Tristar, Inc. of Rochester v. County of Olmsted

Decision Date20 February 1991
Docket NumberC7-90-1489
PartiesTRISTAR, INC. OF ROCHESTER, Petitioner, v. County of Olmsted, Respondent.
CourtTax Court of Minnesota

The above-entitled matter came on for hearing before the Honorable Arthur C. Roemer, Judge of the Minnesota Tax Court on January 23, 1991, at the Rochester City Hall in Rochester Minnesota, upon respondent's motion for summary judgment.

Attorneys and Law Firms

Robert W. McIntosh, Assistant Olmsted County Attorney, appeared for the respondent.

Donald C. Steiner, Attorney at Law, appeared on behalf of the petitioner in opposition to the motion.

The issue is whether a minimum assessment agreement executed by the petitioner's predecessor in title and the City of Rochester pursuant to Minn.Stat. § 273.76, subd. 8 (1980) estops the petitioner from contesting the January 2, 1990 estimated market value of the subject property.

Memoranda were submitted prior to the hearing and the matter was submitted to the Court for decision on January 23, 1991.



The Court, having heard and considered the arguments of counsel, and upon all of the files and records herein, now makes the following:


1. The respondent's motion for summary judgment is hereby denied.



The written stipulation of facts was presented to this Court by the parties to this action. The subject property consists of two condominiums described as Unit 1.14 (TC05, Plat 2500, Parcel 3460) and Unit 1.15 (TC05, Plat 2500, Parcel 3461), in Center Plaza Condominiums, in the city of Rochester. The condominium project, once known as Broadway Terrace Condominiums, arose out of efforts of Center Partners, a Minnesota partnership, to renovate and redevelop a building known as the downtown Holiday Inn.

The City of Rochester pursuant to Minn.Stat. ch.472A established Development District No. 2, which included what is now known as Center Plaza Condominiums. To further the implementation of the development program for Development District No. 2, the City of Rochester entered into a development agreement dated March 31, 1983 between the City and Center Partners. This agreement required that a Minimum Assessment Agreement be executed pursuant to Minn.Stat. § 273.76, subd. 8 (1979), to set minimum market values on the land and improvements for the pertinent part of the development project with Center Partners. This Minimum Assessment Agreement was necessary to assure funding of debt service requirements on bonds issued by the City of Rochester. The development agreement of March 31, 1983 was amended on February 20, 1987 (recorded May 12, 1987).

The Minimum Assessment Agreement was executed by the City and Center Partners, approved by the County Assessor, and recorded on March 31, 1983 with the Olmsted County Recorder. Due to changed economic conditions, the Minimum Assessment Agreement recorded on March 31, 1983 was amended as of August 20, 1985 and was signed by the City of Rochester, Center Partners, and other interested parties (owners of parts of the condominium complex), approved by the Olmsted County Assessor, and recorded on May 12, 1986 in the office of the Olmsted County Recorder. The Amended Minimum Assessment Agreement provided that Unit 1 was to be valued at no less than $1, 269, 000 for 1985, $1, 219, 100.65 for 1986, and $1, 202, 467.59 for 1987 and thereafter (hereinafter rounded at “$1.2 million”). Units 2 through 9 were also included in the Minimum Assessment Agreement, along with the subdivisions of Units 6, 7 and 8.

On December 18, 1985, subsequent to the August 30, 1985 effective date of the Amended Minimum Assessment Agreement, Unit 1 was subdivided into fifteen units, among them being the subject units (1.14 and 1.15). Both of these units are basement units.

Although the development agreements and the Minimum Assessment Agreements contemplated subdivision, there is no Minimum Assessment Agreement by the owners of original Unit 1 allocating the agreed minimum value among the fifteen units created by the subdivision of Unit 1. For the purpose of the January 2, 1986 assessment, an appraiser in the office of the Olmsted County County Assessor's office allocated the $1.2 million among the fifteen units. In the January 2, 1988 assessment, the assessor placed an estimated market value upon the two subject units as follows: Unit 1.14 at $386, 200, and Unit 1.15 at $83, 700. When added to the valuation of the other thirteen units, the total valuation equalled $1, 219, 200, the agreed upon minimum valuation.

In the January 2, 1989 assessment, the estimated market value of Unit 1.14 was reduced from $386, 200 to $164, 000 and the estimated market value of Unit 1.15 was reduced from $83, 700 to $36, 000. The valuations of the other thirteen units remained the same, resulting in a total valuation of $949, 300, somewhat less than the $1.2 million minimum provided for by the Minimum Assessment Agreement.

Gary Wondrow, Deputy Olmsted County Assessor, in an affidavit filed as part of these proceedings indicated that the reduction in valuation was erroneous because the assessment agreement was not taken into account. The petitioner had requested...

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