Board of Equalization - April 13 and May 11, 2021 Minutes

April 13, 2021
The Board of City Commissioners met as the 2021 Board of Equalization at 7:30 o'clock a.m., Tuesday, April 13, 2021, in the City Commission Room at City Hall, Fargo, North Dakota, to consider the 2021 assessments of property in the City of Fargo for tax purposes.
Members present: Gehrig, Preston, Strand, Mahoney.
Members absent: Piepkorn
Member Mahoney presiding.
Director of Finance Kent Costin said the purpose of the meeting is to brief the Board on changes to the City’s tax base and allow for appeals from people who are not happy with the valuation on their property. He said Fargo’s economy is growing and growth in the tax base continues and he commended Mike Splonskowski and his team for a fine job, particularly this year when there are COVID-19 issues to deal with.
PRESENTATION
City Assessor Mike Splonskowski thanked Mr. Costin and the Board for the opportunity to serve as the City Assessor. Action will not be taken at this meeting, he said, and he shared a PowerPoint presentation on the Annual Report that outlined legal requirements, sales, appraisal efforts and sales ratio study, total values, 2021 projected taxable value, exemptions and TIFs and Legislative tax relief. He said there have been effects from the COVID-19 pandemic. He said the lodging tax has dropped significantly and values on hotels and office space will be conservative and monitored. There were record residential sales of 2,375 and the median sale price of $270,000.00 increased about $12,000.00 from last year. Projected taxable value is $660,782,433.00, new growth is 2.2% and existing is 3.8% for a total increase of 6% over last year, he said. Discretionary exemptions nearly doubled due to Block 9 and City Centre Lofts exemptions, he said, and TIFs make up about 0.68% of total tax base, down from 1.5%. He explained Legislative tax relief such as homestead and veterans credits. Citizens can find data at fargoparcels.com, he said, and taxpayers can appeal their valuations. Conservative changes are being made to commercial property to avoid big swings in the stability of valuations, he said, and there may be reductions next year if sales come in well below the mark.
Member Strand said much of the West Fargo School District’s growth is actually Fargo’s growth and he would like to see information on how much of the West Fargo School District is in the City of Fargo. He expressed concerns about whether the increasing residential value trends can be sustained.
INDIVIDUAL VALUATION APPEALS
No one was present at the meeting to appeal their valuation.
Member Gehrig moved the Board of Equalization reconvene at 7:30 o’clock a.m., Tuesday, May 11, 2021.
Second by Strand. On call of the roll Members Gehrig, Strand, Preston and Mahoney voted aye.
Absent and not voting: Member Piepkorn.
The motion was declared carried.
Member Gehrig moved to adjourn.
Second by Strand. All the Members present voted aye and the motion was declared carried.
The time at adjournment was 8:02 o’clock a.m.

May 11, 2021
Agreeable with adjournment, the Board of City Commissioners reconvened as the 2021 Board of Equalization at 7:30 o'clock a.m., Tuesday, May 11, 2021, in the City Commission Chambers at City Hall, Fargo, North Dakota, to consider the 2021 assessments of property in the City of Fargo for tax purposes.
Members present: Piepkorn, Preston, Strand, Mahoney.
Members absent: Gehrig.
Member Mahoney presiding.
INDIVIDUAL VALUATION APPEALS - Testimony on appeals from the floor.
No one was present at the meeting to appeal a valuation.
ASSESSMENT DEPARTMENT RECOMMENDATIONS ON APPEALS
City Assessor Mike Splonskowski said there are about 40 appeals; however, only two need individual action to consider a different valuation. He said the recommendation on the rest is to retain their valuation.
John T. Jones Construction, 2213 7th Avenue North:
Mr. Splonskowski said the owner appealed the value and based on the information received and after looking at sales, a slight reduction was made. He said the recommendation is to adjust the 2021 value from $1,345,100.00 to $1,252,000.00
In response to a question from Member Strand asking the reason for the value being lowered, Mr. Splonskowski said a sales comparison was done. He said an appeal is accepted if the value is not supportable based on their information. This type of property, warehouse industrial, would have had an increase based on the broad-brush index assessment done, he said. The warehouse and industrial property has been the strongest in sales on the commercial side, he said, and each year it is a struggle to keep up with the strength of those sales. Indexing was done on that type property this year, he said, some were indexed as much as 12% to keep up with the market and bring all the values into compliance with State requirements.
Member Piepkorn moved the value of the property located at 2213 7th North be reduced and certified from $1,345,100.00 to $1,252,000.00 for the 2021 assessment.
Second by Preston. On call of the roll Members Piepkorn, Preston, Strand and Mahoney voted aye.
Absent and not voting: Gehrig.
The motion was declared carried.
Herberger’s, 3902 13th Avenue South:
In response to a question from Member Strand asking whether a business going into obsolescence and disrepair changes the market perspective, Mr. Splonskowski said this type of property is out of the norm locally. Gander Mountain and the Sportsman Warehouse are the only two vacant retail big box stores sold in the recent past, he said, and they sold in the range of the mid-50’s. He said dark store theory is that big box stores should be valued as if vacant and ready for sale; however, many taxing jurisdictions are struggling with that idea. The International Association of Assessing Officers (IAAO) standards say an occupied big box store should be valued comparably to an occupied one and a vacant one should be valued as a vacant one, he said. In this case, he said, there are condition issues which were adjusted for and with the two other vacant retail big box stores, he feels the value is supported by the local market.
Member Strand said his concern is that there will be more of these every year and property owners can appeal; however, he cautioned that what is done now sets a precedence.
Mr. Splonskowski said this is not abnormal along the lines of there being condition issues.
Member Piepkorn moved the value be reduced and certified at $4,358,200.00 for the 2021 assessment.
