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Jefferson County Real Property Valuation Notices Are “In The Mail”
The Board of Equalization for Jefferson County sent out the 2009 valuation notices on Tuesday, June 9, 2009. Jefferson County is home to metropolitan Birmingham and many of the surrounding suburbs. The valuation date for purposes of the notice is October 1, 2008 and will be the basis for calculation of the ad valorem tax bill due on each parcel for October 1st, 2009 (delinquent December 31, 2009). All tax parcels in Jefferson County will receive a notice even if the Board has not changed the value from that of the prior year. The address for the notice is the address that appears on the records of the Tax Assessor. Should any taxpayer or agent have a new mailing address, you may want to make sure the notice is forwarded to the new address or call the BOE directly (205-325-5566) for the new value.
A taxpayer has 30 days to file a written protest of the new valuation with the BOE. The BOE has instituted a requirement that protests be made via filling out and returning the yellow valuation notice card sent to taxpayers. We do not believe that failure to use the yellow card is justifiable grounds to deny a taxpayer the right to protest, however, good practice suggests that one should comply with the BOE’s request.
While some of the procedures have changed, the information that the BOE is looking for remains substantially the same. For commercial real property, the BOE will typically consider the most recent three years of income and expense statements, as well as any comparable sales information that is presented. The BOE is also interested in any recent appraisals as well as information about the property that bears on its value, i.e., functional obsolescence, deferred maintenance, environmental issues, leasing problems, restrictive covenants, easements and servitudes. Information about comparable sales or leases, in the case of owner occupied property, is also helpful.
Typically, the BOE will send out the final results of all protests dated the same day. This is to prevent confusion as to the commencement date for the 30 day period to appeal to Jefferson County Circuit Court. Most taxpayers in Jefferson County who appeal real property results appeal pursuant to local legislation that allows for the value on appeal to be decided by a panel of three real estate professionals.
Benjamin J. De Gweck
DonovanFingar, LLC
American Property Tax Counsel (APTC)
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Arizona Court of Appeals Holds that Improvements and Personal Property located on Indian Reservation Are Subject to Taxation
At issue in Calpine Construction Finance Co. v. Ariz. Dept. of Rev., 554 Ariz. Adv. Rep. 3 (Ariz. App. 2009), was whether the taxpayer or the Fort Mohave Indian Tribe (“Tribe”) owned the improvements and personal property located on the Indian reservation. Calpine sought a refund of property taxes assessed on the electric power generating plant and personal property it operated on the lease of trust land from the Fort Mohave Indian Tribe. Calpine argued that the property belonged to the tribe and thus was immune from taxation. The general rule under Arizona law is that a permanent structure placed upon and attached to the realty by a tenant is real property belonging to the lessor. However, the parties can abrogate that rule by expressly agreeing to treat the improvements as belonging to the lessee. Based on the language of the leased agreement, the Arizona court of Appeals ruled that Calpine owned the improvements and personal property. The lease provided that all buildings and improvements constructed on any part of the lease land was the property of taxpayer. The lease also did not require any rental obligations for the improvements, and it allowed Calpine to receive any distributions in a condemnation proceeding.
Douglas S. John
Bancroft Susa & Galloway
American Property Tax Counsel (APTC)
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Assessment in Ontario
The notices are out for the reassessment for 2009 taxation based on a January 1, 2008 value. In previous articles, we have raised issues as to where that may lead given the present economic circumstances facing North America.
What we must now be alerted to is not only the value as determined but also the implementation of the “phase-in” and tax capping regimes now within the discretion of the local municipalities. The legislative scheme has changed dramatically as a result of the new reassessment to allow a phase-in of those values for commercial/industrial properties over a four-year period upon which is placed a municipal tax capping/clawback regime.
What is extremely important to note is that not only does an appeal with respect to the assessment returned for 2009 impact the base 2008 value, the appeal may also reference the 2005 value set forth in the Notice of Assessment as the benchmark for the “phase-in”.
A right of appeal exists with respect to that benchmark valuation, particularly in circumstances in which it is something other than that originally established for the 2006/2008 cycle. It is complexity on top of complexity. The last date for appeal for the 2009 taxation year is March 31, 2009.
Richard Poole
Walker Poole Nixon, LLP
American Property Tax Counsel (APTC)
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Updated March 2009
Court Holds Assessor's Technique for Removing Hotel Intangibles Illegal
The Superior Court recently held that the Los Angeles County Assessor's technique for removing non-taxable intangible property from the value of
an operating hotel business, in order to determine the assessed value of the hotel's real property, violated California law. The Assessor had urged the county Assessment Appeals Board to accept the "Rushmore appraisal technique" for removing a Hilton franchise, hotel management and workforce, and other intangible assets and rights from the business enterprise value of a full-service hotel. Although the Board followed
the Assessor's suggestion, the court declined to do so. In its ruling, the court stated that the Assessor's "approach is improper" and that the "appraisal technique [used by the Assessor and adopted by the Board] violated California law." The court also said that the Assessor's
valuation method "impermissibly subjected intangible assets to taxation." (EHP Glendale, LLC v. County of Los Angeles, LASC No. BC385925, Feb. 18, 2009.)
