A number of Cook County lodging establishments are going to be paying a lot more in property taxes next year than they have been paying in recent years.
Eight properties will now be classified as commercial rather than seasonal resorts after a review by County Assessor/Land Commissioner Mary Black and Larry Austin, Cook County’s Minnesota Department of Revenue property tax compliance officer.
According to MN Statute 273.13, to be classified as a seasonal resort, rooms must be rented out no more than 250 days in a year. For businesses with more than 20 rental units, at least 40 percent of their receipts must be from business conducted during a 90-day period, they must provide recreational activities, and a) at least 60 percent of their bookings must be for at least two consecutive nights or b) at least 20 percent of their income must come from charges related to providing recreational activities.
The statute says, “For the purposes of this paragraph, ‘recreational activities’ means renting ice fishing houses, boats and motors, snowmobiles, downhill or cross-country ski equipment; providing marina services, launch services, or guide services; or selling bait and fishing tackle.
Assessor Black said that she had interpreted the law to be saying that a seasonal resort could either have 20 percent of its income come from charges related to providing recreational activities or have 60 percent of their bookings be for at least two consecutive nights. The state is requiring all seasonal resorts to prove that 20 percent of their income came from charges related to providing recreational activities, something a lot of them will have difficulty doing, Black said.
Black said she had told some area businesses that they were “running a fine line” to be considered seasonal resorts.
The state is looking at both the letter and the spirit of the law. Assessor Black said the state is saying a seasonal resort has to not only fit the statutory language but also pass the “smell test.”
As an example of the potential increase, Best Western Superior Inn and Suites in Grand Marais would have had to pay $96,526 in 2012 after paying only $38,818 in 2011.
Assessor Black resigned from her position to pursue her health and fitness business and her last day was September 14. She said the seasonal resort issue would be something the new assessor would be dealing with significantly, and she expected the Department of Revenue to work very closely with the new assessor on it.
Tip of the Trail appraisal
The board approved hiring John Vigen of Ramsland & Vigen to conduct an assessment of the former Tip-of-the-Trail resort property at the end of Sag Lake Trail on County Road 83. The tax-forfeited property will be put up for auction.
The property is currently zoned lakeshore residential, but the county will pay Vigen to assess its value both under its current zoning status and if it were zoned commercial as well as provide an opinion on the highest and best potential use of the land. The cost will be $2,600.
Commissioner Bruce Martinson said he favored hiring Vigen because his proposal outlined exactly what he intended to do to provide what the county wanted and because his business had been around for many years.
The board also considered a lower cost proposal from Holly Harwig of North of North Appraisals of Grand Marais but did not choose Harwig’s services because she only does residential appraisals.
Cook County lodgingestablishments that
will be changed
from seasonal resort
to commercial tax
classification for
2013 property taxes,
payable in 2014:
. Cliff Dweller
in Tofte
. Mountain Inn
in Lutsen
. Eagle Ridge
in Lutsen
. Shoreline Motel
in Grand Marais
. Aspen Inn
in Grand Marais
. Aspen Lodge
in Grand Marais
. Best Western
in Grand Marais
. Naniboujou Lodge
in Hovland
For rural lodging
establishments of 20 or
fewer units to receive
seasonal resort status,
they only have to prove
that their rooms are
occupied 250 or fewer
days a year.
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