and industrial properties. The County Assessor stated the government would like to overhaul the property taxes and remove the schools from this area. The City Finance Director reviewed the City tax statement form and compared the City portion of the general tax levy for the year 2000 to 2001. He also explained the 2001 City budget that contains the debt service portion and the general fund. Merrill explained the special HRA Taxing District that was included in the City's total tax levy. Brenda Ewing, Human Resources Coordinator, gave a presentation on the City's newly adopted Compensation Plan. She noted that a large portion of the City budget is comprised of payroll. Ewing explained the process used to achieve implementation of the pay plan that will be effective January 1, 2001. Roger Stearns, President of Stearnswood, commended the Wage Committee's efforts to develop a new pay plan. He stated that 4% was a reasonable wage increase. However, Stearns did not understand why the commercial tax had increased 13.8 %. He thought it was a large amount for the constituents to pick up. This percentage amounted to approximately a 20% increase on his business. Torgerson acknowledged that the commercial property owners were taking a big hit this year. Merrill explained that the City had kept its tax rate at the same level. The 46% and 45% amounts were remaining constant and 13% was spread over a broader base. He also noted that the new construction had helped to offset the rate. Bob Gehlen questioned if the property tax would double every four years. He stated the tax had increased for the last four years. Merrill responded that the property rates had dropped until this year. However, the formulas are set by the State, and the City and County must follow them. TRUTH IN TAXATION MINUTES — DECEMBER 4, 2000 Motion by Peterson, second by Mlinar to close the public hearing at 6:50 p.m. Motion unanimously carried. The Mayor informed the Council Members that since there would not be a quorum for the special City Council meeting scheduled for 12:00 noon on December 6, 2000, it would be necessary to change the meeting time to 7:00 a.m. Motion by Haugen, second by Mlinar to set the meeting time at 7:00 a.m. for the special meeting on Wednesday, December 6. Motion unanimously carried. The meeting adjourned at 6:53 p.m.