Referendum would affect courthouse cost

Published 12:00 am Wednesday, August 21, 2002

The county board set a maximum cost for courthouse construction Tuesday, but it turned out that the impact on property taxes would change significantly depending on the type of bonding the county pursues, which could intensify an argument that has already been heating up about whether the public will vote on the courthouse project.

The unanimous approval of the cost estimate by BKV Group and Adolfson & Peterson Construction will let the project proceed to the final stage of design development and become ready for bidding by construction contractors.

By the proposal of commissioner Glen Mathiason, the board attached a condition that would constrain the total cost to a maximum of $25,729,236. The figure includes $22,972,532 for construction and renovation costs, and additional expenditures for systems, equipment and other contingencies.

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The tax impact projection was presented by County Auditor/Treasurer Dennis Distad. The calculation is based on a scenario that the county would issue $20 million in bonds that have a 20-year maturity.

According to Distad, the average residential homestead in the county with $75,000 property value would have a $78 annual tax increase.

However, the number would change to $126.24 if the bonding were the type that allows to a public referendum.

This is because while the bonds that allow a public referendum have a lower interest rate, state law exempts agricultural land and buildings &045; although not farm homesteads &045; from taxes to pay off those bonds. Therefore, the owners of other types of properties end up bearing more of the tax.

An average agricultural homestead with a $55,000 house value and $295,000 in land and farm buildings would see a $225.99 tax increase in the case of non-referendum bonds. The increase would be cut to $92.58 under the bonds with a referendum.

According to Distad, there are 21,874 taxable properties in the county, and the agricultural homesteads consist of 22 percent. Whether their properties are included in the taxation or not would impact the most on the owners of residential homesteads, which comprise 46 percent of the total properties.

The courthouse project includes a new jail, courts and court offices, law enforcement center and a 14,500-square-foot addition that will replace offices now in the 1954 building, the northernmost portion of the courthouse. Commissioners decided last month to demolish the 1954 addition. Other costs include renovation and remodeling of the existing portions of the courthouse.

The county has been discussing the project for years because of overcrowding in county offices and the jail.