Most notably, in 2018, the district lost 5 percent of its taxable valuation, in part because of falling commercial property values but largely because a wind farm came off the tax base. Last year Basin Electric purchased PrairieWinds 1 and Minot Wind from its subsidiary, PrairieWinds ND 1. As a result of the ownership change, instead of having a property value against which the mill levy is applied, the wind farm now is assessed a production tax.
Changes in property values are a factor behind this year’s jump in tax levy in the South Prairie School District, according to tax records.
Between falling property values and rising educational costs, South Prairie has the highest school mill levy in the state at 159.24 mills, which is well above the state average of 89.58 mills. When that status was revealed in a North Dakota League of Cities survey this year, school officials released property value information that help explain the unusually high levy. Even they are baffled, though, over why the district isn’t showing growth, although a change in the method of taxing a local wind farm is a major reason for this year’s lowered valuation.
There may be better news on the horizon for South Prairie property-tax payers, but in the meantime, school officials say they are doing what they can to keep taxes in line.
In 2017-18, South Prairie’s cost of education per student was $10,140, ranking it 128th among North Dakota districts. Only 20 districts had lower costs per student.
“We’re very, I feel, frugal with our money. We’re not always overspending and trying to waste taxpayers’ dollars,” Supt. Wayne Stanley said. “We’re doing this as reasonably and efficiently as possible.”
“The reality is our operating budget increased very little,” school board member Randy Korslien said. “The amount of revenue we’re asking for from the taxpayers changed very little, but more burden was put on them because the taxable valuation went down on certain properties.”
Most notably, in 2018, the district lost 5 percent of its taxable valuation, in part because of falling commercial property values but largely because a wind farm came off the tax base.
Last year Basin Electric purchased PrairieWinds 1 and Minot Wind from its subsidiary, PrairieWinds ND 1. As a result of the ownership change, instead of having a property value against which the mill levy is applied, the wind farm now is assessed a production tax.
Korslien said the district was unaware of the assessment change at the time the board submitted its budget to the county. Consequently, the board anticipated a much lower levy than 159.24 mills and didn’t budget for the production tax. The district this month received the unbudgeted production tax of about $116,000, which exceeds the estimated $74,000 that would have been raised by last year’s mill levy on the wind farm.
What school officials see as an ongoing problem is that, unlike other school districts in Ward County, South Prairie has not benefited from a growing tax base generally and actually saw a decline of 0.4% in its taxable valuation since 2013. If the wind farm had stayed on the tax rolls, the district might have seen estimated growth of 3% to 4% since 2013, but that compares with growth of 9.2% to 44.5% for other schools in Ward County over the same five-year period.
The decline comes at a time when South Prairie is paying off significant bond issues. The elementary gym was added in 2009, and the construction bond retires in 2029. The new high school, approved by voters in December 2013, has a construction bond that retires in 2033. At the time those projects were approved, the district had a strong and rising commercial tax base.
“One of the big things that we told our patrons at that time was, ‘We want to build a high school. We want to be able to educate our own children. In essence, it’s going to save you money as a taxpayer, rather than paying tuition agreement to others,’” Korslien said. “So, of course, everybody likes to save money. They said go ahead and spend it. We did, and their taxes went up ever since.”
That wasn’t the way taxes were supposed to go.
“We told them they were going to take a jump and then they were going to ratchet back down and slowly start to get below what they were paying before,” Korslien said.
The mill levy increased from 103.76 mills to 170.93 mills in 2015, eventually falling to 137.29 mills last year despite the overall property valuation still hurting from flooding at Rice Lake and taking a hit on the commercial side.
Apartments are down almost 50 percent in value, according to the City of Minot assessor’s office. Commercial properties, including Walmart, have dropped as much as 10 percent, and land in south Minot that was slated for development that never happened also was lowered. South Prairie’s reach into south Minot includes properties south of 37th Avenue.
The taxable value of urban commercial property in South Prairie fell 3.3% from 2014 to 2018. Commercial property in the district is up about 3% in taxable valuation overall since 2014 due to more structures in the rural area. However, the commercial and overall valuations have been dropping from the peak in 2016.
South Prairie’s tax base is heavily weighted with commercial property, causing it to feel the impact of those declines more strongly. Commercial property accounts for 42.6% of the tax base.
Minot Public School District, where commercial makes up 40% of the tax base, also has seen its overall property value decline from its peak, although its taxable valuation remains up 9.2% from five years ago, according to figures from the Ward County Auditor’s Office. Nedrose, which also is heavily weighted with commercial, continues to see new growth and is up 28.5 percent in taxable value since 2013. Among districts less dependent on commercial valuation, Sawyer is up 27.7%, Surrey 25% and United (Des Lacs-Burlington) 44.5%.
Ward County’s overall taxable valuation took a 25% jump from 2012 to 2013 and continued to climb 12% in 2014 and 9% in 2015 before slowing and falling a bit, according to the county tax director’s office. Ward County saw growth of .88% from new properties last year, but it was offset by drops in existing values, leaving the county with an overall valuation decline of 1.76%.
South Prairie’s mill levy increase can’t all be attributed to falling property valuation, though, because the levy request did increase about $182,000. Bond issue spending doesn’t change much, but the district increased its bond levy to shift more of its payments to the levy and free up its other funds that are under state levy caps, Stanley said. The school’s various levies add up to $1.99 million, requiring a levy of 159.24 mills given the size of the tax base.
Stanley said the state’s per pupil funding is based on previous year’s enrollment so for growing districts like South Prairie, it has left taxpayers to upfront the money. As the growth continues, the district never quite catches up, he said. Current enrollment from preschool through high school is 478 students.
In what could be better news for South Prairie homeowners, the City of Minot assessor’s office is recommending no overall adjustment to residential home values and an overall 3 percent increase in commercial values for the coming year. The city also reports South Prairie’s commercial taxable valuation will go up appreciably in the coming year because the Trinity construction is taxable until put into hospital use.
In addition, Ward County information indicates that significant property valuation lost at Rice Lake from flooding some years ago is starting to come back as owners redevelop.
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