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ARIZONA Property Tax Update
Updated September 25, 2007

When is property “municipal property” and exempt from tax?

The Arizona Constitution exempts from tax “federal, state, county and municipal property.” The Arizona Court of Appeals rejected the argument in Buckeye Pollution Control Corporation v. Maricopa County, 1 CA-TX 05-0011, that the property of the pollution control corporation was municipal property exempt from tax. The Court distinguished property actually owned by a municipality (city or town) with that owned by a pollution control corporation formed by a municipality. Key facts to the Court’s decision were that the city creating the corporation had no liability for the corporation’s debts, the corporation’s board of directors had full power to regulate the corporation and title to any property purchased by the corporation were held in the corporation’s name. Finally the statute allowing for creation of pollution control corporations specifically stated that the property of such corporation would not be exempt from tax.

The Province of Ontario is Canada's largest province with the country's largest assessment base. It recently legislated that taxpayers' representatives and consultants on property tax and assessment appeals, must be registered with The Law Society as paralegals. A code of professional conduct is prescribed, there are minimum insurance requirements and the paralegals will be subject to the testing discipline process of the Law Society.

Only those persons who are lawyers or licenced paralegals will be permitted to represent taxpayers. This is a radical and dramatic change in the representation on property tax assessment appeals.

Those companies of property tax and assessment consultants now working in the field, must restructure their business affairs so that representation will not be conducted by a business corporation. Accountability between the client and the paralegal will become paramount.

Other provinces in Canada are watching this development and may well follow suit.

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.

Under Colorado law it is advantageous to have real property classified as an agricultural use because the real property taxes are significantly less than vacant land or commercial property. Land can be classified as agricultural if it is used as either a farming or ranching operation. If the apiary is used simply to manufacture honey, then the use may not qualify as agricultural. On the other hand, if it can be shown that bees “graze” on the land (as opposed to just making honey), then the land will be classified as agricultural and be eligible for the reduced taxes.

For an animal to be a “grazing animal,” it must: need veterinary services; be provided food and shelter; be bought and sold; be susceptible to branding; not be the property of the state; intended to serve humans.

Last January, Superior Court Judge Robert G. Gilligan had occasion to address the appeal of a property owner seeking to overturn the Waterbury assessor’s imposition of the statutory 25% penalty for failing to file a personal property declaration in a timely fashion.

Regardless of whether the delay was one day or some longer period, Judge Gilligan ruled that once the late filing is established, neither the assessor nor the Board of Assessment Appeals has the right to waive the penalty. (Presumably, if the envelope from the assessor’s office containing the declaration form did not arrive or if the property owner’s premises were destroyed by casualty, perhaps an exception could be
judicially created; this was not the case here.)

Interestingly, here the property owner, while filing a late request, to solve its problem sought an extension equal only to the difference between the time elapsed from the initial due date of the declaration and the 45-day period (December 15). This creative approach was rejected by the court.

The editors of Property Valuation Topics find that most assessors are cooperative and understanding when taxpayers cannot complete their personal property declarations on time. Judge Gilligan’s ruling points out that the necessity, however, for seeking an extension properly, and for furnishing good cause in the request before the passage of the basic filing date.

Eylet Crafters, Inc. v. Waterbury, Superior Court, Judicial District of Waterbury, January 25, 2007.

DISTRICT OF COLUMBIA / WASHINGTON D.C. Property Tax Update
Updated June 15, 2007

Commercial property owners often contract with the District to use subterranean space across the owner’s property line for parking spaces, power transformers and other uses. These spaces, often under sidewalks and roads, are within the city’s public space. Each year the city bills property owners for the use of this public space based upon the size of the space being used, the property’s land assessment and the public space tax rate.

For Tax Year 2008 owners have been slammed by enormously larger vault bills as a result of large increases in assessed land value, a change in the tax rate from 1.5% to 1.8% and a retroactive increase in the prior year’s tax rate.

The marked increase in tax liability has resulted in an increase in the attention being given to real property land assessments and heightened scrutiny regarding assessment appeals.

FLORIDA Property Tax Update
Updated September 25, 2007

When Does the Property Appraiser Have the Ability to Challenge a Statue?

In Florida, the Property Appraiser does not have the ability to challenge the constitutionality of a statute on the basis that such statute is contrary to limitations imposed by the United States Constitution or the Florida Constitution. However, Florida courts have recognized two exceptions to this rule: (i) if the taxing statute at issue involves the disbursement of public funds or (ii) if the constitutionality is raised as a defense in an action initiated by the Taxpayer.

