Property Tax Attorney | Property Tax Appeal | Property Tax Lawyer | Ad Valorem Tax | Real Estate Tax | Real Estate Assessment | Property Tax Affiliation | National Property Tax | Personal Property Taxes | Property Tax Counsel | American Property Tax | American Tax Counsel | Tax Reduction Needs | Property Tax Assessments | Property Valuation Methods | Tax Bill Appeal | Tax Assessor Challenge | Property Tax Trends

National Property Tax Update
Updated February, 2008

ARIZONA Property Tax Update
Updated March 15th, 2008

External obsolescence must be shown to affect the subject property, not just the industry as a whole

Eurofresh, Inc. is the leading year-round producer and seller of greenhouse tomatoes in the United States. Eurofresh contested their property value and succeeded in convincing the Arizona Tax Court that external obsolescence within the greenhouse industry as a whole impaired the value of Eurofresh’s greenhouse. On appeal, the Arizona Court of Appeals held that evidence was needed to show how industry obsolescence factors actually affected the value of the subject property. A party must present evidence of the cause of the claimed obsolescence, the quantity of such obsolescence and that the cause actually affects the subject property. Because Eurofresh produced no such evidence at trial, the Court reversed the judgment and ordered that the Tax Court enter judgment for the county. Eurofresh, Inc. v. Graham County, 1-CA-TX 06-0002.

Toronto's biggest office towers are in line for huge property tax reductions after a recent decision by the Assessment Review Board of Ontario. The bank towers' case hinged on what is meant by the words of the provincial Assessment Act which states that assessment should be based on the value of a building "in fee simple, if unencumbered".

The assessor argued that the value of the towers should be determined by their value as going concern, fully occupied by rent-paying tenants. The lawyers for the bank towers argued that the statutory wording meant that assessed value must be based on a building that is "unencumbered" by tenants and leases. Instead, we insisted the towers should be valued the same way a house is - as a vacant building on the date of sale, with no tenants and no furnishings.

The Assessment Review Board sided with the bank towers. The decision said the assessor's assessment method "contains a fundamental flaw" because it was "based on an incorrect interpretation of the words of the Act".

Assessment Appeal Filing Season in California

The period for filing appeal applications on 2007-08 California property tax assessments closes on November 30. All county assessment appeals boards or county boards of equalization will accept appeal applications through that date except for boards in the following counties, where the appeal filing season has already closed: Alameda, Inyo, Kings, Orange, San Francisco, San Luis Obispo, San Mateo, Santa Clara, Sierra and Sutter. Appeals may be filed on applications available from local boards. Some counties also make appeal applications available on their public internet websites. Applications sent on November 30 should be postmarked by the U.S. Postal Service to insure timeliness. During this regular filing period, taxpayers may also appeal base-year value reassessments caused by changes of ownership or resulting from completion of new construction, but only so long as the change of ownership or new construction completion occurred during the prior three years.

Colorado Court of Appeals Ruling in the Red Junction, LLC vs. Mesa County Board of County Commissioners Case

Red Junction, LLC vs. Mesa County Board of County Commissioners, the Colorado Court of Appeals affirmed a final Order of the Board of Assessment Appeals, affirming the denial of the Board of County Commissioners of a second abatement-refund petition by a property owner in one tax year. The Court held that subsequent abatement petitions for a given property for the same tax year are barred by claim preclusion. Nothing in the Property Tax Statutes either authorizes or prohibits multiple petitions in any given year. However, the Court holds that the policy behind the doctrine of claim preclusion justified its application to this type of administrative proceeding. The Court agreed with the BAA that the tax payer could have adjudicated all of its claims in the initial Petition.

With no authoritative legal decisions to guide taxpayers, it has been unclear whether personal property declarations, which are to be filed every year with local assessors by owners owning assessable personable property, must be submitted to the assessor’s office on November 1 or whether mailing, faxing or an email PDF is sufficient. While the applicable statute imposes a penalty for failure to file the personal property rendition by November 1 each year, many assessor’s offices accept facsimiles and original renditions in envelopes postmarked by November 1, whenever received.

