By Tom Larson
The Stevens County building advisory panel heard plenty of numbers at its meeting Monday night, but the members left the two-hour session wanting more.
The Stevens County Citizens/County Board Facilities Project Advisory Committee met with county Assessor Judy Thorstad, Auditor/Treasurer Neil Wiese and financial experts advising the county on its $15 million building project.
The group discussed the county's tax system and the impact of possibly selling General Obligation Bonds of about $9.85 million to pay for the jail portion of the project, which also includes renovating the courthouse and building a law enforcement center.
The committee members reviewed a sampling of county properties to gauge the tax impact, and they asked to see more detailed figures on what the owners pay now, and what their total tax bill is when school district and other levies are added in.
At its April 27 meeting, the panel is expected to review a jail operating budget with Stevens County Sheriff Randy Willis, and hear from speakers connected to jail operations in Wilkin and Traverse counties, and from Roberts County in South Dakota.
Thorstad briefly explained the sometimes complicated process her office uses to value and classify county property.
Because of sales from October 2007 to September 2008, agricultural land value will be higher in the coming year, but it's difficult to say what that will mean for tax rates because it's not known how other factors -- such as school levies and state aid amounts -- will affect the bottom line, Thorstad said.
"There are a lot of pieces to the puzzle," she said.
Wiese explained tax capacity and rates applied to various property classifications. But he, too, said it's difficult to predict what will happen with future tax rates because the state's tax code has many rules and other factors, such as ag credits, are part of the process.
"It gets very, very complicated," Wiese said.
The county's total tax capacity is about $10 million, and in 2008, ag land represented about 57 percent of the county's net tax capacity. Residential homestead property represented about 22.5 percent of the tax capacity, with the remaining 22 percent being industrial and commercial property, non-homestead property, such as rentals, and other classifications.
Wiese said the county currently has about $8 million in reserves, and that the asset value of the county is about $35 million -- about a third of that is kept liquid and the rest is invested or represented in assets such as buildings, roads and bridges.
The county had about $9.8 million in reserve in 2008, but that about $1 million has been spent on planning the current building project.
Current county expenditures are about $12.6 million per year, with about $4.7 million coming in through property tax levies, Wiese said.
Asked how the state's budget deficit will affect the county, Wiese noted that the county lost about $160,000 through Gov. Tim Pawlenty's "unallocation" of aid late last year, and Wiese predicted the county's aid might drop between $250,000 and $500,000 in the next biennium.
Carolyn Drude and Bruce Kimmel, of Ehlers and Associates, explained the process of selling bonds, debt limits, ratings agency procedures, and how the county is positioned should it move ahead with a bond sale for the jail.
Standard & Poor's currently has the county rated at AA-minus, which is a solid rating, and the rate improves to AAA because the state's credit rating "backstops" the county's rating. Minnesota has a nation-wide reputation for selling secure and profitable municipal bonds, Kimmel said.
Standard & Poor's justified the rating because Stevens County has a stable economy with a focus on trade and agriculture, budgets conservatively and maintains consistently strong reserves and has moderate debts levels. The county currently has no bonded indebtedness.
Drude also noted that, because of the economic downturn, the competition for bids and lower interest rates have reduced the expected principal and interest total of about $13.97 million on $9.5 million in bonds to be about $1 million less than it was when the project was approved last summer.
The bonds would result in an increase of about $71 per year for a residential homestead property with a taxable market value of $100,000, and $123 per year for a residential homestead valued at $175,000.
Commercial/industrial property valued at $200,000 would see an increase of $229 per year. Ag homestead property valued at $400,000 would see an increase of $176 per year.
Non-homestead ag property valued at $2,000 per acre would see an increase of $1.41 per acre, and a property valued at $2,800 per acre would see an $1.98 per acre hike.
Here are examples, using existing properties in the county, of the tax impact of the jail bonds:
Two commercial parcels, in Morris, valued at $261,400 with a tax capacity of $3,926. Estimated tax impact: $277 per year.
Residential homestead, in Morris, valued at $188,000 with a tax capacity of $1,880. Estimated tax impact: $133 per year.
Ag non-homestead of about 196 acres, in Morris Township, with a value of $385,000 and a tax capacity of $3,855: Estimated tax impact: $272 per year.
Ag homestead of about 635 acres, in Rendsville and Donnelly townships, valued at $1,430,600 with a tax capacity of $9,856. Estimated tax impact: $695 per year.
Residential homestead, in Chokio, valued at $177,300 with a tax capacity of $1,773. Estimated tax impact: $125 per year.
Ag non-homestead of 899 acres, in Stevens Township, valued at $1,866,500 with a tax capacity of $18,665. Estimated tax impact: $1,317 per year.
Commercial property, in Hancock, valued at $996,000 with a tax capacity of $18,432. Estimated tax impact: $1,300 per year.
Commercial property, in Moore Township, valued at $377,000 with a tax capacity of $6,790. Estimate tax impact: $479 per year.
Residential homestead, in Donnelly, valued at $103,100 with a tax capacity of $1,031. Estimated tax impact: $73 per year.
Ag homestead of about 554 acres, in Rendsville Township, valued at $1,139,600 with a tax capacity of $6,947. Estimate tax impact: $490 per year.
Residential homestead of 2.3 acres, in Hancock, valued at $121,500 with a tax capacity of $1,215. Estimated tax impact: $86 per year.
Committee member Sheldon Giese said he wants to know what the properties pay now, before additional taxes would be levied to pay for the jail bonds.
Wiese said he will break out those numbers, and also will calculate the total bills including school, city and other levies that apply.