Although courts have established these two exceptions, there is persuasive authority for the position that the Property Appraiser may not raise the constitutionality of a statute even in a defensive posture. Yet, a recent First District Court of Appeal decision chose to ignore these arguments and allowed a Property Appraiser to raise as an affirmative defense, a challenge to the constitutionality of a statute that defined a special tax district as a “municipality” for property tax exemption purposes.

O.C.G.A. § 48-5-314 makes it unlawful for anyone to knowingly furnish for inspection certain documents provided by taxpayers to county boards of assessors, subjecting such person to a monetary penalty. Excluding the taxpayers’ return and assessors’ field cards, materials which are confidential include, but are not limited to, taxpayer accounting records, profit and loss statements, balance sheets and depreciation schedules, even if made part of an appeal file. Georgia courts held that a private accounting firm which contracts with a county board of assessors for audit services is also bound by the confidentiality provision. Although no reported decision exists, several trial courts have refused to order tax assessors to turn over confidential records of other taxpayers in tax appeal trials where taxpayers were challenging their own property values. Taxpayers should not hesitate to provide confidential financial records in support of their own appeals.

The Idaho Supreme Court recently dismissed a property tax case for failure to exhaust administrative remedies. The case involved statistical updating in McCall, an area of rapidly rising values, in 2004. Timely appeals were filed with the Valley County Board of Equalization, which denied relief. Idaho allows 30 days to appeal a BOE order to the Board of Tax Appeals or to court. The McCall taxpayers did neither -- they filed an independent lawsuit 31 days after the BOE orders. The trial court accepted the case, and ruled on the merits, but the Supreme Court reversed and dismissed the case. This year a newly filed case presents an interesting contrast. The Kootenai County Assessor failed to mail his 2007 assessment notices by the statutory deadline. The lawsuit asks the court to roll back values to the 2006 level as a consequence of missing the deadline. Will deadlines be enforced as vigorously this time?

The last few years have marked a dramatic increase in the value of commercial and industrial real estate. The availability of unlimited, cheap capital has driven the valuation of real estate more than any single factor. Price has not been an impediment to even questionable purchases. The cost of capital reached all time lows by the end of 2006. As a result, market driven cap rates went down and prices soared for Class A office buildings, hotels and other commercial and industrial real estate.

Assessing authorities were quick to seize the opportunity to increase real estate assessments substantially based upon those purchase prices.

Now the tightening of credit, by a shrinking of available capital, raises two important issues. First, as capital becomes scarcer, prices will go down and cap rates will rise. We must be vigilant and press the assessing authorities to reduce their assessments in line with the lower purchase prices. Secondly, it becomes more and more apparent that the valuation of real estate must take into account the influence of the financial markets on the valuation of real estate.

Recognition should lead us to develop methodologies, which take into account the changes in the financial markets and enables us to develop more stable values.

Taxpayer revolt in Indiana

I Real property values were reassessed in Indiana this year. This reassessment resulted in significant increases in both assessed values and tax dollars. Taxpayers protested throughout the City of Indianapolis as many residential tax bills increased by as much as 200%. Protesters rallied at the Governor's home, the Mayor's home, and groups of taxpayers formed to file class action lawsuits to protest the bills and the system. In Indiana, it's war on property taxes. As a result of this taxpayer revolt, the Governor of the State ordered a reassessment of the City of Indianapolis and Marion County, the largest county in the State. During the last 60 days there have been many questions as to how the reassessment will be handled, what the result of the reassessment will be and how the property tax system will change. One constant has been the continuous protesting among taxpayers. Tax bills have been significantly delayed throughout the State; in some areas, the taxing authorities have not issued tax bills since November 2006. Much confusion still exists throughout the State. An Indiana taxpayer should be aware of the most current changes and new procedures in each County before filing a property tax appeal.

As property tax lawyers we often undertake considerable effort to obtain a 40 to 50% reduction in the assessed value of commercial housing assets such as apartment complexes, senior housing or assisted living facilities. Under Iowa law there is a quick and easy way to obtain this reduction. It works when commercial property is reclassified as residential and the taxing authorities apply a roughly 50% “holdback” reduction to the taxpayer’s obligation. In Iowa there is a large holdback for residential properties and virtually none for commercial.

The quick and easy way to do this, relative to, and often in supplement to, the traditional legal challenge of the assessed value, is a cooperative or condominium conversion in the form of ownership of the asset. Iowa Code Chapter 499 regulates condominiums and 499A cooperatives.

A complete discussion of the details of the conversion procedure, and the differences between these two forms of ownership, is beyond the scope of this article. The primary advantage of the cooperative form of ownership over the condominium form is that the cooperative presently is not required to upgrade to current building codes at the time of the conversion whereas condominium conversions after April 25, 2000, must be upgraded to current building codes. This can be a significant savings depending on the age of the asset.