A Bridgeport taxpayer mailed its rendition on October 31; it arrived in the Bridgeport Assessor’s office on November 3. The Assessor imposed the statutory 25 percent penalty.

SBC Internet Services, Inc. v. City of Bridgeport (and companion cases); Superior Court judicial district of Fairfield at Bridgeport (February 15, 2008).

DISTRICT OF COLUMBIA / WASHINGTON D.C. Property Tax Update
Updated December 14th, 2007

Federal prosecutors have charged two D.C. real property tax employees, together with others outside the government, with multiple counts of fraud and conspiracy relating to the issuance of false real property tax refund checks over a seven-year period. The government alleges that one of the employees masterminded the scheme and used her family, friends and some fellow employees to assist in the massive fraud estimated to have reached at least $20 million.

The bogus refund checks were made payable to fictitious companies that the conspirators controlled. The conspirators often used slight variations of the names of legitimate businesses and individuals to further their scheme. The government is now attempting to sort out how this fraud, the largest in D.C. history, went unnoticed for such a long period of time.

FLORIDA Property Tax Update
Updated March 14th, 2008

Property Tax Reform Approved by Voters

In January, voters approved a constitutional amendment which dramatically changes assessments of commercial property in Florida. Traditionally all property in Florida, other than primary residences with homestead exemptions, has been re-assessed annually at market value.

Beginning in 2009 the amendment will limit assessment increases to no more than 10% over the prior year’s assessment, regardless of the increase in market value. (The cap does not, however, apply to school district levies which are approximately one third of the total tax bill.) Properties may be reassessed at market value upon a change of ownership or control, including a change of ownership of the legal entity that owns the property. Changes, additions, reductions or improvements to property will not be subject to this cap.

To receive the assessment limitation property owners must file an application with the county property appraiser on or before March 1, 2009. Application forms are currently being drafted and are not yet available.

While this cap will help keep taxes down for property owners it will also create disincentives to buying and selling property and will lead to inequitable assessments of similar properties.

GA. Supreme Court And US. Supreme Court Decide Georgia Tax Cases For Taxpayers

In Monroe County, et al. v. Georgia Power Company, Case No. S07G1156, decided January 8, 2008,
the Georgia Supreme Court ruled that for the taxation of public utilities, county boards of tax assessors lack the authority to alter the State Revenue Commissioner’s determination of fair market value and its proposed apportionment, but do have the authority to alter the assessment ratio he proposes based on the most recent records uniquely available to each county.

In CSX Transportation, Inc. v. Georgia State Board of Equalization, et al., 128 S. Ct. 467, 552
U.S._____ (2007), the United States Supreme Court held that federal statutory law allows a railroad to attempt to show that state methods for determining the value of railroad property result in a discriminatory determination of true fair market value.

Property tax developments in Idaho have been mostly positive over the past few years. First the burden of proof was reduced for taxpayers who appeal, and then tax rates went down. Now that the real estate bubble has burst, this is a year to look closely at your tax values. Start by looking at last year’s value to see if it makes sense for January 1, 2008. If not, you can initiate informal discussions with your assessor now. Be on the lookout for the formal assessment notices which are mailed on or before the first Monday in June. Appeals to the county board of equalization are due by the fourth Monday in June. The boards of equalization must complete their work by the second Monday of July. Taxpayers who are still not satisfied may appeal to the state board of tax appeals or, alternatively, they may go directly to district court.

The Cook County Board of Review, at the urging of the Mayor and the City of Chicago, has announced that it will accept 2007 Valuation Complaints for all Townships in Cook County from March 17-March 31. This is the first time in its history that the Board of Review has taken such action, and that is despite the fact that more than half the Townships had already closed for Valuation Complaints and the Board of Review is under great pressure to finish its work as early as possible.

The City of Chicago announced that it was available to help every homeowner prepare their Valuation Complaint. The City recognized that values had declined significantly and that recent sales should not be an indication of current Market Values.

