DNR mistake could cost man a thousand dollars

The Department of Natural Resources is investigating options to help a Darlington man after one of its foresters made a mistake that could lead to a thousand dollars in back taxes.

In June 2012, Jim Kostohrys bought 200 acres of Iowa County land, thinking a large section of it would be enrolled in the state’s Managed Forest Program that gives land owners tax breaks for keeping the land pristine. He said when he first saw the property with oak and walnut trees that date back to the mid-19th century, he found it “magical.”

Kostohrys and his real estate agent met with one of the region’s DNR foresters for half a day before the purchase to ensure the land qualified under the program.

“We drove all over the property, looked at everything. He pulled out a lot of different maps, gave us lots of good information on what we need to do to keep the property in compliance,” Kostohrys said, standing on the property that used to be owned by Wisconsin’s first governor, Henry Dodge. “At that point, I don’t want to say he signed off on it, but he pretty much said, ‘Everything’s OK, everything’s great.'”

Eight months later, that same forester alerted him that he had made a mistake in assessing the land. Three of the acres that Kostohrys bought were not able to be kept in the program and that he’d have to pay a $300 fine to pull them out of the Managed Forest Program plus pay back taxes, at a higher rate, dating back to when the land was originally entered into the program, which was in 2003. It’s a bill that will cost him thousands of dollars, though the DNR said it estimated up to a thousand.

“They called me up and said, ‘It’s our problem. It’s our error, but you have to pay for it,'” Kostohrys said. “It’s ridiculous because it wasn’t my mistake.”

News 3 participated in two conference calls with leading DNR officials to understand what happened. John Nielsen, who is the Southern District’s forestry leader, said the original landowner entered 37 of the 40 acres he would later sell to Kostohrys into the MFP in 2003. Two years later, he would add the remaining 3 acres and 56 more into the program. However, in 2004, Wisconsin law related to the program changed, preventing parcels of less than 7 acres to be entered into the program.

Had the original owner put all 40 acres into the MFP in the first place, Kostohrys would not now have a problem, but the 3 acres in question were tied to the extra 56 and not to the original 40.

Further complicating matters was the fact each of the “orders” were in different files and neither had a cross-reference to the other. The forester who met with Kostohrys brought the older order to the meeting, while another forester had the more recent one. If the forester who met with Kostohrys had both files with him at the time of their meeting, in theory, he could have caught the problem, allowing Kostohrys to back out of the purchase of those 3 acres.

DNR mistake could cost man a thousand dollars

“One of the DNR people said it’s like a perfect storm with about five Murphy’s laws coming together on top of you,” Kostohrys said. “Everybody agrees, everybody says this is wrong, this is not right, it’s not your fault. But nobody seems to be able to do anything about it.”

The DNR said state law requires a property seller to disclose land that is in the Managed Forest Program, but the deed Kostohrys has does not indicate that. He has title insurance and nothing came up as a red flag at the time of closing.

Further, both the seller and buyer’s real estate agents assumed the land was in the program because it was. It wasn’t until the sale, breaking up the parcels, that a problem arose. Neither party knew that a 3-acre parcel could not stand on its own. The only party to the situation who would have had the expertise to do that was the DNR forester who met with Kostohrys and his real estate agent.

“We did give him misinformation,” the DNR’s Nielsen said in the conference call. “We are investigating options for the landowner, but the law does not give us much flexibility (to help).”

Nielsen said the obligation for MFP in state law goes with the land, not with the sale. That means Kostohrys owes back taxes for more than a decade before he bought the land.

Kostohrys has not yet received the tax bill on the 3 acres, which will be retroactively taxed as residential property instead of MFP. It’s a much higher rate and the irony is, he does not want to take the land out of the program. He plans to keep it pristine without development even if the state forces him to remove it from the MFP.

“It’s like if you bought a used car, got a clean title and then months later, you’re told there are a bunch of parking tickets from before you bought the car,” he said. “Then, you’re told you have to pay for those tickets and a late fee on top of it. It’s ludicrous.”

DNR spokesman Bill Cosh said Friday just before 5 p.m. that the agency will waive the $300 fee it was set to charge Kostohrys for removing the land from the Managed Forest Program. Further, Cosh said that the estimated tax bill to Kostohrys would be between $900 and $1,000.

Cosh said the agency was exploring options to help Kostohrys pay the taxes, “but there are only so many things we can do.”