Henrietta-Park Rapids study property tax consequences

The Park Rapids City/Henrietta Township Growth Management Task Force talked about the property tax consequences of orderly annexation and began shifting boundary lines Wednesday night.

The task force has met monthly since August and hopes to finish preliminary work in May.

A lot of details still need to be worked out, but so far, there has been consensus the township and city will: 1) adopt a process for coordinated planning and zoning, 2) work out an agreement allowing sewer and water to be extended prior to annexation and 3) arrive at an orderly annexation agreement.

At some previous meetings and again this week, moderator Cliff Tweedale of the Headwaters Regional Development Commission talked about property values and the impact of an annexation agreement on taxes.

"Some people believe we're losing by sitting at the table, that we're giving the township away," said Henrietta supervisor Lowell Warne.

To address that concern, Tweedale has provided maps, showing the percentage of the township's total assessed values by quarter-section (160 acres).

This week, he provided the additional information that since 2001, the township's total assessed valuation has nearly doubled, growing from about $108 million in 2001 to about $203 million in 2006.

Within anticipated boundary lines (drawn and redrawn), Tweedale said, the values are less than 10 percent of the township's tax base and the township's share of taxes are about 10 percent of the total (with the school district's and county's share amounting to much more).

"It's a very small amount that would affect the township," Tweedale reasoned.

If the city's tax rate remains higher than the township's, Tweedale explained, there is a way to compress the rates to reduce the impact on property owners.

He also suggested an agreement might minimize the impact by delaying the split between the city and township by as long as five years.

After that, orderly annexation agreements commonly phase in the city's share at rates, such as 20 percent the first year, 40 percent the second, 60 percent the third and so on until the city receives 100 percent of all the taxes from the area.

One goal agreed upon earlier is the township will continue to have a sufficient tax base to meet residents' needs.

Lowell Warne indicated an agreement might be more township-friendly if it could provide the township with a share of improvements on a parcel during the phase-in, rather than only receiving the share based on the value when the agreement is reached.

"I believe you can do that," Tweedale said. (Both the city and township will have attorneys look over any agreements before they are signed.)

How far east?

Last month, task force participants drew some boundary lines for potential areas to be annexed.

This week, Tweedale asked them to reconsider. The priority had been to consider where growth will occur in the next 15 years or so, most obviously along Highway 34 east and north and south along CSAH 81 (Henrietta Avenue) and CSAH 6.

Tweedale said the task force also needs to take "politics" into consideration.

Looking at some parcels, the township officials thought it might be better to exclude from consideration, city administrator Brian Weuve said, practically speaking, it isn't cost effective to extend utilities down a road if both sides of the road aren't going to help pay.

Henrietta Township supervisor Judi Nelson said she has been thinking about what might happen if the city started developing on the west side and had to concentrate on extending utilities there. "It makes me shy about how far east it's going," she said.

Citizen participant Mark Hewitt said a lot of development on the west side is unlikely. "It's all based on traffic counts," he said. "That's why Wal-Mart is going in where it is. And I don't foresee a change because most of the lakes are in this direction," he said, pointing east.

Regardless, Nelson said she would pull the proposed east boundary line in to CSAH 4 and Township 169.

Most disagreed with that line as an east boundary. "We're looking at 15 years and there are people east of (CSAH) 4 wanting to be in today," said city planner Mike Strodtman.

"It's hard to draw a line without a timeline," Strodtman said.

"If we're talking about 15 years, we're not looking out far enough," agreed mayor Ted Godfrey, predicting "things will boom" along Highway 34 in the next five years.

Tweedale said another way to think about managing growth is to say there will be no more commercial development beyond a certain point.

"If we're too bold, we will have a tough time selling it to our constituents based on past experience," said Warne.

"But you are making the decision based on what you think is best for the whole township," reminded Henrietta clerk Brenda Carpenter.

Warne noted that regardless of where a boundary line is drawn, a request like that could be submitted.

Appearance matters

There may be considerations other than obliging such requests, however.

Weuve said some businesses won't consider a site unless it can be connected to municipal utilities right away.

Godfrey said, in some cases, they will need to weigh consideration of the property owner's wishes against "good annexation."

And council member Clyde Zirkle suggested annexation boundaries should be designed for property values that will go up if the land goes into the city.

"The Highway 34 corridor is the area that we need to control. If we regulate it, it will help and bring property values up," Zirkle said.

As a community member, Hewitt said he is interested in controlling growth along Highway 34 so it remains nice looking. To do that, the area will have to have some kind of zoning. "If you draw the line down (CSAH) 4, it's not going to keep development from happening (farther east) where you have no control," he said.

Or, Hewitt asked, could joint planning extend beyond the annexed area?

State statute appears to lay out a way that can be done, according to information Tweedale provided.

There was some discussion also about the north and south boundary lines and both were pulled in closer to Highway 34.

Council member Nancy Carroll said she believes "anything close to Wal-Mart will become valuable," as the group considered how far to extend the north line.

For discussion, Tweedale asked what if someone requests annexation for a major development before an agreement is in place? He also reminded the group that if there is agreement, the talks shouldn't stop progress, as Zirkle cautioned last month, but there should be agreement about more immediate requests, which the city is already receiving.

Three representatives from the city and three from the township volunteered to serve on a committee to consider the answers to those questions.

If differences can be prorated, Zirkle observed, "We can prove to people that it can work and that it benefits you and it benefits us."

After lines were drawn and redrawn, Tweedale suggested giving more thought not only to the boundaries, but to areas that might be phased in and how they might be divided, for example, one area immediately, another in five years and another area in 10-15.

In one scenario, Hewitt noted, it could be 15 years before the township gives up the total tax base of the area within the boundary lines.

"I think financial impact is not the issue (for either the township or the city)," Tweedale said. "The issue is the potential to encourage growth in a responsible way."

After three hours, the task force decided to meet again May 4 to reconsider the boundary lines and talk further about their options for joint planning.