The recent action by the Board of Review in accepting Complaints brings into prospective many Real Estate Tax Issues in Cook County.

Cook County has a Classification System in which residential properties are required to be assessed at 16% of Market Value and commercial properties are assessed at 38%. There is clearly a stated social policy, which seeks to balance the tax burden in favor of homeowners.

The Illinois Constitution specifically approves Cook County’s Classification System, but it also puts limits on the extent of the difference between lowest and highest assessment levels. The highest assessment level cannot be 2 ½% times more than the lowest.

We recently reviewed the assessments in a residential section of Chicago that has undergone a significant a revival in recent years. It is marked by new construction and rehabilitation. In 2007 we found assessment ratios that ranged from 5.9% through 12.6% of recent sales. There was also clearly a pattern of “sale chasing”, where some properties were assessed in the midyear of a three year cycle, and some were not.

The constitutional assessment Mandate of Uniformity has been disregarded; we have an Ad Hoc System without rules and without transparency. Every homeowner receives a notice indicating that the assessed value is 16% of the Market Value, when it could be anything between 6% and 13%, but never 16%. An artificial process in a system that must support education and basic local services can only lead to the chaotic situation that fostered the decision of the Board of Review.

Property Assessments Being Issued Statewide

The March 1, 2007 assessments throughout the State of Indiana are now being issued by the various township assessing officials. Once these assessments are issued, Taxpayers have a window of only 45 days within which to file an appeal petition contesting the new assessment.

Indiana adopted an approach called "trending" a few years ago in which property assessments will be updated annually based on real property sales activity to supplement the traditional reassessments in the past. For the 2007 assessments, a trending factor will be placed on the 2006 assessment to reflect the increase or decrease in value between January 1, 2005 and January 1, 2006. Taxpayers should review the trended assessments closely.

Indianapolis Area
Last year the Indiana Department of Local Government Finance ordered a reassessment of all real property in Indianapolis (Marion County) after taxpayers protested the significant increases in both assessed values and tax dollars. The new assessments have been determined and should be available shortly. The final 2006 assessments will be shown on the 2006 reconciliation tax bill which is due June 27, 2008. Taxpayers will have a window of only 45 days from issuance of that tax bill within which to file an appeal contesting the new assessment. Taxpayers should closely review the new assessments.

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:

Both property tax exemption and TIF are widely available and should be considered by developers for their projects in Iowa.

2007 PAYMENT UNDER PROTEST DATE SOON . Levies are being set and 2007 tax bills will be sent out around November 1, 2007. For those taxpayers that did not file a 2007 appeal in the Spring, a tax protest may be filed on or before December 20 th. The requirements to file include completion of a protest form and payment of at least one-half of the taxes due. Forms can be obtained from the offices of the county treasurer where the property is located or by visiting the web site for the Kansas Board of Tax Appeals: www.Kansas.gov/bota. As always, it is recommended that one consult local tax counsel because strict compliance with the statutes is a jurisdictional requirement.

BIG BOX CASE VICTORY FOR TAXPAYERS: The Kansas Board of Tax Appeals in Docket No. 2004-3806-EQ, Prieb Properties, LLC, Shawnee County , Kansas, held that “build to suit” rent rates and “sale-leaseback” rent rates are not market rents.

Most Kentucky counties will be mailing out their 2008 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. 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.

New Louisiana Tax Commission Appointed / First Action Repeals Pro-taxpayer Rules

New Louisiana Governor Bobby Jindal has appointed the members of his new Tax Commission, the agency responsible for overseeing assessments by the local assessors. The members are: Mr. Pete Peters, the retired former head of the Tax Commission staff. Mr. Peters will serve as Chair of the Tax Commission. The other four Tax Commission members are Mr. Paul Hargrove, Mr. Joey Vercher, Mr. Ken Naquin, and Ms. Belinda Hazel. To the disappointment of the Louisiana business community, one of the first actions of the new Tax Commission was to reject rules proposed by the former Tax Commission that would have better defined the role of obsolescence in the valuation of taxable property. With this move Louisiana reverts back to a standard that appears to allow assessors to refuse to adjust for obsolescence notwithstanding the existence of evidence supporting an obsolescence adjustment.

