Whistleblower: Surprise! Tax bill goes sky-high

The newlyweds bought a house in Crystal knowing the property's annual tax bill. Then the county found a typo.

By James Eli Schiffer, Star Tribune

Last update: April 13, 2009 - 10:21 PM

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Nothing has quite gone as planned since newlyweds Mike and Mary Gustafson moved into their new home in Crystal last August.

First, a neighbor stopped by to tell them that months before, police had broken down the door in search of drugs. Then came a strange tax bill from Hennepin County -- indicating that their property taxes would be 35 percent higher than what they were told during the closing.

In December, Mike Gustafson lost his job as an environmental consultant. All of a sudden, an extra $1,000 each year in property taxes changed from an irritating surprise to a financial challenge.

"If I had a job, it would be no big deal," he said.

In the view of Mary Gustafson, what happened was "truly insane."

Last summer, the Gustafsons were making wedding preparations while house shopping. They set their sights on a nearly new house at 3548 Zane Av. N., but the price was too high. They were aware the seller was eager to unload the house, and the price kept dropping. In August, they paid $320,000 for the two-story, 2,639-square-foot home and moved in. The closing documents only indicated the property tax, not the assessed value.

The Gustafsons liked their new home, but they did wonder about the broken door frame, the dented door and the missing vent covers. That mystery was cleared up when the neighbor dropped in to let them know about the police raid.

"We all knew something was screwy" when the tax bill, marked up with blue ink, arrived in October, said Mary Gustafson, a mortgage banker who thought she had seen it all. It turns out that at the same time the Gustafsons were closing on the house, Hennepin County was fixing an error in its property-tax database. That data entry error mixed up the tax value of the old house next door with the Gustafsons' newer, larger house.

"We've got over 400,000 parcels in the county," said Tom May, the Hennepin County Assessor. "This is a rarity. ... I've been here for almost 34 years. I can recall a few times that happened."

In recognition of the Gustafsons' plight, the county changed the assessed value to forgive any additional property taxes for last year. But the taxable value of the house will rise to $352,000 this year -- meaning $4,909 in property taxes, more than double what the Gustafsons expected to have to pay. Next year, the assessed value may get closer to the level of what they actually paid, May said.

So Mike Gustafson is looking for a job, still smoldering about the tax assessment and wondering how he could have avoided this predicament. "If you're not knowledgeable, how do you even know to ask the questions?" Gustafson said. "You rely on the experts. I don't know what a general person could do."

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