Committee advances bill to change residential property definition after Mandan landowner testimony

The House Finance and Taxation Committee voted to give House Bill 1152 a due-pass recommendation after hearing that some vacant lots or standalone garages are being taxed as commercial property under current law.

Representative Porter presented the bill and said a constituent, Ron Balkovich of Mandan, received notice that a 1.73-acre lot with a 40-by-60 shop had been classified and taxed as commercial because it does not currently contain a dwelling. Porter said the situation, which he described as a conflict between zoning and tax classification, arises because the statute requires property to be “used by an individual or a group of individuals as a dwelling” to qualify as residential for property-tax purposes.

Ron Balkovich told the committee he has owned the lot north of Mandan for about 20 years and that the assessor told him there is no Century Code category for a lot with a shop but no residence; under current practice such property reverts to commercial classification. Balkovich said he appealed to the county commission and was denied and that other nearby properties with businesses and residents were taxed as residential while his lot was treated as commercial.

Charles Dendy, general counsel for the Office of State Tax Commissioner, gave neutral testimony explaining the statutory framework. Dendy said zoning is a separate matter from property classification under the North Dakota Century Code and reiterated that the law’s residential definition requires use as a dwelling; if a parcel does not contain a dwelling it is generally classified as commercial. He said the bill’s language would allow separate parcels with accessory or storage buildings to be treated as residential in more circumstances but cautioned that unintended consequences are possible.

Linda Swihovic of the North Dakota Association of Counties told the committee tax directors reviewed the bill and “didn’t see any issue with this bill,” saying it would provide clarity. She noted the change likely would produce a modest taxable-value difference — she said the base rate could shift from 5% to 4.5% of true and full value for affected properties — and observed broader pending bills on residential classifications could interact with this change.

Representative Greenheck moved a due-pass recommendation; Representative Anderson seconded. The committee recorded a roll-call vote: Chairman Hedlund, Vice Chair Hager, Representatives Anderson, Doctor, Dressler, Greenheck, Nearing, Olson, Porter, Toman, Foss and Vista voted yes; Representative Steiner voted no. The committee chair announced the motion carried.

Committee members discussed the possibility of unintended consequences if the change were made in isolation, noting another property-classification bill scheduled for later committee consideration. Representative Vista recommended waiting for a broader view, while Representative Steiner declared a conflict and said she would vote against the motion because her own property would benefit from the change. With the due-pass recommendation, House Bill 1152 moves forward in the legislative process for further consideration.