Bemidji City Council: Annexation decision on hold

The Bemidji City Council decided against taking action Monday on a resolution that would advance the first phase of orderly annexation.

Instead, a meeting will be planned between the city and Bemidji and Northern townships to discuss the possibility of amending the pay structure of the orderly annexation agreement.

The annexation decision has been complicated by an ongoing reassessment process for certain Northern Township residents along Birchmont Drive who appealed the original assessment in the road reconstruction project.

While Northern Township is moving forward with the reassessment process, seven of those properties are within the ring of properties that had been scheduled to be annexed into the city limits this year.

The township last month requested that the city delay annexation until the reassessment process is complete.

Following a two-hour discussion, the City Council last Monday voted 4-3 to move forward with the first phase of annexation, but to leave those seven properties as Northern Township properties until reassessment was complete.

But Tim Mountain, a supervisor with Northern Town Board, asked the city during its regular meeting Monday to not break apart the township.

"Northern Township does not want to be fractured," Mountain said.

A letter from Northern Township was presented to the City Council prior to the meeting. In it, the Town Board stated its "strong concern" with the council's plan to proceed forward without including those seven properties.

"It is our stance that the contested assessments in the Birchmont project have created a situation where it is to the benefit of all parties to properly delay the first stage of the orderly annexation agreement until all assessments impacted by possible annexation have been resolved," the letter states.

Mountain said the township is not at all opposed to annexation plans, but would rather the city this year take in all properties eligible for annexation or none at all.

"What we're not in support of is the fracturing of our township," he said.

City Attorney Al Felix said his interpretation of the agreement is that it is legal for the city to move forward on all but the seven properties, but recognized that Northern Township is in a difficult situation.

"Northern is facing a significant reassessment process," he said.

The reassessment process, according to Felix, will involve appraisal fees in addition to the ongoing legal fees Northern Township is accumulating.

The hope, he said, would be to reassess those added costs to those property owners who appealed the original assessment.

But if that is not possible, he explained, Northern Township would be forced to raise those funds through a township-wide tax levy.

Felix pointed out that if the city were to annex in all the properties eligible for annexation, that would leave Northern Township with a smaller pool of taxable properties.

"I didn't understand that like I probably should have," said Mayor Richard Lehmann of his vote last Monday.

Lehmann, along with Councilors Roger Hellquist, Ron Johnson and Kevin Waldhausen, had voted to proceed with the annexation.

Lehmann Monday night spoke in favor of waiting until reassessment was complete.

"It's an issue of allowing them the time and opportunity," he said.

But Waldhausen and Johnson wondered whether the predicament would allow for a renegotiation of the pay structure established in the orderly annexation agreement.

Per the agreement, approved in November 2004 by all three municipalities, specific parts of the townships become eligible for annexation in 2010, 2015 and 2020.

Eventually, the city will collect tax dollars from the annexed properties, but it will not be immediate.

During the first year, in this case 2010, the township maintains its taxes levied against the properties, according to the annexation agreement.

The first full year of annexation, the township will keep 100 percent of the township property taxes.

In the second year, the township gets 80 percent of city taxes. Then 60 percent in year three, 40 percent in year four and 20 percent in year five.

The city will keep all city property taxes from year six and beyond.

Waldhausen asked Mountain whether Northern Township would be willing, if the city were to delay annexation one year, to step up the time period so the city would recover tax dollars sooner.

Mountain said it was a question for the entirety of the Town Board.

"Anything I would say individually would be counter-productive," he said.

Johnson said he would think it would be a good compromise between the city and township.

"That seems to be only fair," Johnson said.

But, he added, he did not know how Bemidji Township would feel about a new timetable.

Kay Murphy, city clerk, said she would contact the two townships and try to find a time next week at which all three municipal boards could sit down and discuss a possible change to the agreement.

"I think we have to have everybody there so we make a decision right there," Johnson said.