Cris K. O’Neall
Cahill, Davis & O'Neall, LLP
American Property Tax Counsel (APTC)
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Updated June 2009
Colorado Assessors Report Less Cases Filed than Originally Anticipated
Colorado just completed the filing process for tax protests of the 2009-2010 reassessment for real property tax valuations. Although most taxpayers were initially concerned that their real property valuations rose during what most people consider bleak economic times, upon further education, most taxpayers realized that under the Colorado Real Property Tax System, taxes were generally assessed correctly.
Under Colorado law, real property taxes are assessed in arrears. The base period used for 2009 and 2010 taxes was January of 2007 through June 30, 2008. The Assessor’s Offices are taking the position that the current economic downturn did not commence until the third quarter of 2008 and, therefore, was not considered. Most Assessor’s Offices have concluded that the volume of cases filed is less in 2009 than they anticipated because the Assessor’s Offices spent a great deal of time educating taxpayers on the assessment base period. If you missed the tax protest deadline of June 1, 2009, you may still be eligible to file a tax abatement on January 1, 2010.
Kenneth S. Kramer
Berenbaum, Weinshienk & Eason, P.C.
American Property Tax Counsel (APTC)
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Updated June 2009
Property Valuation Topics:
Unusual Event: Three Appraisers Agree
The taking of a former Volkswagen auto dealership and repair facility consisting of approximately 2.5 acres with a gross building area of slightly more than 19,000 square feet generated a confluence of appraisal opinion perhaps not seen since the last solar eclipse.
An opinion not otherwise notable for establishing new law (it was not necessary) or in parsing a difficult fact pattern addressed the property owner's appeal of the Connecticut Commissioner of Transportation's award of $2,129,000. Happily for the appellant, the Commissioner's appraisal was "updated" to $2,786,000.
The second appraiser who testified at trial for the State of Connecticut valued the property at the time of taking at $2,750,000. The property owner's appraiser put forth a market value of $2,785,000. All appraisers used methodologies other than the sales approach.
As Judge Trial Referee Samuel Freed observed, "In most cases of this sort, the court is charged with taking into account the divergent opinions expressed by the witnesses of the claims advanced by the parties. . . . What is quite noteworthy in this case is the lack of diversity in the opinions advanced by the experts presented by the parties." Essentially, the court observed, the appraisers' conclusion was "unanimous".
State of Connecticut v. Auto Corner, LLC , Docket No. CV‑0740‑32622, March 31, 2006.
Elliott B. Pollack
Pullman & Comley, LLC
American Property Tax Counsel (APTC)
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Wilkes Artis, Chtd.
American Property Tax Counsel (APTC)
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A recent bill changes the presumption of correctness in Florida property tax appeals. Under the new law the appraiser must prove by a preponderance of the evidence that its assessment was arrived at by complying with statutory requirements and professionally accepted appraisal practices. If the appraiser fails to prove this, then its assessment does not have a presumption of correctness.
If the appraiser succeeds in its showing, then the taxpayer must prove by a preponderance of the evidence that the assessment does not represent the just value of the property or is arbitrarily based on appraisal practices different from those applied to comparable property in the county. If the taxpayer makes this showing, then the special magistrate shall establish the assessment if there is competent, substantial evidence of value in the record. If the record lacks such evidence the matter must be remanded to the property appraiser with directions from the magistrate.
This new statute takes effect for 2009 assessments and represents a substantial change in favor of taxpayers challenging their assessments.
Julie Schwartz
Berman Rennert Vogel & Mandler, P.A.
American Property Tax Counsel (APTC)
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Updated June 2009
New Tax Legislation in Georgia
The governor has signed three new bills affecting property tax issues in Georgia. S.B. 55, amending O.C.G.A. § 48-5-2, mandates that tax assessors consider foreclosure, bank and other financial institution owned sales, distress sales, and any combination of comparable real property transfers in determining fair market value. H.B. 233 (now O.C.G.A.§ 48-5B-1) provides a moratorium period for taxable years beginning January 1, 2009 and continuing until January 9, 2011. Property taxable values cannot be increased above 2008 values except under certain circumstances: property additions or improvements, ownership transfer, rezoning, subdivision, or combination which changes property use, property factual error corrections. This law does not take effect until tax year 2010 for counties that performed or contracted for a comprehensive county-wide revaluation. The third new law, S.B. 240 amends O.C.G.A. § 48-5-311 to provide for an optional binding arbitration procedure in which a single arbitrator will decide the property value in lieu of that determination being made by a board of equalization hearing or non-binding arbitration.