Most jurisdictions in Maine sent out their fiscal year 2008 tax bills over this past summer. The assessing date for the fiscal year 2008 tax bills is April 1, 2007. A taxpayer has 185 days from the Commitment Date to file an application for abatement. The Commitment Date is usually within a few weeks before the tax bills are actually sent out. One should always take care to verify the Commitment Date. To be entitled to an abatement the taxpayer must show that the assessment is “manifestly wrong.” The assessor has a statutory defense that if an effort is made to be accurate in his assessment within reasonable limits of practicality, the assessment made may deviate from the assessment ratio by as much as 10%. This means that as a practical matter, absent bad faith, the assessor can be wrong in his assessment by as much as 10%.

In Massachusetts now is the time when many Applications for Abatement filed with local Board of Assessors have been denied. If a taxpayer wished to continue with his claim for a tax abatement he must a petition. That petition is almost always to the Commonwealth of Massachusetts Appellate Tax Board. The Appellate Tax Board is the final arbiter of fact. Only appeals regarding questions of law may be taken beyond the Appellate Tax Board. The Appellate Tax Board charges an unusual filing fee in that it is ad valorem. This meaning that the filing fee is dependent on the assessed value. This is Currently 10 cents per thousand of assessed value with a maximum filing fee of $5,000,000. In Massachusetts a separate petition must be filed for each fiscal year. It is not uncommon for two or three years to pass before the matter is resolved. This can be an expensive proposition.

MARYLAND Property Tax Update
Updated October 5th, 2007

2007 Decisions and Second Level Appeals

2007 Levy Year Appeal: Initial appeals of the 2007 Levy Year assessments were brought before the State Department of Assessments and Taxation (SDAT) for the first level of administrative review in Maryland. The assessor’s determination is not the final word however. Property owners dissatisfied with the SDAT decision have thirty (30) days from the issuance of the final notice to file for a second level appeal at the Property Tax Assessment Appeals Board (PTAAB). These 3-member independent Board hearings allow for another opportunity to present the merits justifying a reduced assessment. The 2006 second level appeals will conclude by the end of the year, while the 2007 second level appeals will continue throughout the 2008 calendar year.

For the second year in a row Southeastern Michigan’s Top Verdicts and Settlements featured in Crain's Detroit Business included a property tax appeal handled by Honigman Miller Schwartz and Cohn LLP. In Transwestern Fountain Walk LLC v City of Novi, the City valued a new lifestyle center as having market value of over $74 million on December 31, 2003. This property had over 750,000 square feet and featured such retailers as Dick’s Sporting Goods, The Great Indoors and Cold Stone Creamery. Each year after 2004, the City continued to value the property at over $74 million until the case was settled in 2007. Pursuant to the settlement, the City agreed to reduce the property’s market value to $57.5 million for tax years 2004-2006 and $47 million for 2007. The resulting multi-million dollar tax savings was one of only ten 2007 cases that Crain’s featured.

In 2007, Crain's Top Verdicts and Settlements featured four cases that the Honigman firm handled. Of the four cases, two were Michigan Supreme Court victories for taxpayers.

Minnesota law permits property taxpayers to file a petition challenging value, level of assessment, and other claims by April 30, 2008. The filing deadline is absolute, and if missed, costs the taxpayer a chance to challenge its tax assessment.

Minnesota has a strict disclosure law that requires production of an income-producing property’s operating statements and rent information within 60 days after the filing deadline. If the deadline is missed, the petition will be dismissed.

The recessionary pressures evident today are having an impact on the institutional investment market. There is evidence of upwards pressure on cap rates, and transaction activity has largely dried up. In addition, some assessors are focusing on residential values, given the freefall in that market, and may not be tuned into the problems facing commercial properties. Filing opportunities should not be ignored in this environment.

