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Property tax winners and losers

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news Detroit Lakes, 56501
Detroit Lakes Minnesota 511 Washington Avenue 56501

Most people in Becker County will see their property tax bill stay the same or even go down a bit next year.

But changes in the state-orchestrated system have created some definite winners and losers, with some reporting big increases in their tax bill, while others (disabled veterans) are eligible to pay nothing at all.

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Lakeshore takes a hit

For years, the state has shielded land that has rapidly grown in value, notably lakeshore, from the full impact of property taxes.

But no more. The "Limited Market Value" safety net has been removed for property taxes payable in 2010. Those property owners will now pay full value.

In Becker County, about $340 million worth of value will no longer be sheltered by Limited Market Value (which was, in effect, subsidized by everybody else).

Those once-sheltered property owners will feel the pain to varying degrees next year.

"We're not generating any new revenue, I don't want to see people misled," said County Assessor Steve Skoog.

"All it did was create a shift -- those people are paying more, so other people will probably pay less."

New construction

In spite of the poor economy, there was about $55 million in new construction this year, which lowers taxes for everyone, since it increases the tax base.

That's down from a high of about $90 million in new construction in 2008.

There was also some $30 million in valuation growth for existing property, a relatively small increase.

"We didn't really change a lot of value for payable 2010," Skoog said.

The new construction and higher values amounted to about $85 million, for a total estimated market value in Becker County of $4.68 billion in 2010.

Disabled veterans

Fully disabled veterans are eligible to pay no taxes on up to $300,000 in homestead property under state law.

"If they're eligible, they can get out of property taxes entirely," on a house, garage and one acre homestead, Skoog said.

Qualifying veterans with a 70 percent disability rating or higher are eligible for a market value exclusion of $150,000.

For 2010, that means about $14.2 million in value will be shifted to other taxpayers in Becker County.

Check your tax bill

The county assessor's office uses real estate sales data from Oct. 1, 2007 to Oct. 1, 2008 to determine values for the 2009 assessment for taxes payable in 2010, Skoog said.

He says people should pay attention to the notice mailed out in the spring to property owners about their proposed taxes. Those numbers are used to spread taxes the following year. If you have questions, contact the assessor's office or attend the Local Board of Appeal and Equalization in the spring.

"If we don't hear from them, we have to assume they agree with the valuation and the assessment," Skoog said.

Big changes for ag land

"It used to be if 10 or more acres were used for agricultural purposes, the whole land got the benefit of the ag class," Skoog said.

That allowed farmers to pay half the residential homestead rate on a major portion of their property, which was all defined as ag land.

But assessors had to categorize rural land differently last year, by determining its use.

Now rural land (whether it's part of a farm or not) that is not used for agricultural production is classified as "Rural Vacant Land."

If you qualify for an ag homestead, that "rural vacant land" will continue to be taxed at the old ag rate -- for now, anyway.

But hobby farmers, beware: if you don't qualify for an ag homestead, that "rural vacant land" will be taxed at twice the ag homestead rate. In fact, so will land classified as "Productive Agricultural."

The state is essentially saying you have to actively farm to qualify for low agricultural tax rates.

"Green Acres" changes

Another big change implemented by the state involves the "Green Acres" program, designed to shelter agricultural land from "economic forces over and above what the ag value would be," Skoog said.

Essentially, it was intended to save farmers from being taxed out of agriculture because their farmland included prime development property close to town or on lakeshore, Skoog said.

"They really changed how Green Acres is given," he added.

The state will now set county-by-county ag values based on a formula it developed.

For Becker County, the values are set at $2,000 per acre of tillable land and $1,000 per acre of pastureland.

Skoog said the county's values on tillable land won't have to be adjusted much, but current values on pastureland are at $1,000 to $1,500, so some will have to be adjusted downward.

The state has also expanded the Green Acres program to cover lakeshore and wooded pastureland when their acreage value exceeds those predetermined amounts.

There are several new forest management programs that either provide a lower tax rate or cash payments per acre for those who agree to manage the land for preservation.

And there is a Rural Preserve program for those who were in Green Acres but no longer qualify. The land will continue to be treated like Green Acres, but property owners will need to develop a plan through the Becker Soil and Water Conservation District, Skoog said.

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