Lisa F. Stuckey
Herbert H. Gray III
Ragsdale, Beals, Seigler, Patterson & Gray, LLP
American Property Tax Counsel (APTC)
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Updated June 2009
Valuation of Low-Income Housing Projects
In response to the growing controversy over the valuation of low-income housing, Idaho recently enacted legislation providing guidance to county assessors for the valuation of low income housing projects governed by section 42 of the Internal Revenue Code. The new law also outlines procedures that assessors must follow when considering the federal tax credits associated with these projects. The new statute requires assessors to use variations of the three standard appraisal methods. When using the sales comparison approach, assessors must look to sales of similar rent restricted properties. When using the cost approach, assessors must essentially reduce the value of the property based on the rent restrictions. And finally, assessors will include a small portion of the credit when utilizing the income approach through a statutorily prescribed formula based on when the taxpayer enters into the regulatory low income housing agreement with the appropriate authorities.
Norm Bruns
Garvey Schubert Barer
American Property Tax Counsel (APTC)
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Updated March 2009
Revaluation Of The City Of Chicago And Changes In The Assessment Ordinance
As part of Cook County's revolving three year cycle of property revaluations, all properties in the City of Chicago will be revalued in 2009.
We expect that Assessment Notices for Rogers Park and Lake View will be mailed some time after April 15th. From there the revaluation process will continue throughout the rest of 2009. Effective for 2009, the Cook County Board has revised the Ordinance which governs assessment ratios in all of Cook County. All commercial and industrial properties will now be assessed at 25% of market value. Up to 2009, industrial properties were assessed at 36% of market value and commercial properties were assessed at 38% of market value.
In the wake of the current devaluation of real estate, there is great uncertainty as to how the Chicago Revaluation will go forward. Every segment of the real estate market has suffered significant decline and the City, the County and the State are forecasting budget deficits. A reasonable assumption might be that assessments will go down but rates will increase geometrically. At the same time, history suggests that assessments will rise to minimize the need for big increases in the tax rate.
Chicago taxpayers should be very diligent reviewing their new assessments.
James P. Regan
Fisk Kart Katz and Regan, Ltd.
American Property Tax Counsel (APTC)
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Updated June 2009
Appeal Deadlines From JuneTax Bills
Unlike in the past, Notices of New Assessments will not be mailed in most Counties throughout Indiana this year. Although some taxpayers may receive Notices alerting them to changes in the assessed value for their property, it is more likely that any assessment changes will appear on the taxpayer's spring 2009 tax bill issued in June. Once the tax bill is issued, showing a change in an assessed value, the taxpayer will have 45 days from the date the tax bill is issued to file an appeal contesting the new valuation. So it is imperative that taxpayers closely monitor the tax bills received this month, and be aware of appeal deadlines from those bills.
Tax Bills Mailed in Indianapolis (Marion County)
Appeal Deadline in July
The second installment 2007 (pay 2008) tax bills are in the mail. The taxpayer will have 45 days from the date the tax bill is issued to file an appeal contesting the March 1, 2007 assessment. Appeals are due in July.
Stephen H. Paul
Vickie L. Norman
Baker & Daniels LLP
American Property Tax Counsel (APTC)
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Updated March 2008
Property Tax Exemption and Tax Increment Financing
As property tax lawyers we are occasionally asked to assist in matters related to governmental incentives to the purchase and development of residential, commercial and industrial real estate projects. In Iowa, two of the more common incentives involve differing approaches that each can result in considerable decrease in real estate taxes attributable to the property and improvements to the property. The two approaches are property tax exemptions and tax incremental financing (“TIF”).
The property tax exemption program generally focuses on an exemption from taxation for the actual value added by the improvements made by the developer. The exemption period, and amount, vary, but a 100% exemption for a relatively short period, two or three years, is a common exemption incentive. The exclusion from taxation is generally tied to the value added to real estate during the process of construction for development or redevelopment.
TIF is available to municipalities pursuant to Iowa Code section 403.19 (2007). It is normally employed in approved tax increment financing districts. A typical City description of TIF benefits it will grant is:
- At the City Council’s discretion, and as permitted by Iowa code, Chapter 403.19, tax increment financing may be available in providing direct grants, forgivable loans, or property tax rebates for qualifying businesses in the urban Renewal Area. The funds from the direct grants, forgivable loans, or property tax rebates may be used for, but are not limited to, financing the private site improvements such as site improvements, new building construction, building expansions, building rehabilitations, facade improvements or interior build outs . . . .
Both property tax exemption and TIF are widely available and should be considered by developers for their projects in Iowa.
Douglas R. Oelschlaeger
Shuttleworth & Ingersoll, PLC
American Property Tax Counsel
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Updated February 2008
2009 Valuations Are Out - Time to File an Appeal ?
The 2009 appeal season is upon us. Most, if not all, of the new 2009 real property values are mailed in the month of March to property owners across Kansas. If you did not receive a 2009 valuation notice, you can contact the county appraiser’s office ( http://www.kansas.gov/kcaa/appraisers/main.htm ). Some counties have valuation information on-line. To see if the county has on-line information, check here. http://www.kansas.gov/kcaa/links.htm .
