---

by DENISE MARTIN

Every decision the Supreme Court hands down affects somebody or something— and officials working within the county property tax system are anticipating an impact to their workload due to a portion of the tax delinquent response process recently being ruled unconstitutional.

Deputy Chisago County Attorney Jeffrey Fuge is point person for the statewide issue.  He says right now the only crystal clear thing about this question is the ruling.   He said, at its essence the Supreme Court determined government can not take more than it is owed.  

The hard parts are going to be determining what is “owed,” how to handle the unresolved (unsold) properties and getting the new wording correct for statutory process guidelines.

Counties, which Fuge says are the “chief agency’ for administering tax forfeit policy for the state, anticipate the details could take years to address.

The ruling that triggered a statewide work group, declared that when a jurisdiction (Chisago County) sells a tax forfeit parcel it needs to compensate anything in excess of the costs already into the parcel,  to the person who owned the land when it went tax forfeit.  Previously the property would be sold and the jurisdiction would not only retain the tax delinquent amount, but all the proceeds.

Like all the 87 counties in Minnesota, Chisago staff received a data request to put together a list going back about 15 years. The information was recently compiled and submitted to a district court and depending on what is ruled as “owing” the plaintiff in the original lawsuit, there may or may not need to be class action put together. 

There are 204 Chisago County tax forfeit parcels going back to 2005, which conceivably could be eligible to be included in potential refund claims.

County Auditor/Treasurer Bridgitte Konrad reports the overage amounts of the eventual forfeit sale revenues versus the back-tax amount run from around $25 to $250,000.  An overall total of what Chisago could be looking at crediting to comply with the court is unknown right now;  as it depends on what government jurisdictions are allowed to recoup in costs.  The legislature begins a new session in February 2024 and whatever is done in the House and Senate will also have bearing on refunds.

And, there’s the question, what should parcels sitting in limbo (in probate or trust), expect.  What about property owners whose parcels haven’t sold.  What about landowners who bought their delinquent property back?

Konrad did an analysis and found going back to 2005— Chisago County has placed parcels with a combined sticker price at $10.5 million, in estimated market value, into the forfeiture process.  

The county sold 99 parcels over the years at auction.  

There are 30 in the inventory now, and the process has been put on hold until there’s more clarity.

Furthermore, Fuge explained, is there a viable legal “loss” tied to the value of the gap amount that can be argued?  

Some tax forfeit lands get accepted into local jurisdiction ownership, at no charge, for use as out lots, or stormwater drainage or easements.  Chisago County has 56 parcels bought or transferred directly to local governing jurisdictions, so if reconciling the proceeds and the delinquent tax owed, is ordered to be accomplished this would create an extensive accounting shuffle among governments.

These questions and many other concerns are being looked at by a working group that includes the MN Association of County Officers and the Association of MN Counties.  These representatives will create positions on what to do in the future and how to pay for potential refunds.  Fuge said the people serving behind the scenes are gathering information from across the state and by the end of November there will hopefully be a recommendation.  The idea is to have language fine tuned during January,  for legislative consideration when lawmakers go back in session February.

There were House and Senate bills introduced to revise the existing tax forfeit statute, in 2023, that stayed in committee.

Rep. Dave Lislegard in the House submitted HF 1929,  included wording to allow for costs to be recouped in delinquency proceedings to notify, advertise tax forfeit actions, market parcels, cover attorney fees, and do property cleanup or maintenance.

Sen. Warren Limmer had a stripped down version of revisions in his SF3315  altering who gets the proceeds apportionment.

If you think you have had property sold for delinquent taxes and believe more proceeds were retained than the jurisdiction is entitled to, the time to enroll in a potential class action is not here yet.  Asst. County Attorney Fuge said the class has not been certified yet.  The court has been asked to consider all 87 counties for review in another case in Hennepin County (Tyler v Hennepin)

Ideally the legislature  would identify funding to assist in responding to statewide claims, and also the next session should aim to create a statewide process that addresses property tax forfeiture.

 

---