9.e) LTR from Washington CountyWashington
_t County
March 9, 2015
City of Scandia
14727 2096' St. N.
Scandia MN 55073
Re: Tax Forfeited Parcels
City of Scandia:
Property Records and
Taxpayer Services
Jennifer Wagenius
Director
MAR 11 2015
CITY OF SCAM!
Enclosed is a classification listing of tax forfeited land located in your City. The parcels described in
the listing forfeited to the State of Minnesota for non-payment of property taxes.
As required under M.S. 282.01, we request that the City review and either approve the parcel(s) for
public auction or private sale bid to adjacent owners or request a conveyance to your City for an
authorized public use or public purpose. We request a letter listing the parcel(s) approved for sale or
to withhold from sale. If requesting a conveyance, see attached governmental subdivision
acquisition for explanation of the procedure(s). Conveyance may be contingent upon the Department
of Natural Resources' approval of the classification and sale.
If City has no interest the parcel(s), our question is, is the land buildable? This information will help
us determine whether the parcel(s) will be sold at public sale or private sale.
Special assessments that were levied before the forfeiture do not need to be certified to this office.
They were canceled at forfeiture and will be paid from the sale price, if adequate funds are available.
If the sale price is not high enough to fully pay the unpaid taxes and special assessments, some or all
of the special assessments levied prior to forfeiture may be reassessed by the City. Special
assessments that are levied after the forfeiture should be certified to this office. They will be added
to the appraised value and paid from the sale price.
Please be advised that if the City fails to respond within sixty (60) days of the date of this letter, the
classification and sale will be deemed to be approved by the City.
If you have any questions, please feel free to contact me by calling 651-430-8261 or by email at
andrea.banaszewksina,co.washington.mn.us
Sincerely,
Andrea Banaszewski
Tax Forfeited Land Specialist
Enc, Parcel Listing
Governmental subdivision acquisition
Government Center • 14949 62nd Street North — P.O. Box 6, Stillwater, Minnesota 55082-0006
Phone: 651-430-6175 • Fax: 651-430-6178 • TTY: 651-430-6246
www.co.washington.mn.us
Equal Employment Opportunity / Affirmative Action
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Governmental Subdivision Acquisition
Tax Forfeited Parcels
A governmental subdivision may acquire a tax forfeited parcel either:
(1) free of charge as long as it continues to be used for the authorized public use
(2) by paying market value for an authorized public purpose
(3) by paying less than the market value if the intentions for the property meet the requirements of M.S.
282.01, Subd. la, para. (d).
DEFINITION: "GOVERNMENTAL SUBDIVISION". A governmental subdivision may request to purchase a
parcel of tax -forfeited land or to acquire it free of charge with a "conditional use deed." The statutes do not
define the term, "governmental subdivision," for the purpose of either purchasing tax -forfeited land or
acquiring it free of charge with a conditional use deed. (M.S. 282.01, Subd. 1a)
The Department of Revenue (DOR) recommends that the term, "governmental subdivision," be defined in the
same way as the term, "political subdivision," is defined for property tax purposes. This definition includes the
following local taxing districts: counties, cities, townships, school districts, and special taxing districts.
Examples of the special taxing districts that are most likely to purchase tax -forfeited land include, but are not
limited to, the following:
(1) housing and redevelopment authorities (HRA's) under sections 469.001 to 469.047
(2) economic development authorities (EDA's) under sections 469.090 to 469.1081
(3) port authorities under sections 469.048 to 469.068
(4) watershed districts under chapter 103D
See MN Stat 275.066 for a definition of special taxing districts and other entities that apply.
(1) free of charge as long as it continues to be used for the AUTHORIZED PUBLIC USE
A county may convey tax -forfeited property free of charge to a governmental subdivision that uses the land
for an authorized public use.
Authorized public use means a use that allows an indefinite segment of the public to physically use and enjoy
the property in numbers appropriate to its size and use, or is for a public service facility. (M.S. 282.01, Subd.
1a, para (e)). The limitations of authorized public uses are enumerated in statute. The following list details the
only property uses valid under the term "authorized public use":
1. A road, or right -of way for a road. (M.S. 282.01, Subd. la, para. (e)(1)).
2. A park that is both available to, and accessible by, the public that contains amenities such as campgrounds,
playgrounds, athletic fields, trails, or shelters. (M.S. 282.01, Subd. 1a, para. (e)(2)).
3. Trails for walking, bicycling, snowmobiling, or other recreational purposes, along with a reasonable amount
of surrounding land maintained in its natural state. (M.S. 282.01, Subd. 1a, para. (e)(3)).
4. Transit facilities for buses, light rail transit, commuter rail or passenger rail, including transit ways, park-and-
ride lots, transit stations, maintenance and garage facilities, and other facilities related to a public transit
system. (M.S. 282.01, Subd. 1a, para. (e)(4)).