Taxpayers desiring to appeal their 2009 valuation have 30 days from the date the valuation notice was mailed. The directions to appeal are required by state law to be included on the valuation notice. The first level of appeal is with the county. If you are not satisfied with the results of that informal hearing, the next level of appeal is to the Kansas Court of Tax Appeals (“COTA). Additional information on how to protest can be found on the COTA website. http://www.kansas.gov/cota/
MISS THE APPEAL DATE? No problem. Kansas generously permits a taxpayer to avail themselves of one (and only one) of three opportunities to pursue property valuation reductions. A taxpayer can (1) file an appeal within 30 days of the date the valuation notice is mailed, or (2) pay the first half taxes under protest on or before December 20 th; or (3) pay the second half tax under protest on or before May 10 th of the year after the valuation year. If the ownership of the property changes during the calendar year, the new owner can also pursue a tax appeal even if the prior owner had.
Linda Terrill
Neill, Terrill & Embree, L.C.
American Property Tax Counsel
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Updated March 2009
Kentucky Assessment Notices to Be Mailed Soon
Most Kentucky counties will be mailing out their 2009 assessment notices in April. Kentucky law requires that a taxpayer be notified in writing of any increase in its real property tax assessment. Taxpayers wishing to challenge their tax assessments must do so during the statutory appeal period, generally the first two weeks of May. Taxpayers whose assessments do not increase may still challenge their assessments; however, they must also do so within the appeal period, and they generally will not receive written notice of the dates for appeal.
Appeal dates may differ from county to county, so taxpayers must check with the local assessing authority for the correct appeal dates.
Given the recent economic downtown, there may be a significant opportunity for a reduction in a property tax assessment – but only if the taxpayer acts within the appeal dates. Failure to request an assessment conference with the county property valuation administrator during this period will generally preclude the taxpayer from any further challenge to the assessment or the tax bill for that year.
Bruce F. Clark
Michele M. Whittington
Stites & Harbison PLLC
American Property Tax Counsel
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Updated March 2009
Law Change Could Hurt Owners of Tax Exempt Properties
Owners of exempt property may be hurt by a recent Louisiana law change. Historically, the owners of tax exempt property did not have to confirm that the exemption was being respected by the Assessor by checking the tax rolls during the public inspection period. The owner of exempt property could challenge a tax bill by paying the bill under protest and filing a lawsuit in district court. This procedure used to be in La. R.S. 47:2110. As the result of a major rewrite of the Louisiana law on tax sales, La. R.S. 47:2110 was renumbered La. R.S. 47:2134. In addition to renumbering the provision, the Legislature added a change that says exemption challenges must be handled like valuation challenges. The change was effective January 1, 2009. Thus, for 2009 and later years, an owner of exempt property must check the tax rolls during August and September of each year to confirm that exempt property has not been put on the taxable property tax rolls. If the Assessor decides to challenge the exemption and puts the property on the tax rolls, the property owner must file a protest with the local Board of Review and can appeal to the Louisiana Tax Commission. If the property owner waits to get a tax bill, it will likely have lost substantial rights and may be unable to challenge the assessment.
Christopher J. Dicharry
Kean, Miller, Hawthorne, D'Armond, McCowan & Jarman, L.L.P.
American Property Tax Counsel (APTC)
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Updated June 2009
Maine Tax Bills Are Being Committed
In Maine many jurisdictions are in the process of committing their 2009 tax bills. These tax bills have an assessing date of April 1, 2009. The tax bills are usually sent out to the taxpayers within a few weeks of the commitment date. The taxpayer must file an abatement application with the local assessor within 185 days from the commitment date. The assessor has sixty days to either act on the abatement application, unless the applicant has consented in writing to further delay. If the assessor fails to act, the applicant is deemed to be denied. The applicant then has a right to further appeal to the municipal Board of Assessment Review if one has been establish by the municipality. If the municipality has not established a Board of Assessment Review, most commercial property appeals will be before the State Board of Property Tax Review.
David G. Saliba
Saliba & Saliba
American Property Tax Counsel (APTC)
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Updated June 2009
In Massachusetts Filing Fees Can Be Expensive
Many of the taxpayers that filed fiscal year 2009 applications for abatement have had their applications denied by the local assessors. If a taxpayer wants to continue with his appeal he must file a petition with the Massachusetts Appellate Tax Board. The fee charged to file such a petition can be expensive. The filing fees are ad valorem at a rate of 10 cents per thousand of assessed valuation. Thus a property assessed for $10,000,000 has a filing fee of $1,000; a property assessed for $20,000,000 has a filing fee of $2,000, and so on. The maximum filing fee is $5,000. This fee is only for the fiscal year appealed. If the matter is not resolved it is incumbent upon the taxpayer to file again for the subsequent fiscal year and pay an additional
filing fee. No other State in the country has such a filing fee structure for tax appeals.