Pending Missouri real property tax appeals for the 2007 assessed value are considered an appeal also for the year 2008. However, given the vagaries of the system, the prudent course of action is to file an appeal for the year 2008 also. Missouri is on a two year cycle with the valuation date being January 1 of the odd numbered year. If no appeal was filed for the particular property for the year 2007, an appeal should be filed for the year 2008. The standard for the 2008 assessed value will be the value of the property under the economic conditions existing as of January 1, 2007. A simple way to look at it is to file a timely appeal for 2008 whether or not an appeal was filed for 2007 recognizing that the January 1, 2007 value will control the assessment level.

Declining Nevada Real Estate Market Results in Increase in Property Tax Appeals by Home Builders

One of the hardest hit real estate markets in the United States has been Clark County, Nevada (Las Vegas). Although the commercial real estate market in Las Vegas remains relatively strong, the residential market has declined precipitously. During 2007, the price of existing single-family homes declined 15.3%. In addition, the number of foreclosures in Clark County is one of the highest in the United States.

As a result, the number property tax appeals increased significantly during the recent 2008-09 tax year appeals season. Last year, there were 722 appeals filed with the Clark County Board of Equalization. This year, the number increased to 1370 or by almost 90%.

While individual homeowners accounted for much of the increase in the number of appeals, residential home builders were another major source of property tax appeals. The decline in residential land values, new homes prices, and in the sales absorption rate has resulted in a significant decline in the value of residential developments. As a result, home builders accounted for 20-25% of the appeals filed with the Clark County Board of Equalization during the recent 2008-09 tax year appeals season.

New Hampshire 2007 Equalization Ratios To Be Announced

The New Hampshire Department of Revenue Administration will soon be establishing its tax year 2007 equalization ratios. These are the equalization as of April 1, 2007. The Department conducts both weighted mean equalization ratio study and a median equalization ratio study. In New Hampshire equalization ratios are essential to proving that tax abatement is warranted. Taxpayers must prove by a preponderance of the evidence that it is paying more than its proportioned share of taxes. The finder of fact must determine what is the appropriate equalization ratio as well as what is the market value of the subject property. The local assessor may claim that their equalization ratio is different from what the Department of Revenue Administration has determined. The median equalization ratio as determined by the Department of Revenue Administration generally preferred over the weighted mean equalization ratio or an equalization ratio claimed by the local assessor.

Recent published statistics have confirmed that the commercial real estate market in New Jersey is eroding. Statistics for the 4th quarter 2007 published by Real Capital Analytics indicate that the office vacancy factor for Central and Northern New Jersey is at 17.8%. Other statistics confirm that the entire commercial market has slowed considerably in New Jersey.

This finding is significant for property taxpayers. Under New Jersey assessment law, all property must be valued based on its current fair market value. This means that if a property is leased at $20 per square foot, and the current fair market value is $15 per square foot, the assessor is obligated to ignore the existing lease and value the property based on current economic conditions. At the same time, most property in New Jersey is not reassessed on an annual basis. That means that much of the commercial property in New Jersey is currently assessed at values that are not sustainable in this current economic slowdown. Sophisticated owners need to review these assessments on an annual basis, especially in times of dynamic change.

New York City is experimenting with a new valuation technique for residential apartment buildings. Multi family housing, assessed as property Class 2, will no longer be valued using the capitalization of net income which, heretofore, was the settled methodology. Instead, a gross income multiplier (“GIM”) approach will take its place.

This GIM was employed for the first time on the 2008/09 tentative assessment roll. Coops, Condominiums and Rental properties were all assessed using GIM after the release of the tentative assessment roll on January 15. The Department of Finance made massive corrections to virtually every class 2 assessment after the rolls release because of a legal error in assigning different GIM’s to Coops and Condos than they applied to Rental properties. These adjustments resulted in increases to rental properties and small decreases in Coops and Condos.

We do not believe the court will sanction this valuations methodology but only time will tell and we will begin the legal challenge for 2008/09.

Lessors and lessees of personal property should be aware that whether the transaction is a true lease or is a conditional sale may determine which entity must list the property for property tax purposes in states which assess personal property. Agreements that are denominated as “leases” may be conditional sales if they are for a definite term and there is an option to purchase the property at the end of a lease that is small enough to be considered nominal.

