A view from the recently opened Boreal House in West Duluth. The neighborhood’s commercial properties face a 24 percent jump in property tax valuations this year. (The Minnesota Star Tribune)

DULUTH – St. Louis County assessors raised the estimated value of commercial and industrial properties in West Duluth and downtown by a combined $100 million, sparking concerns from local businesses worried about accounting for property tax hikes in budgets already strapped by the COVID-19 pandemic.

Some parcels in those parts of the city had not been reappraised for 10 to 15 years, according to St. Louis County's annual property assessment report.

Residents received mail notice this week of the county's most recent estimated market valuations of their properties, which will be used to determine taxes payable in 2021.

"The timing of this makes it especially difficult, when so many people are hurting due to the COVID-19 situation," said Mary Garness, the county's director of public records and property valuations. "But the reality is these changes in valuation were long overdue, and for us to not make these adjustments would be unfair to our other taxpayers."

Kristi Stokes, president of Duluth's Greater Downtown Council, said she's already heard from business owners alarmed by the significant increases in estimates.

"We realize that it's been quite some time since properties went through revaluations," Stokes said. "However, to get this information right during COVID-19 has been, I think, a bit difficult for many property owners."

St. Louis County's total property value — determined as of Jan. 2 and, therefore, not reflective of potential effects of the coronavirus pandemic — grew by $514 million, or almost 3%, from last year. Almost a third of that value is from new construction.

The total value of commercial and industrial properties in downtown Duluth increased by 11% from 2019 to 2020, while those in West Duluth (including the Lincoln Park craft district) rose by 24%.

In 2013, St. Louis County took over the appraisal process from Duluth and other cities in an attempt to create a more uniform system. Since then, the county has been working to revalue the properties. But doing so required time-intensive visits and analyses, and the county was at times short-staffed and facing turnover challenges, Garness said.

This year's round of drastic increases should be the last tied to that transition. Garness said the county is mostly caught up, meaning parcels will be inspected every five years moving forward, in accordance with state law.

Keith Nelson, the St. Louis County commissioner representing the district that includes Virginia, called $100 million an "egregious" amount of property for the county not to have been properly taxing.

"I certainly hope I do not hear any complaints from the commercial districts in Duluth or from elected officials in Duluth, for the fact that they got a great deal for 15 years," he said at Tuesday's board meeting.

Commissioner Frank Jewell, whose Duluth district includes downtown, said though some of his constituents may bear the brunt of the anticipated tax increases, he considers them fair. But he also challenged Iron Range officials to push for more tax revenue from the region's mines, citing a 5-cent-per-pound taconite tax that was redistributed from the county to Iron Range school districts earlier in the decade.

"We, of course, aren't on an equal level because the mining companies have long not been paying their fair share to St. Louis County," Jewell said.

In the coming weeks, the County Board is expected to discuss the possibility of delaying penalties on late tax payments to provide some relief to property owners facing mounting hardships amid the ongoing public health crisis.

Katie Galioto • 612-673-4478