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.

The Kentucky Court of Appeals recently ruled that property owned by a religious institution is exempt from ad valorem taxes under Section 170 of the Kentucky Constitution, regardless of whether the property is currently being used for religious purposes. In St. Andrew Orthodox Church v. Thompson, 2006 CA-00305-MR and 2006-CA-0058-MR (Aug. 10, 2007), a church purchased two five-acre lots with two single-family houses. St. Andrew had future plans to build a larger church on the lots, but in the meantime, was renting the houses to non-church members and using the rent to pay the mortgage. The assessor argued that the property was not eligible for the Section 170 tax exemption, since it was not being used for religious purposes. The Court found that a 1990 amendment to Section 170 had broadened the previous constitutional exemption (which had required actual use), so that the intent to use the property for religious purposes in the future was sufficient to exempt the property under Section 170. The decision is awaiting possible review by the Kentucky Supreme Court.

Louisiana Oil and Gas Industry Proposes Major Changes to Method for Valuing Down Hole Taxable Property

The Louisiana oil and gas industry has proposed major changes in the way that property taxes on subsurface oil and gas equipment are determined. Louisiana is a fair market value state. La. Const. of 1974, art. VII,. § 18. However, special issues arise in the valuation and taxation of subsurface equipment because Louisiana law prohibits the taxation of minerals in place and of mineral rights and leases. Additionally, the value of land cannot be increased because of the presence of minerals. La. Const. of 1974, art. VII, § 4. Thus, the oil and gas industry contends that the taxation of subsurface equipment is limited to the fair market value of the actual in place equipment. For many years the LTC has begun the valuation of subsurface taxable equipment with the American Petroleum Institute Joint Association Survey on the Cost to Drill and Equip Wells (“JAS”). The survey is the result of voluntary reporting on the current cost to drill and equip wells. The survey includes such costs as drilling rig rates, the cost of board roads, and such other items. In order to extract the non-taxable costs from the JAS, the LTC has used a percentage of the average cost to drill and equip as reported in the JAS. At times the percentage has been as low as 15%, but in recent years the percentage has increased to the current 40% of the average JAS cost to drill and equip. For years the industry has insisted that the percentage of JAS has been too high resulting in the overvaluation of taxable property or the taxation of non-taxable property contrary to the Louisiana Constitution. During 2007 for use in 2008 and later years the industry has proposed the use of the United States Department of Energy’s Energy Information Administration (“EIA”) data to determine the cost of subsurface equipment. The industry believes that the EIA information is more specific to the actual down hole equipment and is a more reliable indicator of the current cost of the actual taxable down hole equipment. Once a reliable indicator of current cost is found, the LTC regulations will apply standard cost approach methodologies to annually arrive at the fair market value of subsurface taxable equipment. Contrary to the industry position, the Louisiana Assessors Association has recommended that the LTC adopt 100% of the average JAS cost to drill and equip as the starting point for valuing taxable down hole property. The LTC is scheduled to announce whether it will accept the industry proposal on October 3, 2007

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 Obtaining Relief From Disproportionate Assessing Is A Formidable Task

The recent Massachusetts Appellate Tax Board case of William Welsh Graham et al v. Board of Assessors of the Town of West Tisbury 2007 Mass. Tax Lexis 23, shows how difficult it is to obtain a property tax abatement based upon an allegation disproportionate assessment. Here the taxpayers’ property was located on the island of Martha’s Vineyard. The taxpayers alleged that their property was assessed disproportionately. The Appellate Tax Board ruled that the taxpayers failed to support their claim or disproportionate assessment. The Board stated “…the appellant’s failed to establish that the assessors undertook an intentional policy or scheme of valuing properties, ……… at a lower percentage of fair cash value than the appellant’s properties” (emphasis supplied).

The Board further stated, “Where assessments, even if wrong, are ‛consistent with honest mistake or oversight on the part of the assessors’ as opposed to a ‛deliberate scheme of disproportionate assessment’ no relief for disproportionate assessment is appropriate.”

MARYLAND Property Tax Update
Updated October 5, 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.