In North Carolina, the question of which entity must list the property is governed by N.C. Gen. Stat. § 105-306. Whether a transaction is a conditional sale or a lease may be determined with reference to the UCC approach under N.C. Gen. Stat. § 25-1-203, as well as Financial Accounting Standards Board Standard No. 13. Counties may issue discovery assessments for transactions that lessors have treated as conditional sales if the option purchase price is too high or the transaction otherwise bears indicia of being a lease.

March 31, 2008 marks the deadline for filing tax complaints in Ohio. For many taxpayers this may bring trouble. 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.

Taxpayers must be careful how they respond to a tax complaint. Many the cases are brought based upon a recent purchase while others may simply be “fishing expeditions”. There are a number of different courses of action that vary depending on the unique circumstances of a given case, one of which starts by filing a counter-complaint within 30 days of receipt of the original complaint. In any event, before engaging in any correspondence with anyone seeking to increase your taxes, consult with a real estate tax attorney. Ohio law is full of pitfalls for both tax payers and school boards that file tax complaints.

Oklahoma imposes a 7% gross production tax on the gross proceeds received from the sale of oil and gas. The gross production tax is in lieu of ad valorem tax, not only upon the oil and gas itself, but also upon equipment used to produce the oil and gas. Historically, the demarcation line between when production is complete and when marketing of the oil and gas begins has been unclear. Ad valorem taxes are local taxes retained by schools and county governments. The gross production tax is a state level tax which goes into the coffers of state government. Counties have been very aggressive in assessing ad valorem taxes by classifying most equipment as marketing related. To avoid the possibility of double taxation, the legislature enacted HB 1485, effective January 1, 2008. This law will allow producers to deduct ad valorem taxes from the gross proceeds used to compute gross production taxes. Refunds are available for the previous three years.

While April 15 th is “tax day” for federal and state income taxpayers, April 1 st is equally important to property taxpayers who wish to avoid paying property taxes for the upcoming year. Below is a list of exemptions for selected types of properties for which applications or statements must be filed with the local county assessor or the Oregon Department of Revenue on or before April 1 st to qualify for exemption from property taxes.

Cancellation of assessment for commercial facilities under construction. New buildings or additions to existing buildings are exempt from property tax assessment for up to two years while under construction. The building or structure must be under construction on January 1, 2007, not have been used or occupied before that time, constructed in the furtherance of the production of income (e.g. an industrial or commercial building or condo), and in the case of nonmanufacturing facilities, the building or structure must first be used or occupied not less than one year from the time construction commences. For manufacturing facilities, any machinery and equipment located at the construction site which is or will be installed in or affixed to the building or structure under construction may also be exempt.

Cancellation of assessment of pollution control facilities. A pollution control facility constructed in accordance with specific Oregon statutes and that has been certified by the Environmental Quality Commission may be exempt to the extent of the highest percentage figure certified by the Commission as the portion of the actual cost properly allocable to the prevention, control or reduction of pollution.

Exemption of nonprofit student housing . Student housing that is rented exclusively to students of any educational institution that offers at least a two-year program acceptable for full credit towards a baccalaureate degree may be exempt from certain ad valorem assessment. The exemption applies to student housing of an educational institution that is either public or private.

Exemption of low income housing. Property owned or being purchased by a nonprofit corporation that is occupied by low income persons or held for future development as low income housing, or a portion thereof, may qualify for tax exemption.

Exemption of ethanol production facilities. The real and personal property of an ethanol production facility may qualify for exemption of fifty percent of the assessed value of its property for up to five assessment years.

Exemption of rural health care facilities. The real and personal property of a health care facility with an average travel time of more than thirty minutes from a population center of 30,000 or more may be exempt from property taxation if the property constitutes new construction, new additions, new modifications or new installations of property as of January 1 st. Additionally, the exemption must be authorized by the county governing body in which the facility is located. The exemption can be for up to three years.

