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Dan Gunderson, MPR News 90.3 FM, Published July 17 2013

New improvement district taxes divide Minnesota lake residents

Property owners throughout Minnesota are increasingly turning to a new funding tool called lake improvement districts to protect water quality and fight the spread of invasive species.

But the new taxes the districts levy are dividing residents around several Minnesota lakes, including Marion Lake in Otter Tail County. To settle the dispute, residents will vote Saturday on whether to approve the Marion Lake Improvement District.

A few miles off state Highway 10 near Perham, Minn., Marion Lake still has good water quality and is not yet plagued with invasive species. But many property owners point to nearby lakes infested with zebra mussels and invasive plants. They want new taxes to build a war chest to fight off potential invasions.

If approved by voters in a referendum, the Marion Lake Improvement District would be the first in the state that is not in response to a specific problem.

Strategizing

Ten neighbors who favor the district recently gathered on the deck of George and Ellen Palmer’s home to discuss strategies that could help them win an upcoming referendum on the Marion Lake Improvement District.

“I don’t think anybody around this table wants to pay more taxes,” said Ellen Palmer, who served coffee, rolls and the argument for local taxes. “But we don’t want our lake destroyed, either. And when you do address those problems, it should be done fairly. In other words, everybody should have to pay some.”

There is an existing lake association on Marion Lake that collects voluntary $25 annual dues from about 150 of the 250 properties. But some residents decided a tax based on property ownership would be a more equitable way to pay for protecting the lake’s water quality. They propose a $50 annual assessment on each lake property.

Opposition

There are 39 active lake improvement districts in Minnesota, according to the state Department of Natural Resources. Assessments vary, but annual payments typically range from $50 to $150.

Lake improvement districts can raise revenue through assessments, service charges or a tax on the value of each property.

Palmer sent a survey to everyone around the lake. She said more than half of the property owners responded and nearly all of them supported an improvement district.

So, they asked the Otter Tail County Board of Commissioners to set up the district. The county conducted a public hearing last August where Palmer said opposition to the idea first surfaced.

“It was like a bomb went off. There were people who were very upset,” she said. “So, we don’t know what happened, except we feel people became very alarmed at the idea of a tax.”

Despite opposition, the Otter Tail County board approved the Marion Lake district and five others. Residents of Star Lake in Otter Tail County are currently collecting signatures to challenge a lake improvement district approved earlier this year.

Otter Tail County has never rejected a request.

That fired up opponents like Rick Snelgrove, who led a petition drive that gathered enough signatures to bring the lake district to a vote.

“I mean, what part of, ‘There’s nothing wrong with our lake,’ don’t people understand?” Snelgrove asked. “It’s sort of like getting hit in the forehead with a raindrop and deciding you better start taxing to build an ark.”

Only one lake improvement district has been rejected by voters after winning county approval, DNR officials say. That happened in Douglas County in 2003.

Snelgrove said the water is public property and anyone can use it, so the state should be responsible for water quality.

‘We’re responsible’

Supporters of the new taxing district argue the state isn’t doing the job.

George Palmer said lake property owners need to step up because the Department of Natural Resources can’t protect every lake.

“They don’t have a funding mechanism to do any of these things,” he said. “I think that we’re responsible because we feel what we have in our homes and in our lake lots is a valuable asset.”

Palmer worries his home value will decline if the lake becomes infested with invasive species like zebra mussels.