David G. Saliba
Saliba & Saliba
American Property Tax Counsel (APTC)
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Wilkes Artis, Chtd.
American Property Tax Counsel (APTC)
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Updated June 2009
Bank Sales May Help Michigan Taxpayers
The current economic downturn has caused bank sales to become a common if not predominant method of real estate conveyance in many markets. In Michigan there are certain markets where the only recent sales are the result of mortgage or tax foreclosures. Michigan assessors have traditionally attempted to disregard any bank sale in their sales studies or as comparable sales in appeal proceedings. The law in
Michigan does prohibit the use of forced sales or certain auction sales such as those resulting from a bankruptcy liquidation proceeding. However, the law is clear that bank sales may be considered if the seller has been able to use common marketing techniques and such sales have become a common method of property transfer in that locality for the class of property being considered.
The Michigan State Tax Commission has recently provided guidelines regarding when bank sales can be used for sales study purposes. In most cases, if the property has been marketed for an adequate period of time, with full market exposure the bank sale should be considered. In cases where the bank seller is also financing the transaction, the sale may still be considered but the sales price may have to be adjusted to take the financing into consideration. As Michigan's economic difficulties continue, there could be a greater chance that taxpayers and assessors will disagree about the weight bank sales should be given, notwithstanding the Tax Commission's recent guidance.
Stewart L. Mandell
Honigman Miller Schwartz and Cohn, LLP
American Property Tax Counsel (APTC)
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Updated June 2009
Minnesota Rejects Cost Approach for Corporate HQ Buildings
Minnesota’s Tax Court recently rejected use of the cost approach for a 1.1 million square foot corporate headquarters in suburban Minneapolis. Over $120 million was spent to expand the campus by nearly 500,000 s.f. the year prior to the assessment. The outlay included over $62M spent on a 350,000 s.f. office center, considered by all parties to be a functionally ideal design. The court agreed with the taxpayer that the $120M expenditure, along with another $20 million spent over the next two years to update existing buildings, did not equate to market value going forward.
The court also rejected use of the income approach for this owner-occupied property, because there were no meaningful rent comparables. The court settled on a sales comparison approach that yielded values of $73M- $85M for the three years at issue, a significant reduction in value from the assessment.
Mark K. Maher
Smith, Gendler, Shiell, Sheff, Ford & Maher, P.A.
American Property Tax Counsel (APTC)
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Updated June 2009
BOE Filing Deadline Confusion in Missouri
In Missouri, new Section 137.275 RSMo. provides that any aggrieved property owner may file an appeal with the county board of equalization on or before the second Monday in July. That would seem clear except that Section 137.385 provides appeals to the county board of equalization shall be filed before the third Monday in June; “provided that the board, in its discretion, may extend the time for filing such appeal.”
The counties that have purported to extend the time for filing an appeal for 2009 are: St. Louis City, St. Louis County, Greene County, Jefferson County, St. Charles County, Jackson County as well as miscellaneous other smaller counties. As to those urban counties, and a few others, a filing date of the second Monday in July (July 13, 2009) seems appropriate, even though it appears to run afoul of the June 15, 2009 filing deadline in Section 137.180. The county board of equalization is deemed by law to be an agency of the county. Promulgation of a filing date of the second Monday in July, which is authorized by at least one statutory section, should be relied on as being timely.
Jerome Wallach
The Wallach Law Firm
American Property Tax Counsel
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Updated March 2009
Car Rental Companies' Leasehold Interest Not Subject to Nevada's Possessory Interest Tax
In recent years several airports, such as in Anchorage, Baltimore-Washington, Kansas City, Fort Lauderdale-Hollywood, Houston, and Phoenix, have constructed consolidated car rental facilities to enhance the ground transportation services available to passengers.
These consolidated car rental facilities have also become a significant source of revenue for local and state governments. The issue before the Nevada State Board of Equalization was whether the leasehold interests of the rental car companies operating at the McCarran Consolidated Car Rental Facility ("Car Rental Facility") in Las Vegas were subject to the possessory interest tax. Nevada law, allows a county assessor to assess a tax on privately held leasehold interest, possessory interest, or beneficial interest of real property owned by federal, state, and local governments. Nevada's possessory interest tax is limited in that it does not apply to: (1) property located upon a public airport; or (2) property owned by a public airport authority that is not located upon a public airport but that is used for the purposes of a public airport.
