$146,171 error caught on Knute Nelson’s taxes
A significant error was recently discovered regarding the property tax statement for Knute Nelson Senior Living, a Grand Arbor project.
The market value of the property was computed as if the project was 100 percent complete, when at the time of the assessment, the project was only 25 percent complete.
This equates to a $146,171 mistake in Knute Nelson’s favor.
Alexandria City Assessor Reed Heidelberger brought the error to the attention of Douglas County Assessor Keith Albertsen recently and now the two assessors are working on developing a process to prevent this sort of thing from happening again.
In a letter to the Douglas County Commissioners, which was presented at the county board meeting Tuesday morning, Albertsen said, “This is the first time an issue of this magnitude has occurred.”
He explained how it happened: On a parcel south of Grand Arbor, construction of a new apartment building was started in late 2015. Heidelberger stopped there on Dec. 29, 2015 and collected the information regarding the new construction.
Since the assessment date cut-off is Jan. 2 of each year, the status of the property as of that date is when the property is valued and the status of the property as of Jan. 2, 2016 is what the taxes payable in 2017 are based on, said Albertsen in the letter.
When the data was entered is when the error occurred.
At Tuesday’s meeting, Douglas County Auditor/Treasurer Char Rosenow said that the city assessor valued the property at 100 percent complete, when in reality, it was only 25 percent.
A value notice was sent out in the spring of 2016 and a Truth in Taxation statement was sent out in the fall of 2016, but Albertsen said the county was not notified by the property owner that anything was wrong.
When the actual property tax statements were sent out, a representative from Knute Nelson called Heidelberger.
In an email to the newspaper, Albertsen said, “We could have fixed the problem and corrected the rates to reflect the correct value up to the end of Dec. 2016, but after that, the taxes are calculated and the rates cannot be changed.”
He also noted that there are programs in place to catch large increases that may be due to a keying error. However, a large increase was expected because a new building was being built, said Albertsen.
“There was no way of knowing that the percent of completion was incorrect,” he said.
The county won’t have to refund any money, but the value of the property is reduced, which in turn means the county, city and school district will collect a lesser amount of taxes that they all expected.
Albertsen said the county will be getting $59,340.57 less than it expected, the city will be collecting $50,468.21 less and the school’s portion is $33,682.85 less.
So, where will that money, which has already been accounted for in the budget come from?
The county’s portion cannot be levied. Albertsen said the county’s portion will probably have to come out of the reserves. It is unclear what the city and the school district will do.
At Tuesday’s board meeting, Rosenow asked the board to approve an abatement request from Knute Nelson in the amount of $146,171.
Commissioner Charlie Meyer made the motion to approve the abatement. And although the commissioners didn’t want to approve it, Meyer said, “It’s beyond our control,” and the motion was then unanimously approved.
Chairman Jim Stratton said it was nothing the taxpayer did and wasn’t their fault, but he was disappointed that there was no representation from the city or school district at the meeting.