LaSalle Lake proposal could cost taxpayers
A hearing next week in a tiny township hall could turn into a major referendum on whether poor rural counties and a state $6 billion in debt can afford the cost of preserving its natural resources.
Hubbard County and Fern Township officials are being asked to ponder how much it will cost taxpayers to set aside nearly 1,000 acres of forest, water and a resort on LaSalle Lake in the northwest tip of the county.
The Lessard-Sams Outdoor Council, which oversees funding from the 2008 Legacy Amendment, is proposing buying it for an addition onto Itasca State Park, or another DNR scientific and natural area.
It is one of two-dozen land purchases being contemplated statewide.
It would be accomplished through the Trust for Public Land, which would be the actual buyer using Legacy funds.
A wise buy?
The potential loss of tax revenue locally, estimated around $42,000, to a poor county and an even poorer township, along with the inflated price of the land being purchased is causing Hubbard County officials to blanche.
The township could lose as much as $6,000 depending on how the property is used. How will the township provide services to its residents with a substantial drop in tax revenues?
And for Minnesota residents who voted to tax themselves 3/8 of 1 percent in sales tax to fund the Legacy Amendment in 2008, some are now wondering what the rationale is if preservation takes land off tax rolls and they get hit a second time covering for the loss of that revenue?
"Another DNR land grab," is how Hubbard County board chair Lyle Robinson characterizes the deal.
"And the DNR is trying to ramrod it through," worried commissioner Cal Johannsen at an Oct. 6 board meeting. The parcel of land is located in Johannsen's district.
The property and the price
LaSalle Lake is one of the deepest in the state, rustic and beautiful, everyone involved agrees.
According to Robinson, about $1 million of buildings, the LaSalle Camping and RV Resort, are situated on the 953.71 acres under consideration. The resort is owned by Walker developers Jay Echtenkamp and John Zacher.
The financial viability of the business, as with many northland developments, may be at the heart of the developers' wish to get out from under it, some commissioners say. One board member suggested the property was close to being foreclosed on.
Echtenkamp, in an interview last summer, would not discuss anything to do with a possible foreclosure. Preservation of the adjacent land is the primary reason, he maintains.
Robinson said the pair purchased the land for $2 million several years ago.
In 2007 the developers approached the Hubbard County board for a land exchange in Fern township which would have allowed for expansion of the RV park. The board took no action. The land sits 10 or so miles northeast of Itasca State Park and features an indoor pool, recreation area, "an 18-person hot tub," lodges and amenities for camping.
Early talk was that it would be managed by Itasca State Park if purchased. Now commissioners are unsure how or who would run it.
DNR Fisheries supervisor Doug Kingsley said he imagined it would likely be managed by DNR's parks division.
The developers' website states "LaSalle Camping and RV Resort is located in northern Minnesota on over 1,000 acres of beautiful birch and pine forest surrounded by government land.
"Our resort surrounds LaSalle Lake which has 242-acres and over 3.5 miles of shoreline. LaSalle Lake is the second deepest natural lake in Minnesota with depths of up to 224 feet.
"We have 2 and 3 bedroom lodges available for weekly rentals Saturday through Saturday and wooded extra large (50' by 100' deep) RV sites."
Hubbard County values the property at $4.8 million, including the buildings.
According to law, the developers must get an outside appraisal before the Trust for Public Lands can make the purchase.
That appraisal was $8.49 million, twice the county's valuation.
"I don't know where that number is originating from," Hubbard County Auditor Pam Heeren wrote in a report she prepared for the county board.
"You go in and you raise that bare land to that value, all the neighbors aren't going to be very happy at all," Robinson maintained.
"You start using those values for that land there's gonna be a lot of complaints up there," he insisted.
PILT or no PILT
When states or their agencies buy up county land, theoretically the counties are reimbursed for the loss in tax revenue by a system called Payment in Lieu of Taxes.
According to Heeren, after the state gets its appraisal, by law it is not allowed to pay more than that appraisal value unless the buyer can prove special circumstances. Even then, the state cannot inflate the purchase price more than 10 percent over that value.
"The rule of thumb for the PILT is $1 million of value equals $7,500 of PILT," she wrote Robinson last month in the report he requested on PILT. That is supposed to cover the cost of services provided for non-taxable lands.
But Robinson and other commissioners maintain that won't make the county whole.
"The formula used by the DNR for calculating this amount would be based on what the property is appraised for through an appraisal procedure they would review," said Bob McGillvray, project manager for the Trust.
"Considering various assumptions at the bottom of the range of what this property would be acquired for would result in PILT payments that are substantially more than the county is receiving now."
But Heeren, in her report, said if the land is designated a certain way there could be a big difference in what the county stands to recoup. Currently the real estate taxes generated are $42,700 for all taxing districts, she said.
"If it was considered Acquired Natural Resources land it would be paid at 75 percent of value, or $36,100, which is a loss of $6,630 in real estate taxes," her report states.
"If it was considered DNR Administrative land it would be paid by the acre, 953.71 at $.624 or a total of $595.12."
At the last county board meeting, Heeren admitted the potential loss to Fern Township "is huge for a township that size."
Fern Township officials had not returned calls seeking comment on the matter by press time Friday.
At the last board meeting, Heeren said she'd spoken to the state's PILT expert, who reported the land use for LaSalle has not been determined. That will be the determining factor in what the county and township are reimbursed.
"The county won't be that bad but the township will hurt if it's an SNA (scientific and natural area)," Heeren said.
Last year the county received $671,224.19 in PILT. Forty percent of that goes to the county's general fund to offset the levy. A portion goes to the Forest Development Fund and some goes to the townships based on the number of acres in that particular township.
Robinson said whenever Minnesota gets into a pinch for money, PILT pools of money are the first cut. There's no guarantee it would be there for the future, he maintains.
The zero net loss theory
Beltrami County recently put the kibosh on a similar proposal to purchase land near Balm Lake, which has a mile of undeveloped shoreline in that county.
Beltrami County commissioners rejected the sale because it took too much property off the county's tax rolls.
County commissioners discussed a "zero net loss" approach to DNR land acquisitions, which Johannsen and Robinson are considering.
"Counties are going to a zero net loss for taxable land," Robinson said at the last board meeting.
"If the DNR wants to buy it must trade a comparable piece," Robinson maintained. "It's something that's become a problem for all counties."
While Johannsen believes Itasca State Park makes money for the state and brings people to the area, he nevertheless wonders if an even bigger park will generate more revenue locally.
And at the rate Legacy funds are accumulating, Robinson said more such issues could come up.
"They're collecting money in this fund at an alarming rate but the economy..." he said shaking his head.
"They've got so much money they don't know what to do with it," Johannsen said.
The commissioners believe the state should get involved in an overall policy review of the acquisitions and reimbursements.
Robinson has also suggested Legacy funds should be spent to pay the future tax losses to counties on the properties acquired.
"The reason it's so beautiful is that it's out in the middle of nowhere and no one in their right mind would go there," Robinson said. "Pristine wilderness so let's go ruin it."
The meeting is Nov. 30 at 7 p.m. in the Fern Township Hall.