Exemption of long term care facilities. The real and personal property of a nursing facility, assisted living facility, residential care facility or adult foster home may qualify for exemption if the facility has been certified for the tax year as an essential community long term care facility. The Legislature specifically declared that a property tax exemption would enable essential long term care facilities to increase the quality of care provided to the residents because the full value of the exemption is applied to increasing the direct caregiver wages and physical plant improvements that directly benefit the facility residents and staff.

Special assessment of nonexclusive fare use zone farmland. Any land that is not within an EFU zone but that is being used, and has been used for the preceding two years, exclusively for farm use may qualify for farm use special assessment if the gross income derived from the farming operation meets a certain amount that depends upon the size of the farmland.

Special assessment of designated forestland in Western and Eastern Oregon. Forestland being held or used for the predominant purpose of growing and harvesting trees of a marketable species and that has been designated as forestland, or land in either Western or Eastern Oregon, the highest and best use of which is the growing and harvesting of trees, may qualify for special assessment if certain other requirements are met and a timely application filed.

Taxpayers who believe they qualify for cancellations of assessments, exemptions or special assessment should contact the office of the county assessor in which the property is located, or contact the Oregon Department of Revenue, to request application forms and instructions. The fact that a cancellation, exemption or special assessment is granted for one year does not mean the property automatically qualifies for exemption in subsequent tax years. A number of these cancellations, exemptions and special assessments require that applications be filed with the county assessor or the Department of Revenue each year. That is, an exemption or special assessment may be lost if an application is not filed in each successive year.

April 1 is the last day to file for the above-mentioned cancellations, exemptions and special assessments and assessing authorities do not have discretion to accept a late filing.

At present a case in Allegheny County is challenging the long held Pennsylvania standard of using contract rather than market rents to value property. The current system creates an unintended uniformity problem. Currently two theoretical properties can be assessed at drastically different values. The first property is occupied by a net lease tenant enjoying a long-term below market lease. Under present law that tenant should be taxed based on the value attributed to the lease payments.

The second property is owned by a competitor however the competing company owns the property rather than leasing. The current law provides that the owner of real estate be assessed based fair market value. And therefore market rents and market sales of like property would be used to establish value.

This system would have then two competing companies taxed at different amounts interestingly enough the company that enjoys the below market rents would also be taxed at a lower amount. As developments in this matter progresses APTC member firms can help you to plan or fight excessive taxation.

In Rhode Island The Time To Appeal May Be Now

In Rhode Island many taxpayers filed for abatements with the local assessor last summer and fall protesting the assessment that has a valuation date of 12/31/06. Many of those applications have already been denied. Some of these taxpayers continue their appeals by filing with the local Tax Board of Assessment Review. The local Tax Board of Assessment Review must afford the taxpayer a hearing. In some cases that has already been done and a decision either approving or denying the abatement request has been issued. If the taxpayer is denied an abatement he must file a petition in the Superior Court within 30 days from the date of the decision. In Superior Court the taxpayer has the right to claim a jury trial. Rhode Island is one of the minority of states that provides the taxpayer with the option of jury trial in a tax abatement matter.

Recent tornadoes significantly damaged many Tennessee properties. Taxpayers should be aware of relief provided under Tennessee law.

Tennessee assessors value property in its condition as of January 1 st, regardless of its condition during the rest of the year.

An exception to this rule exists if, before September 1 st, an improvement is demolished, destroyed, or substantially damaged. If it is not restored and nothing else is constructed before September 1 st, then the assessor shall value the property in its damaged condition from the date of damage until December 31 st. The January 1 st value will be used until the date of damage. The value is then “pro-rated” between the January 1 st value and the date of damage value.

It is important to note that if damaged improvements are repaired or rebuilt, before September 1 st, then there is no provision for relief. The January 1 st value will remain on the property all year, though the property may not have been in service for several months.

There have been several recent cases which effect taxpayer’s rights and procedures at the administrative level. With the May 31 st protest deadline approaching, taxpayers should consider the impact of these cases.

