Watertown seeks special legislation to acquire tax-forfeited property

The Watertown City Council unanimously decided last week to begin the effort to acquire a 48-acre tax-forfeited property on the southeast side of town through a conditional use deed.

A conditional use deed would allow the city to acquire the land situated between the Wildflower Development and Tuscany Village for $250. The only requirement is that the city use the land for a stated public use for at least the next 15 years. Acceptable uses would include a public utility building, park amenities or a series of nature trails.

It sounds simple enough, but the city found out recently that the entire process could be much more complicated that it originally realized.

Initially, the city believed it had three options for the property, which was previously owned by Lakeland Construction Finance, or the Tuscany development group. The options were thought to be approving the land for public auction, declaring the land to be unbuildable and offering the land to a neighbor through a limited sale, or acquiring the property either through a conditional use deed  or at its assessed value.

However, the city recently learned from the Minnesota Department of Natural Resources that the land cannot be approved for public auction because a drainage ditch on the property is considered a body of water. The city already knew a limited sale was not an option, because 15 of the 48 acres, located north of County Highway 10 along 30th Street, are buildable.

That left the city with two options. It could either do nothing, potentially allowing the county to stake a claim in the property or leaving it up to the state to decide what to do with it, or it could seek to acquire the property.

Even acquiring the property, though, is much more complicated than first thought. Though the two options remain the same — purchasing the property for the assessed $140,000 value or through a $250 conditional use deed -— the city will first have to seek special legislation that would allow the state to convey the land to the city. That’s the route the city council chose last Tuesday, while also directing city staff to seek the support of local state representatives in the process.

Seeking to acquire the property through a conditional use deed seemed to be the City Council’s preferred option from the outset, but the council wanted to seek input from the public first. Several residents — mostly those who live in or near the Wildflower Development — spoke at a public hearing before the council made it’s decision.

Most of the residents who spoke were in favor of either restoring the wetlands on the property or creating some sort of nature trails for non-motorized activities such as biking or walking. However, a few concerns were raised regarding the costs associated with maintaining the property after the city acquired it, how a field on a property just to the north of the property in question would be accessed, and how a potential public service building operated by either the city or county would impact 30th Street, if that was ever the use chosen for the land.

One of the few drawbacks to the city’s potential acquisition of the land is that it would be permanently removed from the tax rolls. However, that seems to be a minimal factor, since the Market Value for the land in 2014 is $297,000, and, if the property were not in tax forfeiture, it would have generated $2,100 in 2013. However, the property started the tax forfeiture process in 2005, and no tax revenue has been collected on the property since 2005.

If the city is successful in acquiring the property through special legislation and a conditional use deed, early indications are that the stated public use for the property would be nature trails. The city would likely only brush cut or wood chip the trails, thus keeping maintenance costs to a minimum.

After 15 years of continued conditional use by the city, the city could petition the state for a quit claim deed, which would relinquish the state’s interest in the property and lift all restrictions on the city’s use of the land. The city would own the land free and clear and at that time could use it however it sees fit.

If, at the time, the city chose to sell the 15 buildable acres, it would likely be able to do so, which would represent a solid return on the $250 conditional use deed investment. The city could also purchase the land right now for the assessed value of $140,000, allowing the city to sell it immediately, but the council didn’t look favorably on that option. The 33 acres of un-buildable wetlands could hinder the city’s ability to sell it quickly and recover its money.

 

Contact Matt Bunke at matt.bunke@ecm-inc.com

 
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