Why Is The Mayor Of Oxbow Getting Almost 200 Percent Of His Property Value For A Flood Diversion Buyout?

Recently Rich Mattern, the Mayor of West Fargo, vented some spleen at Governor Jack Dalrymple and the Legislature over their priorities on water projects. Mattern pointed out that while his constituents are facing higher water bills because the state wouldn’t make money available for a new water plant, the City of Oxbow is getting a new golf course and clubhouse courtesy of the taxpayers.

“So what we have is the governor, the Legislature and the water commission supporting a golf course and clubhouse to support a few hundred people, but can’t come up with a dime to support 32,000-plus people for a water treatment plant and perhaps other cities such as Mapleton, Horace and Casselton,” Mattern said in a prepared statement. “That logic is difficult to follow and baffling.”

Indeed it is. The golf course and clubhouse are part of a deal to get the City of Oxbow on board with Fargo’s controversial flood diversion plan, and it isn’t the only sweetheart deal they’re getting. Over at Watchdog today I have a story about the property buyouts taking place in Oxbow, including for Mayor Jim Nyhoff who acknowledge an emailed inquiry I sent him but did not respond to my questions.

What sort of a deal is Nyhoff getting? He is currently slated to receive a $311,000 buyout of his property on Schnell Drive, a price 196 percent above its 2014 tax assessed value of $158,500. Nyhoff would also get $90,000 in relocation compensation. That for a man who has very lately become one of the loudest advocates for the flood diversion after previously opposing it.

And it’s a deal a lot of people in Oxbow are getting. “I think this was just a buyoff,” Fargo City Commissioner Dave Piepkorn told me about the Oxbow buyouts. “We’re buying them off if they would be our ally, otherwise they would have joined the lawsuit with some of the smaller government opponents.”

The proposed Oxbow buyouts average over 207 percent more than the 2014 assessed value of the homes, according to documents provided to Watchdog by Piepkorn and City Commissioner Tony Gehrig. …

In Oxbow, the average 2014 assessed value is over $224,000, but the average proposed buyout is over $453,000. Oxbow properties also come with an average “relocation compensation” of over $157,000 per property.

You might be tempted to say that assessed property values are often different from market values, and it’s only fair to compensate property owners being bought out by the government at fair market values. The problem is that when you compare the Oxbow buyouts to similar buyouts in Fargo it’s clear that the Oxbow folks are getting significantly more both in terms of the purchase price of their properties and their relocation compensation.

[mks_pullquote align=”right” width=”300″ size=”24″ bg_color=”#000000″ txt_color=”#ffffff”]“Are you OK with Oxbow getting 200 percent buyouts while Fargo residents are getting 110 percent of their value?” Commissioner Tony Gehrig asked me…[/mks_pullquote]

The proposed Fargo buyouts being considered by the Fargo city commission averaged 128 percent of the 2014 tax assessed value. The Fargo property buyouts also come with a much more meager relocation payment average of $37,234 per property.

“Are you OK with Oxbow getting 200 percent buyouts while Fargo residents are getting 110 percent of their value?” Commissioner Tony Gehrig asked me when I spoke with him about the buyouts. “I don’t care who you are, your home is worth what it’s worth. If your assessed value is, let’s say $130,000, you shouldn’t be getting $600,000 or more for your home,” he said.

There’s also a legal issue here. Gehrig pointed out to me that state law requires property tax assessments to be within 10 percent of market value. If the assessed property values in Oxbow were roughly half of the actual market value then the assessments were illegal and the folks in Oxbow have been getting away with paying less than they should have in property taxes.

Fargo city officials have claimed that the 200 percent buyouts in Oxbow are required by state and federal law, but I spoke to a state lawmaker who said otherwise:

Rep. Roscoe Streyle, a Republican from Minot who sits on the Budget Section and Water Topics Overview Committees, agreed with Piepkorn.

“There’s nothing in state law that requires Fargo or any other entity to pay a certain percentage above assessed or market value when buying out property,” Streyle told Watchdog. “I would hope they have a uniform system in place so that all property owners are treated fairly during the buyout process.” …

“Many federal government programs do require participating entities to follow Uniform Standards of Professional Appraisal Practice, but that’s when federal financial assistance is provided,” Streyle said.  “To this point there has been federal technical assistance provided to the F-M area diversion authority, but not federal financial assistance.”

Also problematic is that it seems as though the Diversion Authority tried to slip these buyouts through under the radar:

“Melissa and Mike, when asked, said they didn’t know about the buyouts,” Gehrig said, referring to fellow city commissioners Melissa Sobolik and Mike Williams, who serve on the Diversion Authority overseeing the project.

Piepkorn said when the proposed buyouts came before the City Commission for approval they were “lumped in with a lot of other expenses.”

“The Diversion Authority has a mountain of paperwork. When they throw all that paperwork out and say ‘we told you what we’re doing’ it’s a filibuster,” Gehrig added.

“From now on we’ll vote one-by-one,” Piepkorn said. “I’m going to pull them out.”

So, in summary, we have a bunch of sweetheart buyouts going to a community that at one time was very much opposed to the flood diversion. Among those being bought out is an elected official who was also opposed to the diversion. These Oxbow buyouts are an outlier compared to other diversion buyouts in the region, and they were presented to the Fargo City Commission in something less than a transparent way.

I don’t think it’s unreasonable to say that this is all a little fishy. Richland County Commissioner Nathan Berseth, who is also on the board of the Richland/Wilikin Joint Powers Authorith which is suing to stop the diversion, gets the last word:

Oxbow Mayor Jim Nyhoff and his city were once enemies of the Fargo flood diversion.

“At one time Oxbow joined our JPA,” Richland County Commissioner Nathan Berseth told Watchdog. “Now they’re strongly opposed to the JPA and think we’re all wrong.”

The JPA stands for the Joint Powers Authority formed between Richland County in North Dakota and Wilkin County in Minnesota, both south of Fargo. Berseth is a board member on the JPA, which has filed a lawsuit in federal court over the flood diversion project.

In 2011, Nyhoff communicated his community’s opposition to the flood diversion project in a letter to the U.S. Army Corps of Engineers, but Nyhoff’s position has since changed. Nyhoff said at a June city meeting it was time to go on the offensive in favor of flood diversion. …

“It seems…that money talks. They’re being bought off,” Berseth said. “Our position never changed. The only thing that’s changed for Oxbow is that they get a country club that’s bought and paid for and they get these homes that are bought at outlandish replacement prices.”

Whatever your position on the Fargo flood diversion, there’s something that stinks about what’s going on in Oxbow.