Terra Springs condominium complex residents and city and county officials hope to work together to make recent tax hikes on complex units more equitable.
Complex residents told officials last week they face an immediate 17.7 percent average tax increase based on a 19.3 percent average estimated market value increase. Residents and Stillwater city officials hope to make the tax bills more fair and equitable across the five-building complex.
Stillwater City Attorney Dave Magnuson said Terra Springs is unique because it was built with TIF funds and 25-year city bonds valued at $6.2 million to the original developers. The bond must be paid back to the developers.
There is a minimum assessment agreement in Terra Springs complex contracts. Due to the housing collapse from 2009 through 2011, those property values dropped below minimum requirements for the property.
“When values started dropping in 2009, it was very unusual to have a minimum assessment agreement on residential properties. We were not aware of that and we were made aware of it by the end of 2012 and we ended back up at what the minimum assessment agreement was,” said Jennifer Wagenius, Washington County director of Property Records and Tax Services.
This caused the property tax increases for complex residents. Those increases varied building to building according to Terra Springs’ Homeowners Association Representative Tom Lindeen. Building One received a tax increase of 44.7 percent, Building Two a 23.6 percent increase, Building Three a 31.6 percent increase and Building Five a 3.2 percent increase. Building Four remained the same since it reportedly hasn’t reached it’s market value. Stillwater City Administrator Larry Hansen added that conversation from Tuesday’s meeting indicated that this minimum value varies from unit to unit in this complex, too.
“Apparently the units were done in an unfair way as well. The developer added units together, and some residents mentioned that some units don’t exist so there is unfairness in how some of these are valued too.” Hansen said.
Many residents are concern that they were not informed of the minimum assessment clause when they bought their units while earlier purchasers said they were told about it. Other ownerss said they didn’t know about it until they read the fine print of their purchase agreements.
“I’m a little familiar with real estate — my mom’s involved with it — so I’ve heard about it for most of my life” said Stillwater Ward 2 Council member Ted Kozlowski. “We have to have those disclosures, even though it’s in the title work. We have to work with the realtors and business community and try to make it part of the disclosure going forward. If we had that a lot of you would’ve seen this all coming and we might not be in this situation now. The problem is one of awareness. No one knew about this and frankly, that pisses me off.”
“Though I don’t want to sound like a real estate cop-out,” said realtor and Terra Springs homeowner Stephen Lund, “it’s buyer beware, I missed it too. When everyone was learning what was being purchased it’s the homeowner’s responsibility to ask those questions.”
Alexandra Santa Cruz, secretary and treasurer of Building 620, agreed with Kozlowski and Lund but added that the only direction to move is forward.
“Regarding this minimum assessment, I’d like to add a little phrase. Whether a pitcher hits a stone or a stone hits a pitcher, it’s gonna be bad for the pitcher. We’re the pitcher. I don’t know if we’ll get away from honest folks making an honest deal or what they thought was an honest deal.” Santa Cruz said. “What I would personally like to see from the city or the assessor if there’s a unit that is 500 square feet and that person got a minimum assessment value of $128,000 and has now had that value moved up to $300,000, we’d like to correct that. Put the past in the past. If good people could get together, if the assessor or tax ladies or whatever could find a way to re-look at this picture and make it fair — maybe looking into a fair situation with square footage involved.”
City and county staff agreed to more conversations to bring equity and fairness to Terra Springs property taxes. The groups are willing to meet with complex residents to work out solutions if individual buildings work together. Further discussions will occur with the individual boards for each building and county assessors to work out a fair and equitable division of assessments.
Wagenius said for buildings that opt to renegotiate agreements, the city will prove the square footage of all the units and make adjustments as needed but 100 percent of the owners must agree to those changes, which could prove difficult. It might be hard because a change could cause one person to pay more than they already are while others might pay less.