Cash Cowed

Is $13k too much to pay for a compact disc? Not in Hennepin County.

Last summer, while casting about for a news story, Gary Hill called up the Hennepin County Taxpayer Services Department and requested a digital copy of the county's property-records database. As director of the investigative unit at KSTP-TV (Channel 5), Hill knew the information he was looking for was a matter of public record. With a decade's experience in computer-assisted reporting, Hill figured the county's techies could supply him with everything he wanted on a single compact disc.

He figured that once armed with detailed information about the ownership, taxes, and value of the 380,000-some properties in the county, he could come up with a variety of stories. "We could do comparisons," he explains. "Where are wealth and poverty clustered? Who is in arrears on their taxes? What are the trends?"

Shallow pockets: Gary Hill heads the investigative-reporting unit at KSTP-TV
Craig Lassig
Shallow pockets: Gary Hill heads the investigative-reporting unit at KSTP-TV

Then there was the little matter of the price tag. When Hill first telephoned the Taxpayers Services Department in August, he was told that the requested information would cost $13,500. In a follow-up letter, the county clarified: It would actually cost $13,703--including $200 tacked on for copying labor and, in a tidy flourish of bureaucratic detail, $3 for the CD.

"Burning a CD is dirt-cheap these days. You can do it for 50 cents. They should be charging five bucks," Hill says, then pauses, laughs, and reconsiders. "Maybe a hundred." In any case, to Hill the county's asking price seems to be more than a simple case of gouging. It is, he asserts, a violation of both the spirit and the letter of the Minnesota Data Practices Act, the state law that governs what public agencies can charge for copies of their records. Under the act, Hill points out, agencies are supposed to assess only "reasonable" fees for copying services, and they are required to provide detailed justification of their prices. The fee didn't seem reasonable to Hill. And the county's justifications, he thought, were a stretch.

Last month David Fisher, the commissioner of the state Department of Administration, concurred. In a written opinion, Fisher questioned the rationale the county used to devise its fee structure, argued that the county misinterpreted the law, and flatly declared the charge "not appropriate."

"This opinion comes as no surprise," responds Patrick O'Connor, director of Hennepin County Property Taxpayer Services. "The commissioner has consistently come out on the side of providing data at low cost. But I think we did a good job of justifying our actions. We're providing taxpayers with reasonable cost reimbursement for an incredible business resource." The commissioner's opinion is strictly advisory, O'Connor notes, so the county is not required to act on it. Barring a defeat in court, he says, the county plans to continue its current practices.

Which seems natural: Hennepin County rakes in an average of more than $300,000 a year through the sale of its various property databases, according to Bob Hanson, the county's chief information officer. When you throw in a special service that provides customers with direct "point-to-point" access to the records, the county's annual take rises to more than half a million dollars, says Hanson.

Most of the money comes from a half-dozen big real estate concerns. For title insurance companies, Hanson observes, shelling out $13,703 for quick, reliable access to computerized property records is more efficient (and cheaper) than performing time-consuming individual record searches on the county Web site. For customers who don't wish to buy the entire database, he says, the county offers a wide range of less expensive custom options.

As Hanson sees it, the property-tax database is a public asset, not unlike minerals and timber on public lands, and those who profit from public assets should pay for the privilege. He points out that the county has invested heavily in building and maintaining its property-tax records system over the years, spending a total of some $14.2 million on it since the mid-Seventies. It is only fair, Hanson argues, that the county should recoup some of those expenditures.

Under Minnesota's Data Practices Act, government agencies are supposed to figure only actual copying costs into their pricing schemes. But in the mid-Eighties, in response to lobbying from Hennepin County, the legislature created an exception for commercially valuable data--information like the computerized property-tax records-- that private industry can turn a buck on. Under the exception, the copying charges for data that businesses are willing to pay for can be adjusted to reflect the "development costs" incurred by government in creating the new computer systems.

That the property database falls under the commercially valuable exception is not in question. But the definition of "developments costs" is. "We've been making this computer system better and better for the 20 years the system has been around. And we think those are legitimate development costs," says Hanson. "You don't build a computer system and never spend money on it again." Because the county considers "development" a continuing process, those costs will likely never be recouped, according to Don Kopel, the information technology supervisor at the county's taxpayer services department.

In Hill's view--and Commissioner Fisher's--the county is using an overly broad definition. "What they appear to be saying is, everything they do with the system counts as 'development costs.' But a lot of what they're talking about is operating costs," Hill says.

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