How to Properly Handle DIT in the Income Approach
When Valuing Rate-Regulated Utilities

On February 28, 2008, the Utah State Tax Commission issued its decision in the PacifiCorp case and clarified that deferred federal income tax expenses (“DIT”) should not be added into the cash flow to capitalize in the yield capitalization model “without making an offsetting adjustment for replacement capital expenditures.” The Commission found that “when a mature cost regulated utility is expected to make . . . constant replacement capital expenditures into the future, the resulting DIT expense will be offset by the payment of taxes previously deferred and the net cash flow to [the utility] of DIT will be $0.” The Commission also concluded that “any net present value benefits associated with DIT would be passed through to the rate payers.” Inasmuch as these present value benefits would not accrue to the benefit of a would-be buyer, any present value benefits associated with DIT should not be “included in the cash flow to be capitalized under the yield capitalization approach” to value.

Northern Virginia property owners are bracing for double-digit increases in their commercial property tax liability. Increases are driven by increased assessments, anticipated increases in tax rates and possible imposition of an additional tax on commercial property (multi-family excluded) to fund transportation in Arlington and Fairfax Counties and Cities of Alexandria and Fairfax. Each jurisdiction prepares and mails its own notices of assessment. Most notices will be mailed before the end of March.

If you have recently purchased a property, be sure to file a change of address with the jurisdiction by certified mail return receipt requested. Unless a written change of address notice is on file with the jurisdiction, the jurisdiction may send the notice and the bill to the wrong address. Failure to receive the tax bill from the jurisdiction is not considered sufficient cause to waive the penalties and interest on a late tax payment.

The Sky is Falling! The Sky is Falling!! No, It’s Just Burden of Proof Legislation.

The regular session of the Washington Legislature adjourned on March 13 th without any major property tax changes. There were some fireworks, however, thanks to a bill that did not even advance out of committee. Bills designed to reduce taxpayers’ burden of proof were introduced in both the House and the Senate. The House bill received a hearing in which assessors claimed that a reduction in the burden of proof would cause the largest tax shift in state history. This melodramatic rhetoric was picked up by the media, and it was actually incorporated into the editorial position of the Seattle Post-Intelligencer. While the scare tactic worked for this round, it was so bad that it may be good in the long run. Similar bills are likely to emerge in future sessions, and legislators will be reminded that they must be skeptical of anything they hear from the assessors on this subject.

Manufacturing Property Tax Adjustment Act

The West Virginia Legislature has passed and sent to the Governor the West Virginia Manufacturing Property Tax Adjustment Act. The Act creates a dollar for dollar credit for personal property taxes paid by a manufacturing business on manufacturing inventory against tax liability arising under the West Virginia Business Franchise Tax and the West Virginia Corporate Net Income Tax. A manufacturing business is defined as one having a North American Industry Classification System code number with the first two digits being 31, 32 or 33. Manufacturing inventory is defined to include raw materials, goods in process and finished goods. The act is effective for Corporate Net Income Tax years and Business Franchise Tax years beginning on or after January 1, 2009. The credit is not available to public utilities. The credit may not be carried back or forward.

In two recent decisions which generated judgments against the City of Milwaukee totaling over one million dollars, two Wisconsin circuit court judges rejected theories espoused by the Milwaukee assessor to value commercial property.

In Allright Properties, Inc. v. City of Milwaukee, the assessor valued an off-airport parking lot based on the income that was generated by the retail parking business conducted on the site. The court found that the assessor’s position was not credible, since comparable land on the same thoroughfare was assessed at between $2.50 and $4.00 per square foot while the land owned by the parking operator was assessed at $25.00 per square foot. The court reduced the assessment by approximately $7 million.

In U.S. Bank v. City of Milwaukee, the assessor placed a separate value on safe deposit boxes and other special bank fixtures at branch banks in the city, above the value of the real estate. At trial, the bank presented expert testimony that the boxes and fixtures added no market value to the real estate, while the assessor offered no market evidence to support her position. The court rejected the assessor’s theory and valued the boxes and fixtures at zero.