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Flood-related loss in market values stands at $3 million -- and rising

Carlton County Assessor Marci Moreland informed commissioners and department heads Tuesday that the total loss in market value of flood-damaged homes in Carlton County currently stands at "a shade under $3.1 million," adding that figure is certai...

Carlton County Assessor Marci Moreland informed commissioners and department heads Tuesday that the total loss in market value of flood-damaged homes in Carlton County currently stands at "a shade under $3.1 million," adding that figure is certain to go up.

Moreland presented an update on the impact of the June 2012 flooding on property valuation for the 2013 assessment during the monthly meeting of the Committee of the Whole. Of the 993 properties that experienced flood damage, 793 have thus far been re-assessed for 2013.

"What we look for is if the home has been repaired back to pre-flood condition; if the home is in a partial state of repair; if the home has been cleaned but no repair has been done to date; or if the home has been scheduled for demolition," explained Moreland in a later interview, adding that letters were left in the doors of those residences with no one at home, asking the homeowners to notify the assessor's office to schedule a visit.

"I would expect that $3,096,000 figure to rise as people receive their valuation notices," Moreland told committee members.

She later stressed that value reduction is a loss in market value, not taxable value, and since most of the properties on the list are residential homes, the market value is reduced first by the market value exclusion.

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Moreland said the loss in market value is certain to go up still further as a result of the homes in Barnum, Moose Lake and Thomson that were vacated entirely following the flood. In Barnum, there were five homes that people vacated, 13 in Moose Lake and one in Thomson.

Of the13 vacated houses in Moose Lake, six of them represent what Moreland termed "walkaways."

"Either the homes were too damaged to return to or the property owner just walked away," she explained. "What will happen with these homes could be a number of factors. The property owner may choose to forfeit on his mortgage and then the bank will go through the foreclosure process. Or if there is no mortgage, the property owner may forfeit on the taxes and then the property will be under the ownership of Carlton County after three years. Another possibility would be that the property owner could try and sell the property 'as is,' or if eligible, the property owner may have chosen to participate in the Department of Natural Resources (DNR) buyout program."

Moreland later explained that under the DNR buyout program, the local taxing jurisdiction, whether it be a city or the county, first needed to file application with the DNR to opt into the plan through the Minnesota Recovery Act. She said only Barnum and Moose Lake chose to file application for this program due to the extent of damages in those communities.

"The cities will buy the properties from the current owners at either the 2012 estimated market value or using a value from an appraisal," she stated. "Cities in turn will submit this to the DNR for reimbursement."

According to Carlton County Economic Development Director Pat Oman, the city of Moose Lake has a total of five homes being purchased under the buyout program. Barnum is purchasing five as well, two of which are located in the flood plain, which means the city will receive 75 percent of the reimbursement in the form of federal dollars from the Federal Emergency Management Agency (FEMA) and 25 percent from the DNR. The other three Barnum homes are being purchased through a straight DNR buyout.

"After the purchase of these properties, the buildings are razed," said Moreland. "The land is put back to a natural state and becomes exempt from taxation, never to be sold to a private entity in perpetuity. So in short, the value as of today on those properties will become exempt from taxation."

Moving forward, the reassessment of the flood-damaged properties that takes place in 2013 will be for taxes payable in 2014 and is not eligible for any state reimbursement, according to Moreland.

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"The tax shortfall will be totally the responsibility of Carlton County and the local jurisdictions," she said. "My only hope is that people will get the chance to repair their homes and property, and in the 2014 assessment for the 2015 taxes we can recoup and add some of the value back onto the tax rolls."

In a document distributed to committee members, the following flood-related market value reductions were outlined by community: $211,500 in Cloquet; $483,200 in Barnum; $205,400 in Carlton; $89,600 in Cromwell; $905,600 in Moose Lake; $162,000 in Scanlon; $284,900 in Thomson; $52,300 in Wrenshall; $5,300 in Atkinson Township; $2,400 in Automba Township; $190,400 in Barnum Township; $56,900 in Lakeview Township; $38,300 in Moose Lake Township; $120,300 in Silver Township; $30,300 in Silver Brook Township; $28,700 in Thomson Township; $109,500 in Twin Lakes Township; $10,800 in Clear Creek Township; $76,200 in Perch Lake Township; and $32,500 in Red Clover Township, for a total value reduction for the 2013 assessment of $3,096,100.

Related Topics: CARLTON COUNTY
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