The Car Rental Facility is located approximately three miles from the main terminal at McCarran International Airport. At the time of the appeal, two years of the assessment were before the State Board. We successfully argued that the Car Rental Facility is operated and managed as an extension of the airport terminal. It handles baggage, check-in, parking, and ground transportation services. Clark County Aviation manages the property as it does concessionaires in the main terminal by imposing McCarran Airport regulations and federal regulations on the car rental companies. In addition, the lease agreement with the Clark County Aviation defined the "Airport" to include the Car Rental Facility. As a result, the Clark County Assessor's Office settled the case just moments before the scheduled hearing by agreeing to refund taxes paid for two years and to discontinue assessing a possessory interest tax on the leasehold interest of the car rental companies.
Douglas S. John
Bancroft, Susa & Galloway
American Property Tax Counsel
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Updated June 2009
New Hampshire Tax Year 2008 Assessment Ratios Published
The New Hampshire Department of Revenue Administration recently published the tax year 2008 equalization ratios. These ratios apply to the April 1, 2008 assessing date. The abatement applications pertaining to the April 1, 2008 assessing date were due on March 1, 2009. If you have filed an Abatement Application, the newly published equalization ratio will assist you in determining the strength of your appeal. For example, if your property has a market value of $1,000,000 and the equalization ratio in the jurisdiction is 90% the fair assessed value should be $900,000. If the equalization ratio is 110% the fair assessed value should be $1,100,000. Due to falling real estate values there are many jurisdictions in New Hampshire with equalization ratios in excess of 100%. If you wish to continue with your appeal you must file a petition with the Board of Tax and Land Appeals or in the Superior Court by September 1, 2009.
David G. Saliba
Saliba & Saliba
American Property Tax Counsel (APTC)
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Updated June 2009
Tax Court Filings Increase Significantly
The tax filing season has recently concluded in New Jersey with startling results. According to the New Jersey Tax Court, the number of appeals filed in 2009 increased by over 40% from the number filed in 2008. This is the largest one year increase in the history of the Tax Court. At the same time, the number of sitting tax court judges is not expected to be increased. This will mean that the backlog to resolve tax appeals will be significantly longer than at present. Most probably, it will take a minimum of three years for a case to be reached for trial. This will put added pressure on beleaguered taxpayers. Under state statute, in order for a taxpayer to have standing to appeal, all taxes and municipal charges on a property must be paid in full. This means that even in cases where values have dropped significantly, assessments must be paid in full.
John Garippa
Garippa, Lotz & Giannuario
American Property Tax Counsel (APTC)
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Updated March 2009
Luxury Decontrol of Apartments Ruled Illegal When Building Owner Received Tax Abatement Benefits
In a stunning reversal, the Appellate Division of the State Supreme Court ruled that notwithstanding a State Agency’s regulations and opinion to the contrary, rent stabilization provisions which permitted vacancy, high rent or luxury decontrol of apartments were illegal when a property was receiving J-51 tax abatement benefits. The J-51 program grants certain tax exemptions and abatements for property improvements and unfortunately applies stricter rent stabilization restrictions. Until this decision, the owners of Peter Cooper Village and Stuyvesant Town, an 80 acre 11,200 unit residential complex had been able to increase apartments up to market rents when they were vacated, exceeded $2,000 in rent or the household income exceeded $175,000. This ruling overruled a lower court decision, which held that the owners could seek market rents when the apartments became vacant or luxury decontrolled. This latest ruling will limit the rents the owners may charge now and in the past. A further appeal is expected.
Joel Marcus
Marcus & Pollack, LLP
American Property Tax Counsel (APTC)
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Updated March 2009
New Rules for Assessment of Personalty
Business personal property is subject to assessment at 100% of fair market value as of January 1 of each year in North Carolina. Business personal property includes machinery and equipment, furniture and fixtures, and computers and some forms of software. Listings, which must be filed by January 31 or the extended filing date if an extension is filed, must also include construction in progress, supplies and other forms of assessable property.
Personalty is generally assessed using trending and depreciation tables published by the NC Department of Revenue on an annual basis. The state's tables are based upon IRS class lives and BLS indexes. While generally adequate for mass appraisal purposes, the state's schedules do not reflect extraordinary obsolescence - whether functional or external - and may therefore produce values in excess of market.
Counties must either notify taxpayers of the proposed assessed value and give them 30 days to appeal or the notice is given when tax bills are mailed and the taxpayer has 30 days to appeal at that time.
Careful attention must be given to tax office notices to avoid losing appeal rights.
Charles B. Neely, Jr.,
Williams Mullen
American Property Tax Counsel (APTC)
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Updated March 2009
Critical Filing Deadline – March 31, 2009 Marks the Deadline for Filing Tax Complaints in Ohio.
With the economy in its current state taxpayers must be diligent in minimizing expenses. Contesting over assessed property taxes should be foremost on the list of ways to reduce costs. In order to contest the 2008 taxes payable in 2009 taxpayers must file with the county board of revision no later than March 31, 2009. Complaints must be received by the county by the deadline as such it is wise to have the complaint time stamped to prove that the complaint was timely filed.
