Farmers who feel overtaxed want refunds from county in ag assessment spat

Shannon Marvel
Farm Forum

Local farmers who think Brown County has overtaxed their agriculture land are hoping to see refunds in the near future.

That, though, is yet to be determined.

Carson Storm, a retired farmer who owns land near Bath, said he never knew the county was assessing his land at 18 percent above top-dollar value as determined by the state using the production model for ag land.

“I have been sick over the increase in property taxes on the land over the past five years or so. My property is cash rented for crop production only, and not all of the acreage is farmable. The

prices for corn and soybeans have been low the last couple years, and every year there has been another significant hike in personal property taxes. If you ask farmers in the area, they are not willing to pay the cash rental rates per acre that they did four or five years ago when there were good crop prices. And I can’t blame them,” Storm said.

In other words, the amount he can get for renting his land is going down and his property taxes are going up. And that’s what has him upset.

That said, the situation isn’t simple.

South Dakota changed the way it determines the value of ag land from a process based on market sales to one based on productivity about a decade ago. The top per-acre value for each county is determined by the state Department of Revenue. It’s based on gross revenue per acre during the previous eight years. The number is different for each county and changes from year to year. Brown County’s top rate under the productivity model is $3,620 this year.

Before the change to the production model, state lawmakers from the area and county officials were clear about one thing: ag land values in Brown County were going to go up considerably over the course of several years.

And they have.

Brown County Interim Director of Equalization Gene Loeschke said ag land assessments have gone up the limit each year under the production model. He said this is the first year the county has reached “full productivity.” In other words, the value of ag land in Brown County is now where it should be under the system.

The result, he said, is that assessments should now follow the state’s per-acre totals without an extra boost added in past years to get values in line with the production model.

But in recent years, landowners in 15 southern Brown County townships have been paying more than the top dollar set by the state. That was done using a map that broke the county into three neighborhoods. It was crafted so that land that was likely to sell for more was assessed at a higher level — 118 percent of top-dollar value.

Other townships in Brown County have been paying either 97 percent or 87 percent of the state’s top number.

After a recent review, the state ruled the county’s map cannot be used. Counties can create neighborhoods, but they have to be based on soil quality, not land sales, per the review.

It’s the in-county discrepancy that has some farmers upset — even if they can’t blame the county for all of the increases.

“Several years ago when I received notice from the assessor of another property tax increase, I called and talked to my township representative (Todd Oschner), who happens to be my renter. I also called him a year or two later when there was another such notice,” Storm said. “I had the impression talking to him that the tax hikes were mandated by state legislation and that it would be a difficult and likely unsuccessful effort to appeal. My renter is a decent and honest man, and I do not doubt his sincerity.

When Storm went to see Loeschke, who was one of the county’s assessors at the time, to ask about appealing, Storm grew discouraged.

“Last year, when I got my property tax increase notice, I went in the courthouse March 14, 2017, and spoke to Loeschke at the counter of the Director of Equalization’s Office,” Storm said.

“I told him point blank that I am nearing a point where I am not going to be able to live off the cash rent I receive on the land because of the property tax increases. He told me that this was determined by the Legislature, and, if I remember right, I believe he told me that only a few people had appealed and it went nowhere.”

Loeschke said he cannot recall the conversation with Storm, but noted in an email that there have been very few appeals of ag land values in the past five years.

“I don’t have an exact number, but the ones that have appealed have primarily been resolved between our office and the township equalization boards. I can think of only one appeal on ag land that has gone to the (state) Office of Hearing Examiners in the past five years,” Loeschke said.

Mike Crady, who owns land in Aberdeen Township, said he also feels as if he’s being squeezed for cash by his property taxes.

He said he once went in to speak with former Director of Equalization Director Mary Worlie, who had that job for years until retiring last year.

“I’ve always thought it was a travesty how our ag taxes are going up every year. I jumped Mary about it one time and she said it’s the sales, but I told her it shouldn’t have anything to do with it (under the production model). I’ve been upset about it. I don’t know how in the world they can assess at 118 percent,” Crady said.

Worlie declined to be interviewed.

“There’s just no money left once you pay your taxes,” Crady said. “It makes me wonder if I want to keep owning this stuff or get rid of it.”

During the commission meeting two weeks ago, Aberdeen attorney Harvey Oliver spoke with commissioners to see whether they would offer refunds to ag land owners whose land has been overassessed. He said credits on future property tax bills would be an option.

Oliver said he spoke with state Attorney General Marty Jackley about how the issue should be resolved.

Jackley said on Feb. 23 that he is willing to work with Brown County State’s Attorney Chris White and the commission to see how to fix the problem, though he has not spoken with commissioners since he visited with Oliver.

Commission Chairman Doug Fjeldheim wrote in an email that the county will work to resolve the issue, though just how is not yet known.

“As far as what is going to happen in regards to the assessments, the commission is working with the state’s attorney and (state) Department of Revenue and whatever outside resource with experience in taxation is available to resolve this issue,” Fjeldheim wrote in an email Feb. 21.

Simply issuing refunds likely wouldn’t be simple at all. The county collects all property taxes, but then distributes the bulk of them to other divisions of government. That’s something Commissioner Duane Sutton mentioned at the Feb. 20 meeting.

In January, former Director of Equalization Michael Hauke Jr. — Worlie’s replacement — claimed that the county had overtaxed ag land in the 15 townships by millions of dollars during the past five years. He called the county’s three-neighborhood map improper because it took into account land sales.

Hauke was fired during the Jan. 9 commission meeting. But his concerns led to the county requesting that the state evaluate its ag land assessment plan.

The Department of Revenue’s evaluation found some truth to the concerns raised by Hauke. It nixed the three-neighborhood map and ordered that the county not value land above the top-dollar figure determined by the department.

Fjeldheim said he could not comment on the firing of Hauke because it was a personnel matter.

Hauke said he feels vindicated by the state’s findings.

“They say there’s no recourse (for taxpayers), but in the next 90 to 180 days, you will see aggrieved taxpayers seeking justice, which is to (say filing lawsuits) in the circuit court and to go to the Supreme Court,” Hauke said. “They wanted to hire me, but they didn’t want to give up the same way as it has always been run.”

During a January commission meeting at which Hauke was not present, Commissioner Tom Fischbach asked whether Hauke had done anything to address his concerns.

“If we were doing this illegally, according to our former assessor, why didn’t he come in here, if he’d been here a year, and tell us it was illegal instead of going to the paper?” Fischbach asked.

Hauke contacted the American News after he said he was told to resign or be fired.

At that same January meeting, Commissioner Nancy Hansen said that Hauke had never mentioned his concerns, despite her frequent visits to his office.

Other commissioners also said they were unaware that they shouldn’t be using the map.

Hauke claims he was never told why he was fired, though acknowledged the county had the right to let him go.

However the communication problems started, they were never addressed or fixed. And now the county is in a quandary.

Oliver, a former Brown County state’s attorney, was clear when visiting with the commission on Feb. 20 that he doesn’t think the county used the map to deceive landowners.

Loeschke hopes he has worked out a fix for the future. He has implemented a map that has four neighborhoods based on soil quality that will be used to assess ag land this year for property taxes payable in 2019. He said the state has given verbal approval to the map.

Crady offered a final solution to the overtaxation troubles.

“Don’t write me a credit, send me a check,” he said.

“It’s not the farmers’ fault — they’re getting hosed on this big time,” Crady said, casting aside kid gloves. “If the county has been not telling us the truth for all these years, they need to stand up and take a punch in the belly.”

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