5. Public beaches or boat launches. (M.S. 282.01, Subd. 1a, para. (e)(5)).
6. Public parking. (M.S. 282.01, Subd. 1a, para. (e)(6)).
7. Civil recreation or conference facilities. (M.S. 282.01, Subd. 1a, para. (e)(7))
8. Public service facilities such as fire halls, police stations, lift stations, water towers, sanitation facilities,
water treatment facilities, and administrative offices. (M.S. 282.01, Subd. 1a, para (e)(8)).
CONDITIONAL USE DEEDS. The state deed which is issued by the Department of Revenue (DOR) for this
method of acquisition is commonly called a conditional use deed. A conditional use deed contains two clauses
that distinguish it from other state deeds. One states the authorized public use, and the other declares that
the title is restricted by the authorized public use. This means that the title will revert to the state if the parcel
does not continue to be used for the authorized public use. (M.S. 282.01, Subd. 1c)
The county auditor must present the governmental subdivision's conveyance request to the county board.
Approval by the county board is completed by resolution.
The resolution should contain the following information: (1) a statement approving the conveyance, (2) the
names of the governmental subdivisions, (3) the identification number (PID) of each parcel, (4) a summary of
the authorized public use for each parcel, (5) the names of each board member with an indication of how each
one voted, and (6) the date and signature of the clerk of the county board.
The Property Tax Division, acting for the DOR, will review the information on the form and either approve or
disapprove the conveyance. If the conveyance is approved, the Property Tax Division will execute a conditional
use deed in the name of the governmental subdivision and mail it to the county auditor. The county auditor is
to have the deed recorded before forwarding it to the governmental subdivision.
RULE OF REVERSION. The governmental subdivision has three years from the date of conveyance to
implement the authorized public use on the tax -forfeited land. If after those three years the governmental
subdivision has failed to put the land to the intended use, or has abandoned that use, the governing body of
the subdivision must do one of two things:
1. With the approval of the county board, the governing body may purchase the property for an
authorized public purpose at the present market value as determined by the county board, OR
2. The governing body of the subdivision may authorize the proper officers to convey the land, or the
part of the land not required for an authorized public use, to the state of Minnesota in trust for the
taxing districts.
COST OF GOVT. ACQUISITION FOR USE DEEDS. When an application is approved, the Department of Revenue
(DOR) will issue a state deed ("use deed") in the name of the governmental subdivision free of charge. (M.S.
282.01, Subd. 1a)
• The issuance of the state deed "free of charge" means that the governmental subdivision does not
have to pay the following costs which are charged when the parcel is sold at a private or public
auction: (1) the basic sale price, (2) the state deed fee, and (3) the 3% surcharge.
• The governmental subdivision does have to pay the following costs in order to record the state deed
("use deed"): (1) the state deed tax, (2) the county recording fee, and (3) the agricultural conservation
fee.
The 2010 changes to M.S. 282.01 incorporated a conditional use deed fee. The new provision (M.S.
282.01, Subd. 1g) establishes an application fee of $250 for use deeds, $150 of which is refunded if the
application is denied. The proceeds from the deed fee are deposited in a Department of Revenue
revolving fund and are appropriated to the commissioner of revenue for making the $150 refunds and
administering conditional use deed laws. Conditional use deeds are more administratively
burdensome than other deeds.
(2) by paying market value for an AUTHORIZED PUBLIC PURPOSE
Non -conservation tax -forfeited lands may be sold by the county board for their market value as determined by
the county board, to an organized or incorporated governmental subdivision of the state for any public
purpose for which the subdivision is authorized to acquire property. (M.S. 282.01, Subd. la, para. (b)) The
governmental subdivision must apply to the county board for such a sale.
For a governmental subdivision, the language reads: "...for any public purpose for which the subdivision is
authorized to acquire property." (M.S. 282.01, Subd. la, para b). This means that the only restriction on the
sale of tax -forfeited land to a governmental subdivision is that the parcel must be used for a purpose
authorized by statute, law, or local charter.
The parcel does not have to be available to the general public as it does if it is acquired free of charge. Access
to the parcel may be limited to a select group of people as long as the purpose is authorized by statute, law, or
local charter.
Let's use the example to illustrate this point. A city wants to acquire a parcel of tax -forfeited land to build a
parking lot next to the city's municipal garage. The parking lot is to be used exclusively by the city employees
who work at the garage. The sale of the parcel to the city would not be disapproved. If it pays for the parcel,
the city can use it for an employee parking lot. The general public does not have to have access to it.
COUNTY BOARD APPROVAL. The county board may sell a parcel of tax -forfeited land to a governmental
subdivision or state agency for an authorized public purpose. The verb, "may," indicates that the county board
is responsible for approving or denying each purchase request.
