Skip to main content

Hardwick to implement Rural Service District in city

Ordinance allows tax system that accounts for urban vs ag property
Lori Sorenson

Hardwick City Council members conducted a public meeting last week to hear potential concerns about an ordinance that could have a noticeable affect on property taxes.
The ordinance, which was approved after the Sept. 18 public hearing, creates a tax system that considers benefits for city dwellers using city services versus agricultural landowners in city limits who are not benefiting from city services.
The city limits for the town of 222 residents includes 1,100 acres, 997 of which are classified as agricultural.
Hardwick’s levy in 2019 was $$55,138, and nearly half of that — $26,000, was paid by six agricultural property owners.
The farm land inside city limits is essentially taxed a much higher rate than nearby township ag land.
For example, Barb and Robert Loosbrock own two similar quarter sections of farmland, one within Hardwick city limits and the other outside the city border.
The Loosbrocks paid $5,270 for taxes on the tract inside Hardwick’s city limits and $223 in township taxes for the tract outside the border.
Attorney Don Klosterbuer has used this example at previous meeting to illustrate the Hardwick’s tax system.
At Wednesday’s hearing, city clerk Tammy Johnson said the council had done its own comparison of taxes on parcels inside and outside city limits.
“It was like an ‘aha’ moment,” she said. “We were shocked to see the numbers. … but we didn’t know where to start or where to begin.”
For the past three years Klosterbuer, council members and landowners have been working on a solution.
The benefits of owning property in the city include access to city services like water and sewer lines and garbage and snow removal.
However, most of the ag parcels don’t utilize those services, yet they’re paying for them at the same rate as city residents who do use them.
While the disparity has likely existed since the town was platted, it became more noticeable over the past decade when land values skyrocketed.
It came to the Hardwick council’s attention when Gert Bruynes moved from her farm to Luverne, prompting a non-homestead tax rate on the farmland. When her family looked closer, they discovered the amount of the city taxes on the agricultural land.
The ordinance approved last week will establish a Rural Service District — the first of its kind in Rock County — for the farm land inside Hardwick’s city limit.
It will ease the burden for ag tax payers, but it will mean the urban tax payers will need to pay more in order to cover the city’s levy.
The council noted that city residents were made aware of the pending ordinance, but no one spoke in opposition to it.
Johnson said residents will notice the difference on tax statements.
“I liken it to a carpool,” she said. “If there are six people and you take two out, the remaining four are going to have to pick up the slack paying for gas.”
The impact on urban properties will depend on several factors, such as individual assessed values.
“If the levy stays the same then the Urban Service District properties will see their taxes go up,” Klosterbuer said. “Because their property will represent a larger percentage of the total taxable value of the city.”
According to the ordinance, for taxes payable in 2020 the Rural Service District will pay 50 percent of the benefit ratio for municipal services. For taxes payable in 2021, the amount will be 25 percent.
The levy amount shouldered by residences and businesses that have 100 percent access to city services will increase at a yet unknown amount.
To make up the shortfall from fewer rural tax dollars, council members may need to raise taxes in the urban district or cut services.
“We still want to be an affordable city to live in,” Johnson said.
After closing the public hearing Wednesday night, council members proceeded with regular business, which included setting the preliminary levy for taxes payable in 2020.
They agreed to a proposed 3-percent increase over the current levy, but they have the option to lower that amount before certifying the levy in December.

You must log in to continue reading. Log in or subscribe today.