Three landowners with agricultural property inside of Hills city limits are requesting that their parcels — a total of approximately 91 acres — be designated as rural service districts.
The designation, common in rural cities throughout the state, would allow the land to be taxed at a lower rate since it does not receive the benefits of city services.
“It’s taxed at a much higher rate than the surrounding township land,” said Nick Sandager, one of the affected landowners.
“We can all clearly see it’s agricultural land. It has been for the last hundred years.”
Sandager addressed the Hills City Council members at their April 14 meeting.
He’s requesting the rural designation on behalf of himself, Charlie Sandager and Dianne Marbus Boatright, all of whom use their land to grow crops.
Sandager said the tax rate on the city property is approximately six times higher than the township land directly next to it and used for the same purpose.
“At the end of the day it’s just zoned wrong,” Sandager said.
“You wouldn’t take a row of houses and say it’s industrial and tax it at an industrial rate. It’s the same for agricultural land.”
He pointed to the cities of Hardwick and Magnolia that have recently created rural service districts, and that by statute, they’d have to return to city tax rates if they were ever developed.
A long-standing request
Sandager said he and the other two landowners have previously requested the rural service district designation, but haven’t had council acknowledgement.
His most recent request to the council occurred three months ago.
“I was a little disappointed when I talked to you guys before and no one got back to me about anything,” he said. “Nothing over three months.”
Since then, the Sandagers and the other property owners have contacted a lawyer to discuss their options.
If the city doesn’t approve the rural service districts, they plan to file for separation to remove their properties from city limits entirely.
The process would take the issue to a judge, and if the city doesn’t agree to allow for separation the case could go to court.
“We were suggesting this rural service district because it’s an easier method for all of us,” Sandager said.
“It stays in the city limits, you still get some of the tax base, no one has to waste money on lawyers, and we can all work together to make everybody happy.”
Currently the properties account for around $3,000 in taxes to Hills, or around 0.5% of the city’s 2026 budget of $545,210 and 2% of the city's 2026 tax levy of $150,441.
If removed from city limits entirely, the 91 acres would reduce the city’s area by around 22%.
Considerations and next steps
The landowners are requesting that the city provide them with an answer by May 13, the day after the council’s next meeting.
“If we don’t hear from you by then, we’ll kind of assume it’s a no,” Sandager said.
Mayor Jim Susie affirmed that the city would provide a response by May 13, saying, “We’ll get you an answer.”
After minimal discussion while Sandager was present, the council returned to the topic prior to adjourning with Susie sharing that he would like to bring in former mayor Keith Elbers as the city’s real estate agent and consultant.
“I’ve been speaking to Keith Elbers about it, and I’d like to bring him on,” he said.
“He already gave me some information and I would like him to bring that to you guys so we can have a real look at it.”
Susie said Elbers, who is offering his services free of charge, could look into the recent actions in Magnolia and Hardwick and that he could advise the council on how to proceed.
Council member Dusty Seachris said he wants to make sure the properties stay within city limits.
“I don’t want it to go to the township,” Seachris said.
A motion was made to appoint Elbers as the city’s real estate agent and consultant.
The present council members, which did not include Vickie Busswitz, passed the motion unanimously.
