DEPARTMENT: Property Taxation and Records
FILE TYPE: Consent Action
TITLE
title
Authorization To Participate In Proposed Class Action Settlement, Sharon Sporleder v. State Of Minnesota
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PURPOSE/ACTION REQUESTED
Authorize Dakota County to participate in the settlement and delegate authority to Interim County Manager to execute any documents required to effectuate the settlement, including any required settlement agreement in the Sporleder lawsuit.
SUMMARY
In May 2023, the United States Supreme Court determined that Minnesota’s tax-forfeiture law was unconstitutional, reasoning that it allowed the State to take real property from its owner without providing just compensation. Shortly thereafter, Sharon Sporleder started a class action lawsuit to recover damages on behalf of all Minnesotans who had their real property tax forfeited but had not been paid just compensation.
A proposed settlement has been reached wherein the State would create a settlement fund and the legislature would revise the tax forfeiture law to ensure it was constitutional. Settlement was conditioned on the State agreeing to the terms.
On May 17, 2024, the State modified the tax forfeiture law and signed the settlement into law. The State created a $109 million fund from which claimants could seek compensation. All counties are allowed-but not required-- to participate in the settlement. The potential claim for compensation by prior owners from tax forfeited land sold in Dakota County is $2.23 million.
If a county participates, all claims against it for damages resulting from tax forfeitures before January 1, 2024, are released, including the claims in the Sporleder lawsuit. While counties are not required to directly contribute to the settlement fund, they are required to “reimburse” the State by remitting 75-85% of the proceeds of the sales of currently forfeited properties to the State. Dakota County has 18 tax forfeiture parcels that qualify for the reimbursement to the State. An estimated maximum of $550,000 could potentially be reimbursed to the State from the proceeds of the sale of these 18 parcels sold at auction.
If a county does not participate, it must notify the State by August 1, 2024. In that event, the county retains all risk of liability for claims related to properties forfeited before January 1, 2024. The State would not be financially responsible for claims related to those properties and could seek indemnification from counties that choose not to participate for any expenses or judgments related to those properties.
Dakota County Property Taxation & Records Department seek approval for Dakota County to participate the settlement. Dakota County Property Taxation & Records Department expects most, if not all, counties to participate in the settlement.
RECOMMENDATION
recommendation
Authorize Dakota County to participate in the settlement and delegate authority to Interim County Manager to execute any documents required to effectuate the settlement, including any required settlement agreement in the Sporleder lawsuit.
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EXPLANATION OF FISCAL/FTE IMPACTS
There are 18 tax forfeited parcels that qualify for the 75 percent-85 percent reimbursement to the State of Minnesota once the properties are sold at auction. When the tax forfeited parcels are sold, the county would reimburse the state from the proceeds from the sell. All transaction for the reimbursement will come from the tax forfeiture fund and would not impact the county budget. The reminder of the money will follow the tax forfeiture distribution process where the money would be distributed back to the county, cities/towns, and school districts. An estimated maximum of $550,000 could potentially be reimbursed to the State from the proceeds of the sale of these 18 parcels sold at auction.
☒ None ☐ Current budget ☐ Other
☐ Amendment Requested ☐ New FTE(s) requested
RESOLUTION
body
WHEREAS, the United States Supreme Court determined that Minnesota’s tax-forfeiture law was unconstitutional, reasoning that it allowed the State to take real property from its owner without providing just compensation; and
WHEREAS, the parties agreed to settle wherein the State would create a settlement fund and the legislature would revise the tax forfeiture law to ensure it was constitutional; and
WHEREAS, on May 17, 2024, the State modified the tax forfeiture law and signed the settlement into law; and
WHEREA, the State created a $109 million fund from which claimants could seek compensation; and
WHEREAS, Dakota County Property Taxation & Records Department seek approval for Dakota County to participate in the settlement; and
WHEREAS, Dakota County Property Taxation & Records Department expects most, if not all, counties to participate in the settlement.
NOW, THEREFORE, BE IT RESOLVED, That the Dakota County Board of Commissioners hereby authorize Dakota County to participate in the settlement and authorize Interim County Manager to execute any documents required to effectuate the settlement, including any required settlement agreement in the Sporleder lawsuit.
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PREVIOUS BOARD ACTION
None.
ATTACHMENTS
Attachment: Settlement Agreement
Attachment: Settlement Execution Page
BOARD GOALS
☒ A Great Place to Live ☐ A Healthy Environment
☐ A Successful Place for Business and Jobs ☐ Excellence in Public Service
CONTACT
Department Head: Amy Koethe
Author: Airabella Lepinski