Furthermore, taxpayers need to be aware that a tax complaint may have been filed against them by their local school district. Ohio is one of the few states where school districts will file a complaint with the county auditor (assessor) seeking to increase the taxes on properties within their jurisdiction. Although unwanted and expensive as well as potentially inequitable, it is well settled law that permits school districts to file tax cases.
Finally, Ohio tax law is full of pitfalls. Prior to filing taxpayers should seek counsel to ensure that the filing that they intend to make is meritorious as well as properly filed.
J. Kieran Jennings
Siegel Siegel Johnson & Jennings LLC
American Property Tax Counsel (APTC)
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Updated June 2009
Appeal Deadlines Run From Board Adjournment Dates
Under Oklahoma law, a taxpayer has the right to appeal any order of the Board of Equalization to District Court for a trial de novo. By statute, such appeals must be filed within ten (10) days from the date of the Board’s final adjournment. However, problems arise because there are 77 County Boards hearing cases across Oklahoma, and the statutes do not prescribe a uniform statewide adjournment date. Most Boards adjourn on May 31 st, but others remain in session through June and July. It is imperative that taxpayers confirm their Board’s adjournment date because late filed appeals are subject to dismissal.
William K. Elias
Elias, Books, Brown & Nelson, P.C.
American Property Tax Counsel (APTC)
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David L. Canary, Esq.
Garvey, Schubert & Barer- Portland Office
American Property Tax Counsel (APTC)
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Updated June 2009
Pennsylvania Long Held Ruling on Leased Fee Assessments is at Risk
The Commonwealth Court of Pennsylvania has recently decided Tech one Associates v. Bd of Property Assmnt and Rev. of Allegheny Cnty..No. 103 C.D. 2008 (June 1, 2009). In Tech One, the court stated that “fee simple, a fee simple determinable, a leasehold interest, or month to month lease are irrelevant.” The Court went to state that the Pennsylvania Supreme Court did not recognize “that leased property and non-leased property could be treated differently for real estate tax purposes” Further interpreting the Supreme Court in Maple Springfield, regarding uniformity stating that “a tax must be applied upon similar kinds of property with substantial equality of the tax burden on all members of the class.”
What does all of this mean? According to the dissenting opinion the court is requiring both the lease fee and the leasehold to be valued. Because the fee simple interest is the combination of both leased fee and the leasehold interests in the property; the state of Pennsylvania may require a fee simple approach to valuation. Although not startling to many taxpayers outside of Pennsylvania, this is a departure from nearly 17 years of leased fee decisions. Finally, it should be noted that the decision indicates that Marple Springfield is still good law. The case may not be final as the tax payer may have taken an appeal to the Supreme Court.
J. Kieran Jennings
Siegel Siegel Johnson & Jennings Co, LPA (Pennsylvania)
American Property Tax Counsel (APTC)
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David G. Saliba
Saliba & Saliba
American Property Tax Counsel (APTC)
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Updated June 2009
Equalization Relief
Tennessee taxpayers are entitled to equalization relief even though Tennessee is a market value state. The equalization is based on a sales ratio determined for each county by the Tennessee State Board of Equalization. The purpose of the sales ratio study is to establish the median level of valuation. In a reappraisal year, the ratio is presumed to be 1.00. Davidson, Shelby, Knox and Hamilton, the most populous counties, are among the counties undergoing reappraisal this year.
The State Board has recently completed the sales ratio study for 2009 and determined the proper ratio for each county. These ratios can be found on the State Board of Equalization’s website at http://www.tn.gov/comptroller/sb/ratio09.htm.
Taxpayers in each county have the right to be valued at that county’s ratio. For example, Williamson County’s (Brentwood and Franklin) equalization ratio is 0.8683. A taxpayer’s property in Williamson County should be valued at no more than 86.83% of its fair market value. If the actual fair market value of a property in Williamson County is $10,000,000, then its value for property tax purposes should be no more than $8,683,000.
Taxpayers should be aware equalization relief is available in Tennessee and should understand how it works.
Andrew H. Raines
Evans & Petree PC
American Property Tax Counsel (APTC)
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Updated June 2009
Recent Legislative Changes to Property Taxes
The Texas Legislature adjourned on June 1 after considering 355 bills related to property taxes and passing 58 of them. It was an extremely active property tax session. The following are some of the more significant changes
- A taxpayer may now file an appeal from the ARB for properties over $1,000,000 in value to the State Office of Administrative Hearings (SOAH). This is a pilot program in five counties and will be limited to the first 3000 appeals filed. It is an alternative to an appeal to district court with no allowance for appeal from SOAH to district court.
- A property owner that prevails in a lawsuit filed under Section 25.25 will be entitled to attorney fees under Section 42.29
- The deadline for the filing of a property tax lawsuit is changed from 45 to 60 days after receipt of the ARB order.
