Nine Cook County lodging establishments will be paying much more in property taxes after a review of more than 80 resorts by former Cook County Assessor Mary Black and the Department of Revenue this summer led to changes in classification from seasonal resort to commercial status. One of them, the AmericInn of Tofte, has been required to start paying the higher rate this year, while the others have until 2014.
AmericInn owner Dennis Rysdahl went before the county board on December 11 to ask for an extra two years to prepare for the higher tax rate, and if it was not granted, to ask why. His taxes have increased from $15,864 in 2011 to $43,326 this year. “We all understand that this is the rule we have to live by,” Rysdahl said. “It’s just that others are getting more time to prepare for it.”
New assessor Betty Schultz told the board that Rysdahl’s business was the only one of the nine that answered on a questionnaire sent out in 2010 that fewer than 60 percent of the year’s reservations were for two or more consecutive nights. This was one of the requirements for a business to qualify as a seasonal resort. The AmericInn’s status was changed and its tax rate was changed accordingly.
In a March 14, 2012 letter to former assessor Mary Black, Rysdahl wrote, “This form was filled out by the person who was the on-site manager of the AmericInn at that time, who did not bring it to my attention before doing so. The occupancy trends of the AmericInn have not changed meaningfully since we bought it in 2003, so I do not know why it was filled out differently this time as regards how many bookings are for multiple nights.”
Regarding lodging establishments of the size and location of the businesses in question, Minnesota Statute 273.13 Subd. 25 states, “…Either (i) the business located on the property must provide recreational activities, [and] at least 40 percent of the annual gross lodging receipts related to the property must be from business conducted during 90 consecutive days, and either (A) at least 60 percent of all paid bookings by lodging guests during the year must be for periods of at least two consecutive nights; or (B) at least 20 percent of the annual gross receipts must be from charges for providing recreational activities….”
Schultz told the Cook County News- Herald that the AmericInn’s status was changed earlier because it did not meet the 60 percent requirement, whereas the other eight businesses had indicated that they did.
In February of 2011, Assessor Mary Black sent a questionnaire to Cook County lodging properties asking if they offered on-site recreational activities. When the News-Herald asked new assessor Betty Schultz why the eight businesses were even questioned about recreational activities if they already qualified for seasonal resort status under the 60 percent requirement, she answered, “…Further clarification was necessary as the provision of recreational activities is part of the above statute.”
This summer, the assessor’s office and the Department of Revenue determined that those eight businesses would lose their seasonal resort status because they did not meet the recreational activities requirements. In an August 2 memo to resort owners, Mary Black wrote, “I and the county board did not think it was fair to change these classifications without proper notice and the board voted to leave the classifications as they are for assessment year 2012, taxes payable 2013.”
At the county board meeting, Dennis Rysdahl requested that the assessor’s office provide him with the documentation the other businesses provided proving that they met the 60 percent multiple-night reservation requirement but was told that that information was not accessible to the public.
Board Chair Jan Hall asked Assessor Schultz to show her the documentation, which Schultz told the News-Herald she did some time after the meeting.
In an October 31 letter to Assessor Schultz, Rysdahl indicated that documenting the reservations and occupancy took a great deal of effort. He said that after being notified in March that he would need to demonstrate that his business met the multiple-night reservation requirement in order to keep the seasonal resort status, he and his staff “spent significant time over the next weeks going through every reservation taken in 2011 and tabulating how many guests stayed for one night vs. multiple nights.”
In the same letter, Rysdahl pointed out that the AmericInn was the only property out of the nine that would be assessed at the commercial rate for taxes payable in 2012 and 2013 and said, “We therefore respectfully request that our taxes be abated to seasonal resort commercial levels for both of those years, and thereafter be set consistent with other similar properties in Cook County.”
Commissioner Jim Johnson said Rysdahl had already been getting a tax break he wasn’t entitled to and the county could get in trouble with the state if they overrode the Department of Revenue’s decision. Commissioner Sue Hakes said she had received calls from people unhappy that some businesses had been paying less in taxes because of being improperly classified.
A motion denying Rysdahl’s request for an abatement of taxes payable in 2012 and 2013 passed unanimously.
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