In order to make a decision, the county board has the right to require the governmental subdivision or state
agency to submit a written application containing at least the following information: (1) a description of the
proposed public purpose for which the parcel will be used, and (2) a citation for the statute, law, or charter
provision that authorizes it to acquire property for the proposed public purpose.
Before ruling on a sale, the county board may want to ask the following questions: (1) Is the proposed purpose
authorized by statute, law, or local charter?, and (2) Will the proposed purpose serve the public interest as
much or more than having the parcel back on the tax rolls? If both questions can be answered in the
affirmative, the county board may choose to approve the request. Approvals should be confirmed by
resolution.
Unlike the "conditional use deed", the governmental subdivision or state agency does not need the approval
of the Department of Revenue (DOR) to purchase a parcel of tax -forfeited land. The purchase request must be
made directly to the county auditor and must be approved by the county board.
NO RULE OF REVERSION FOR GOVT. PURCHASES. The rule of reversion (M.S. 282.01, Subd. 1c -1e) does not
apply to the purchase of a parcel of tax -forfeited land by a governmental subdivision or state agency. Once the
sale has been approved by the county board and the state deed has been recorded, the title does not have to
be reconveyed to the state regardless of what the governmental subdivision does with the parcel
(3) by paying LESS THAN MARKET VALUE
Correcting Blight and Creating Affordable Housing
Non -conservation tax -forfeited lands may be sold by the county board to an organized or incorporated
governmental subdivision of the state or state agency for less than their market value if:
1. The county board determines that a sale at a reduced price is in the public interest because a reduced
price is necessary to provide an incentive to correct the blighted conditions that make the lands
undesirable on the open market, or the reduced price will lead to the development of affordable
housing; AND
2. The governmental subdivision has documented its specific plans for correcting the blighted conditions
or developing affordable housing, and the specific law or laws that empower it to acquire real
property in furtherance of the plans. (M.S. 282.01, Subd. 1a, para. (d))
The Department of Revenue has not defined what a "specific plan" is or is not. The county is therefore given
some discretion as to what is specific enough, reliable enough, or extensive enough to meet this requirement.
The Department of Revenue does not need a copy of the plan and it will not directly officiate whether it meets
the "specific plan" threshold. However, the plan does need to be in written form and describe with some
specificity the intentions for the use of the land. Perceived abuses may cause the Department to consider
proposing law changes with more specific requirements. The intent behind M.S. 282.01, Subd. 1a, para. (d) is
to avoid general economic development land speculation. A discounted price for the land is earned by the
public good associated with blight removal or affordable housing. Citing generic pursuits within the entirety of
the Housing and Redevelopment Authority statutes is not sufficient to qualify for the discounted price for the
sale of land. A county that suspects economic development land speculation is a motivating factor for the
application by the governmental subdivision should not approve the sale.
The county must recite the specific statute or law that empowers the local unit to acquire the property. The
Department of Revenue may provide some direct oversight in this area to ensure that there is authority since
the deed and the act of acquisition are immediately relevant.
If the laws outlined above are complied with for a tax -forfeited land sale at less than market value, the
commissioner of revenue must convey the property on behalf of the state by quit claim deed. If the sale is to
a state agency, the commissioner must issue a conveyance document that releases the property from the trust
in favor of the taxing districts. (M.S.282.01, Subd.1a, para. (d))
Conservation Purposes
Conservation tax -forfeited land may also be sold to a governmental subdivision of the state for less
than its market value for the following purposes:
1. Creation or preservation of wetlands
2. Drainage or storage of storm water under a storm water management plan, OR
3. Preservation, or restoration and preservation, of the land in its natural state.
(M.S.282.01, Subd. la, para. (h))
The options under M.S. 282.01, Subd. la, para. (h) require a restrictive covenant for 30 years. The lands may
be reconveyed back to the state, at which point the restrictive covenant would cease. If reconveyed lands are
to be sold, the county board can take into account the original amount paid when setting the terms of the
sale. If the reconveyed lands are unplatted and located outside of an incorporated municipality, the sale is
subject to the approval of the commissioner of the Department of Natural Resources if the commissioner
determines there is a mineral use potential.
Other Information
COST OF GOVT. PURCHASE. (applies to options 2 & 3) A governmental subdivision is required to pay not less
than the value of the property as determined by the county board plus the other costs that would be charged
to any other purchaser. In most cases, the value of the property will be the same as the basic sale price which
other purchasers must pay. The county board makes the final decision after negotiating with the
governmental subdivision.
The specific costs that must be paid by a governmental subdivision or state agency to purchase a parcel of tax -
forfeited land are outlined below. The list assumes that the basic sale price is paid.
1. The Basic Sale Price
2. The State Deed Fee
3. The 3% Surcharge
4. The State Deed Tax
S. The County Recording Fee
6. The Agricultural Conservation Fee