- If the value of a property is lowered by agreement, ARB decision or lawsuit, the value may not be increased in the next year unless the chief appraiser has substantial evidence supporting the increase.
- If the chief appraiser determines the appraised value of real property using the income approach, the appraised value must include the value of both the real property and the personal property in the account.
- The Comptroller’s property value study of school districts will be conducted every two years rather than every year and the Comptroller will conduct a performance audit of the appraisal methodology and operations every two years.
Jim Popp
Popp, Gray & Hutcheson, LLP
American Property Tax Counsel (APTC)
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Updated June 2009
Privilege Taxes
Assessment: The Same for a Leasehold Interest as It Would Be for a Fee Simple Interest
On June 12, 2009 the Utah Supreme Court issued its decision in the ABCO Enterprises case upholding the assessment of "a privilege tax on a leasehold interest at the same amount that a fee simple interest would be assessed." When otherwise tax-exempt property is use to conduct a for-profit business a privilege tax may be assessed in the "same amount as the property taxes that would have been owed by an owner of nonexempt property." The Court determined that "it is not unreasonable to impose the pro rata share of raising governmental revenue upon a lessee of exempt property," and ruled that an assessment on the leasehold interest did not violate the uniform operation of laws provision of article I, section 24 of the Utah Constitution or the Equal Protection Clause of the Fourteenth amendment to the United States Constitution.
David J. Crapo
Wood Crapo LLC
American Property Tax Counsel (APTC)
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Updated March 2009
Virginia Property Owners Face Property Tax Increases
Refinancing is all but impossible. Assets are not trading. What is the fair market value of a property? According to assessment offices throughout Virginia, not much has changed – most assessments are even or only slightly down. Adding to the challenges owners face are increased real estate tax rates.
Most jurisdictions are in the final stages of preparing the 2010 budget on which the calendar year 2009 tax rate will be based. Look for tax rates to increase more than assessments have fallen. The result for many properties is higher taxes per square foot and assessments in excess of fair market value.
Why? Generally, it is because jurisdictions have ignored the year-over-year increase in capitalization rates. Most localities have kept the capitalization rate the same or made only a token adjustment – fifty basis points or less. Also impacting assessments is the failure to recognize reduced net effective rent and increased vacancy.
Ilene Baxt Boorman
Wilkes Artis, Chtd.
American Property Tax Counsel
(APTC)
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Updated June 2009
2009 Legislative Highlights
Washington’s recent legislative session was characterized both by what the legislature enacted and what it failed to pass. First, in an effort to gain greater consistency between counties in their property tax valuations and to have valuations more accurately reflect market conditions, counties must value property annually for property tax purposes by January 1, 2014. As it stands now, the valuation cycles for Washington counties vary, ranging from annual valuations to valuations occurring once every four years. Second, of particular benefit to taxpayers was the failure of a bill that would have permitted counties to impose a utility tax to supplement property taxes. Finally, legislation to make the property tax appeals process more taxpayer friendly failed to pass. This legislation aimed to reduce the current “clear, cogent and convincing” standard required to overcome the assessor’s presumption of correctness to a lower “preponderance of the evidence” standard.
Norm Bruns
Garvey Schubert Barer
American Property Tax Counsel (APTC)
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Updated March 2009
Wisconsin Court Holds A New Statute Limiting Assessment Challenges To Be Unconstitutional
On January 20, 2009, the circuit court for Milwaukee County struck down as unconstitutional a statute the Wisconsin Legislature enacted in 2008 which limited the rights of certain property owners to challenge their assessments.
Under a longstanding Wisconsin statute permitting challenges to excessive assessments, property owners dissatisfied following review of their assessments by the local board of review can file a claim against the municipality and then file a suit in circuit court, which proceeds as an independent civil action. In 2001, the Wisconsin Supreme Court struck down on Equal Protection grounds a provision in the statute which made it inapplicable in the state’s most populous county, Milwaukee County. The Supreme Court found that the challenge procedures available under the statute were so far superior to the more limited procedures available within Milwaukee County that it was an equal protection violation to provide those procedures to some citizens while denying them to others.
In 2008, the Wisconsin Legislature enacted a new law which permitted municipalities to opt out of the excessive assessment statute by ordinance. In any municipality which enacted such an ordinance, property owners were left without resort to the broader challenge procedures available under the excessive assessment statute, just as Milwaukee County citizens were unable to access those procedures prior to the 2001 Supreme Court decision.
The City of Milwaukee, among other municipalities, enacted such an ordinance, and a Milwaukee property owner challenged the statute on the same Equal Protection grounds as in the earlier suit. On January 20, 2009, the circuit court struck down the statute, finding that it suffered from the same constitutional flaws as the provision the Supreme Court struck down in 2001.
The City of Milwaukee is appealing the decision to the Wisconsin Court of Appeals.
Robert L. Gordon
Michael Best & Friedrich LLP
American Property Tax Counsel (APTC)
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