Property-tax warnings hit record high in Hennepin County

  • Article by: KEVIN DUCHSCHERE and JANE FRIEDMANN , Star Tribune staff writers
  • Updated: June 17, 2012 - 10:56 AM

Hundreds of property owners owe the county nearly $43 million in back taxes and penalties

Hundreds of property owners owe Hennepin County nearly $43 million in back taxes and penalties, forcing the rest of the county's taxpayers to make up the difference.

While the number of delinquent taxpayers has dropped as the economy improves, more and more taxpayers are facing the seizure of their properties to pay off their tax bills.

Last year the county sent out a record 931 notices warning owners that the deadline to redeem their properties was about to expire, a sign that yet another price to pay for the economic downturn of 2007 to 2009 is coming due.

The good news is that the current number of properties behind on taxes is dropping, said Scott Loomer, Hennepin's property tax manager.

The county sent out 16,674 penalty notices this month to owners who failed to pay their spring taxes by the May 15 deadline. That's a 25 percent drop from the 22,251 notices the county sent in June 2009.

But the damage done years ago is showing up in the number of forfeitures. The county recorded 255 last year, the most in two decades.

Hennepin typically holds one auction in the spring and another in the fall to sell forfeited properties, but this spring the county held two auctions to sell 93 parcels.

Ken Rowe, a property tax division manager, said the administrative costs of the forfeiture process and managing forfeited property are covered by the back taxes and fees that the county collects in delinquent cases. The county typically levies for slightly more than it needs to cover the 2 to 3 percent of taxes that aren't paid every year.

"We assume we're going to have these uncollected taxes, and we create a levy that accommodates for that," Rowe said.

Hennepin County hasn't done an analysis of why taxpayers don't pay, but Rowe said there's clearly a correlation between economic conditions and the number of delinquent properties. "The economy is the driver for people falling behind, but I don't think those reasons have really changed over time," he said.

Delinquency down

The picture is brightening in terms of delinquent taxpayers -- those who owe taxes from previous years.

In January, Hennepin counted 6,293 parcels on which taxes were owed before 2012; in 2008, there were 10,906 in arrears. Judgment liens obtained in April -- the last step before owners are assigned a time period to pay back taxes and avoid forfeiture -- numbered 3,196, half of what they were in 2008.

As of April 30, individual and business property owners owed the county $42.9 million, down from $54.2 million at about the same time last year.

There were 5,964 parcels listed as delinquent this spring, compared with 6,697 last year.

On this year's top 10 list of the taxpayers with the highest debt, just as it was last year, is the Mary Lou Regan family trust based in Osseo.

As of April, the Regan family trust was second in terms of the amount due: $411,845 on a 9-acre piece of farmland off County Road 81 in Dayton. With penalties and additional taxes, the Regan trust now owes $578,843 on that land.

The Regan trust hasn't paid taxes on the property since 2008, and the five-year window given owners to pay off taxes and prevent forfeiture is nearly up.

Businessman Scott Regan, one of Mary Lou Regan's sons, said the taxes haven't been paid because the city of Dayton failed to follow through on promises to pay the assessments on the property and defer taxes until it could be developed. The family leases the property to a farmer for corn.

Regan claimed that Dayton took an acre from the property for a new road and utilities, bringing the size of the parcel under the 10 acres required to get tax benefits under the state's Green Acres agricultural property program.

"Everything they told us was going to happen there, they lied and it never happened," Regan said.

Dayton Mayor Doug Anderson said there was never an agreement with the Regans to defer assessments or taxes. He said the city negotiated a payment with the family for a utilities easement on the property.

Mark Regan, Scott's brother, in April owed $50,180 in back taxes on three parcels across County Road 81 from the family trust land, including French Lake Open Golf Course. County records show that those taxes are now paid; Scott Regan said that property has been repossessed by the bank.

Purple over taxes

The Regan family isn't the only property owner to make repeated appearances on the tax delinquent list. The rock star Prince owes Hennepin County $50,316 in taxes for two properties in Eden Prairie and Golden Valley, including $41,544 in unpaid taxes from 2009 to 2011.

In Carver County, Prince isn't delinquent for previous years but hasn't yet paid in full on the first half of his 2012 taxes. Records last week showed that he owed $302,815 for 15 parcels, along with a $24,225 late fee for missing the May 15 deadline.

kduchschere@startribune.com 612-673-4455 jfriedmann@startribune.com 612-673-7852

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