Second by Preston. On call of the roll Members Piepkorn, Preston and Mahoney voted aye.
Member Strand voted nay.
Absent and not voting: Member Gehrig.
The motion was declared carried.
Mr. Splonskowski said the Assessor’s office proposes that the rest of the appeals retain the current value based off information on sales. He said there are some appeals from out of state tax representatives and each year there are more and more of these. He said many times the appeals are just thrown out to look at the value and no support is received, or even a stance to say what the value is, and a requested value is not available. He said most often the Assessors have the support needed for their values or if not, the value is retained.
Member Strand said the Radisson has come to the City for incentives recently.
Member Strand moved to extract the 2021 assessment for the Radisson Hotel property to be voted on separately.
Second by Preston. On call of the roll Members Strand, Preston, Piepkorn and Mahoney voted aye.
Absent and not voting: Member Gehrig.
The motion was declared carried.
Member Piepkorn moved the values of the unresolved appeals for the parcels presented in the packet be retained as recommended by City staff.
Second by Preston. On call of the roll Members Piepkorn, Preston, Strand and Mahoney voted aye.
Absent and not voting: Member Gehrig.
The motion was declared carried.
Radisson Hotel, 201 5th Street North:
In response to a question from Member Preston asking about incentives given to the Radisson Hotel, Deputy Assessor James Haley said it falls under the Renaissance Zone exemption; however, the project is not complete as of the 2021 tax year. When the renovation is complete, he said, the improvement value will become exempt for 2022. The property originally increased in value when a partial new construction value was picked up, he said, and after that point all hotels in the city were decreased 15% for economic conditions, resulting in a decrease for 2021 despite a partial remodel. He said the value is expected to increase when the project is completed; however, the improvement will be exempt for 2022.
Member Mahoney said the request is for a decrease in value of 53% while the Assessment Department proposes retaining the value. He said the past TIF is done and they have come back recently for a Renaissance Zone incentive which they qualified for over a five year period.
Mr. Splonskowski said the Renaissance Zone program allows 100% of the improvement value for five years and does not go into effect until the project is complete.
Member Piepkorn said the Renaissance Zone incentive is limited to only one time.
Member Strand said he would like to do more homework because it seems to him that the hotel is more than a Renaissance Zone incentive.
Member Mahoney said action now is to certify the true value of the hotel.
Member Strand said when there is a 6.38% drop on the heels of substantial investments improving a property, he does not see it as having a reduction when it is being physically improved.
Mr. Splonskowski said there would have been a 15% decrease along with all the other hotels and motels in the City; however, in this case due to some of the increase from the project, it is only 6.38%. He said for the upcoming assessment, there will be another look at all hotels and based off the economic model being used to do the 15% decrease, if it looks like it is up, there will be an increase again.
In response to a question from Member Strand asking what other commercial properties in light of the pandemic received that type of relief, Mr. Splonskowski said they base it on sales and the only indications of negative economic business impacts are the hotels and motels. Lodging tax information was used to do a gross income multiplier, he said, and they cannot go off vacancies happening at this time. He said he arrived at the 15% decrease for hotels based off a 3-year rolling average.
Member Strand said his concern is that picking a single sector to acknowledge harsh impact could bring other businesses to claim impact from the pandemic as well. He said hundreds of business have applied for federal and state programs to get through the pandemic, based on their business models. He said he is concerned about the process, procedure and equity in the hotels getting a 15% reduction.
Member Mahoney said other commercial property owners are not present to seek a reduction, they should attend this meeting and if they feel they missed it, they can appeal to the County.
In response to a question from Member Preston asking about the process and why the income model was used in this case to assess value and not with other commercial buildings, Mr. Splonskowski said they do not usually receive income information on other types of commercial properties to do an adjustment on the income level. He said they are not taxed separately like lodging is, and the Assessment Department is not given that information, nor do they have a way to get it. He said lodging tax is public information and can be utilized. He said they were able to show a slowdown, based on a 3-year rolling average of the financials on hotels and they are not able to get that on other property types.
Member Preston said one difference is that many businesses do not own the spaces they are in, making it a step removed from the value of the property. She would have a question about whether the Herberger’s building discussed earlier would have been treated in a similar manner as lodging.
Member Piepkorn said he finds it interesting that the building was purchased in 2016 for $13 million and they are requesting the assessment value be $4.9 million. He said the discussion is turning philosophical and he would like to vote on the action.
Member Piepkorn moved the current value of $10,801,800.00 on 201 5th Street North be retained for the 2021 assessment.
Second by Preston. On call of the roll Members Piepkorn, Preston and Mahoney voted aye.
Member Strand voted nay.
Absent and not voting: Member Gehrig.
The motion was declared carried.
Mr. Splonskowski said there are four parcels listed that were unresolved and the action requested is to move forward with those appeals to the Cass County Board of Equalization.
Member Strand moved the four unresolved appeals be forwarded to the Cass County Board of Equalization.
Second by Piepkorn. On call of the roll Members Strand, Piepkorn, Preston and Mahoney voted aye.
Absent and not voting: Member Gehrig.
The motion was declared carried.
Approve 2021 Assessment Roll Valuations as Equalized:
Member Piepkorn moved the 2021 assessment roll valuations of property in the City of Fargo for tax purposes as prepared by the Assessment Department be approved as equalized and that the City Auditor's Office be directed to certify the 2021 assessments to the County.
Second by Preston. On call of the roll Members Piepkorn, Preston, Strand and Mahoney voted aye.
Absent and not voting: Member Gehrig.
The motion was declared carried.
Member Strand moved the meeting be adjourn.
Second by Preston.
All the members present voted aye
The time at adjournment was 8:06 o’clock a.m.