Watershed District levy not implemented due to legal concerns
Published 3:36 pm Monday, January 30, 2017
The Shell Rock River Watershed District’s scaled-back property tax levy approved in December has not been implemented due to legal concerns by Freeborn County officials.
Freeborn County Auditor-Treasurer Pat Martinson did not confirm the district’s $142,000 project tax levy and $50,000 survey data acquisition fund levy meant for water monitoring efforts.
Freeborn County Attorney David Walker said the request was not in the district’s budget.
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“Pat Martinson was congratulated by the Minnesota Department of Revenue on her approach here,” Walker said. “They said Freeborn County is very fortunate to have an auditor who takes this position, because she was correct. She relied on outside counsel, and she relied on her own interpretation of the statute.”
Walker said Martinson was informed by independent counsel, lawyer John Kolb of St. Cloud-based law firm Rinke Noonan, that there was no statutory authorization for the district’s request by drainage law.
Watershed District Administrator Brett Behnke disagreed with some of the Freeborn County officials’ assertions.
“I appreciate his opinion, however, I think if he would have been part of the process from the beginning, that we could have made this probably a smoother transition to completing the levying process,” he said.
Behnke said Freeborn County officials took a traditional view of the statute, and he views the issue as being important to all watershed districts. He supports a more defined route to the statute to avoid having levy issues at the local level.
Walker said district officials did not use the right method or means to justify their request.
“What happened in this instance was not a reflection of any opposition to the Watershed District or what they are attempting to do, except to the extent that what they attempted to do in this instance doesn’t follow the statute,” Walker said.
In requesting the levy, watershed officials cited a state statute that governs watershed districts. It allows districts to implement a construction or implementation fund for several watershed district funding measures and projects.
Following the district’s initial $1 million levy request in September, Martinson hired Kolb, who requested the district obtain a legal opinion that the district has authority under the statute to issue the levy, according to a Watershed District press release.
District leaders obtained an opinion Nov. 21 from Minneapolis-based law firm Briggs and Morgan that though “there is a long-held traditional view that watersheds do not have independent levy authority in these circumstances, there is no available legal interpretation on this issue.”
“I was surprised, given the lack of clear authority on this issue, that county officials chose the most restrictive interpretation every step of the way,” said the district’s attorney, Matt Benda. “The district has been proactive in pursuing funding alternatives, and its success has been driven by this approach.”
Behnke said a public hearing was held on the levy request, and he said the survey and data acquisition fund levy was budgeted for under the project levy.
“The needs of the district were well-qualified,” he said.
According to Behnke, district officials analyzed the state statute before choosing their approach, and he said they were informed by Briggs and Morgan that their request met state statutes.
Walker said he has no reason to think the district intentionally did anything improper and is not aware of any consequences for the district’s proposal.
He said he hopes the district is mindful of its need to comply with guidelines as set by statute.
Walker said as interpreted by the Watershed District, the interpretation would be a “game-changer” for watershed districts across the state. He said the statute only gives watershed districts an accounting instruction, not the authority to levy a tax.
“It would be a game-changer for the watershed districts, because it totally blows it open,” Walker said of the effect the interpretation would have on the governing statute.
The district has not filed litigation against the county.
“We are retaining our right to do that, but we have no intention to do so at this point,” Behnke said. “We want to work with the county to reach an applicable resolution to this levy issue.”
In a letter from the district’s legal counsel dated Dec. 28, possible litigation was discussed.
“The district hopes this course of action will be unnecessary, but is prepared to do so to move forward on this important conservation project,” the statement reads.
Behnke said if the district’s leaders had more time to discuss the levy with Martinson and Walker, they would have been able to implement the levy this year.
“I’m fully confident we will reach that for 2018,” he said.
According to Behnke, the process has allowed for good dialogue between the district and the county, and he said he does not think the county’s refusal to implement the levy was political.
The Minnesota Association of Watershed Districts is working on legislation to increase its levying ability without as much scrutiny so watershed districts can complete projects, Behnke said.
The district’s standard $250,000 administrative levy was approved by Martinson.
In a district statement, Behnke said the project tax levy and survey data acquisition fund levy are important because of the Fountain Lake dredging project.
“I requested that the county help us in identifying the best available funding for this project, and they were unable to give a definite answer based on current law,” he said. “The district considered the issuance of a bond supported by the property tax levy as the best method for financing the dredging, but not the only method. I have found the path to success is rarely a straight line. I will continue to push at all levels to make this project a success.”
In the statement, Behnke said the district is considering alternate funding options for the project, including borrowing funds initially and repaying the amount using future sales tax revenue.
“We have the funds identified and available long term to complete the project, but the more options available today, the better we can scope the project,” he said.