Ham Lake council revises property tax extension ordinance

Due to the economic downturn, the Ham Lake City Council may allow a business that sells alcohol get an undefined extension on paying its property taxes and still keep its license to sell liquor.

After receiving a property tax extension request from Ham Lake Lanes, the Ham Lake City Council developed a new ordinance to assist businesses that sell alcohol and technically needed to not be delinquent on property taxes in order to receive a liquor license from the city. Photo by Eric Hagen

After receiving a property tax extension request from Ham Lake Lanes, the Ham Lake City Council developed a new ordinance to assist businesses that sell alcohol and technically needed to not be delinquent on property taxes in order to receive a liquor license from the city. Photo by Eric Hagen

The council Monday night (March 5) unanimously approved the new ordinance.

The city of Ham Lake requires those applying for any business license, permit or zoning or subdivision approval to not be delinquent on property taxes.

Mayor Mike Van Kirk said the council felt that if an establishment was not allowed to get its beer or liquor license because it was delinquent on taxes, the establishment would likely go out of business.

The council does not want to see that happen if the business owner can prove that his or her financial troubles are due to the national economic recession and not due to poor management or any deliberate attempt to evade paying their taxes, he said.

“They’re not getting a free pass,” Van Kirk said. “We’re just not going to put them out of business.”

The council at its own discretion could grant a property tax payment extension as it wants. Van Kirk said the time frame would be determined on a case-by-case basis.

City Administrator Doris Nivala told the council Jan. 17 that a business with an on-sale beer and liquor license asked for another extension for the payment of property taxes. This same business received an extension in 2011, she said.

Nivala did not name the business, but a review of 2011 council minutes showed that Ham Lake Lanes and the Don Hansen VFW had requested and received six-month property tax payment extensions at the June 6, 2011 meeting, which is when these two establishments and others in the city received one-year liquor license renewals.

County records showed that the Don Hansen VFW paid off its delinquent taxes Nov. 28, 2011. Ham Lake Lanes is still behind on its property taxes.

The city received a letter from Ham Lake Lanes owner Daniel Dahlin Dec. 13, 2011 requesting an additional extension.

Dahlin told the Anoka County Union that without a liquor license, he would not be in business.

Ham Lake has also looked to assist other property owners in the past year besides those with liquor licenses. When Guz Afrooz approached the city to work on a commercial development plan for the southwest corner of Highway 65 and 143rd Avenue, he technically could not go through the planning process with the city because he was approximately $100,000 delinquent on property taxes, according to a Jan. 18, 2011 city staff memo to the council.

The council, on the recommendation by City Attorney Wilbur Dorn and city staff, revised the city code to state that applications could be processed if the applicant is working with Anoka County on a delinquent property tax payment plan. This is called a confession of judgment.

Nivala said the problem for some businesses is the county’s policy is to wait until the property owner is one-year delinquent on their taxes before working on the confession of judgment. This is also reserved for properties with values of $500,000 or less.

In the meantime, Ham Lake Lanes would technically not have been able to get an extension under the city’s old ordinance because it could not yet work with the county.

Ham Lake’s new ordinance will allow the council to grant property tax payment extensions to businesses who have on-sale or off-sale beer and liquor licenses. Off-sale licenses are issued to liquor stores whereas on-sale licenses are for establishments that serve liquor on their premises.

According to the ordinance, the council must be satisfied that the reason for the delinquency is due to the national economic downturn and not due to mismanagement or any deliberate attempt to evade taxes.

“The grace period extensions contemplated herein are at the sole discretion of the city council and there shall be no vested right to any such extension,” the ordinance states. “The extensions are permitted solely in recognition of the severity of the 21st century recession and the devastating effect on a business of this nature upon the loss of licensure.”

When asked how the city can truly know the cause of a businesses problem when anybody could claim their problems are due to the recession, Councilmember Jim Doyle responded that the council would take each case one at a time.

Ham Lake is a small community and the council knows what is going on, he said.

Doyle said he would hate to see a business, especially a longtime community business, close when it may only need another nine to 12 months to make it.

“I don’t have a problem trying to help someone,” he said. “We’re not idiots. We won’t be hoodwinked by someone trying to get by on nothing.”

The council granting a liquor license even though the real estate taxes are delinquent is not uncommon. Pov’s Sports Bar in Andover, which closed on its own at the end of 2011, was behind on its property taxes and a street assessment from the city, but still got its liquor license.

Dahlin, who used to own Andover Lanes near Pov’s, is happy to see Ham Lake adopting a similar practice to what Andover has done.

The ordinance does contain a sunset date of July 2, 2017, although the council could extend the ordinance at that time.

Eric Hagen is at eric.hagen@ecm-inc.com

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