In recent years, Michigan industrial and commercial properties in particular have suffered from substantial external and economic obsolescence; obsolescence that is not attributable to a flaw in the property itself, but due to external forces. A recent Michigan Tax Tribunal case involved an agricultural processing facility that highlights how significant external obsolescence can be. In this case, the total assessment on the tax rolls reflected most if not all of the property’s depreciation from physical and functional flaws. However, if the property owner had tried to sell this processing facility, no buyer would have bought the property for its existing use because foreign competition had forced non-farmer producers to exit the market. Accordingly, the property would have sold as basic industrial property, worth substantially less than the assessor contended. Notwithstanding this, and that an appraisal confirmed substantial economic obsolescence, the assessor refused to make any assessment reduction. Ultimately, after several days of trial, including intense cross-examination of the government’s purported expert that prompted some significant observations from the Tribunal Judge, the case settled with downward revisions that totaled an almost 40% reduction from the original value on the tax roll. Very careful preparation is often required to persuade government representatives to make reductions based on external obsolescence. However, a lesson of this case is that tax appeal counsel who has experience with this issue can present cases that even persuade resistant government officials to make these reductions

Minnesota law requires that in November,taxing jurisdictions mail estimates of taxes that will be owed the next payable year. Those Truth in Taxation notices are the county’s best estimate of probable taxes owed for pay 2008. Notices often trigger a realization among managers and owners of property that big tax increases may be in the offing for their property.

The decision—Irongate Enterprises v. St. Louis County—noted that the taxpayer responded to the county’s request for leases for the 15 tenants in the property by inviting the assessor to travel to California, where the leases were kept, to review them. The Court took a dim view of this tactic in affirming the tax court’s dismissal of the case.

The case is a reminder to deal forthrightly with reasonable assessor requests, remembering the ultimate goal of securing a fair assessment for the property.

The Collectors of Revenue in the counties of Missouri will soon be forwarding to taxpayers the real property tax bills for the year 2007. Those taxpayers who have filed appeals from decisions of the Board of Equalization with the Missouri State Tax Commission should be alert to a potential change in the interpretation of Missouri law with respect to protested tax payments.

A statutory requirement that the Collector be notified of pending tax appeals was taken to mean that taxpayers no longer had to pay under protest to preserve their appeal rights. A recent Circuit Court ruling in the City of St. Louis expressed a contrary opinion. That decision is under appeal. Under the terms of that decision taxpayers must pay under protest setting out the reason for their protest at the time their taxes are paid. Failure to do so may result in rendering the appeal moot in that the paid taxes not protested cannot be recovered.
Frequently, payments are made from an escrow fund held by the lender. The lender must be made aware of the fact that the protest letter must accompany the check.

Valuation of Affordable Rental Housing Still Not Uniform, Despite Legislative Mandate

In 2005, the Mississippi Legislature amended Miss. Code Ann. § 27-35-50 to add a new subsection specifying that tax assessors were to utilize the income method exclusively in valuing affordable rental housing. Specifically, the revised statute provides that the “appraisal shall be made according to actual net operating income attributable to the property, capitalized at a market value capitalization rate prescribed by the State Tax Commission that reflects the prevailing cost of capital for commercial real estate in the geographical market” where the property is located, and “adjusted for the enhanced risk that any recorded land use regulation places on the net operating income of the property.” The statute continues to define affordable rental housing (i.e. Section 42, etc.) and what constitutes a land use regulation (covenants as well as laws regarding maximum income, rent, etc.) for purposes of the statute. In spite of this clear mandate by the Legislature, several county tax assessors and boards of supervisors appear to be openly refusing to apply this valuation method to properties in their counties, some on the argument that the statute may be unconstitutional. Any taxpayers owning or managing affordable rental housing in Mississippi should pay close attention to their current and future tax assessments to ensure they are getting the full benefit of this new law.

In 2005, the Nevada Legislature enacted Nev. Rev. Stat. §361.0775, which allowed for a partial abatement of real property taxes for buildings that are certified to be constructed at a silver level or higher in accordance with the Leadership in Energy and Environmental Design Green Building Rating System (“LEED”). The abatement was limited to ten (10) years and ranged between 35% and 50% of the real property taxes in a given year. The 2005 law represented one of the largest abatement of property taxes for “green” building in the United States.

In this year’s legislative session, the “green” building tax abatement was significantly limited. Because there are a large number of major construction projects expected to be LEED certified concern arose over the financial impact on local communities. Several proposals were considered, including suspending “green” building tax abatement. The Legislature ultimately determined to limit the property tax abatement to a range of 35% and 50% of the real property taxes incurred on the improvements and then only that portion of the taxes not dedicated for public education.

New Hampshire To Send Out 2007 Tax Bills

Most New Hampshire communities will be sending out their tax year 2007 tax bills between now and the end of the year. The tax year 2007 tax bill has an assessing date of April 1, 2007. If a party is aggrieved by the assessment, he may file an abatement application with the local assessors no later than March 1, 2008. In New Hampshire the equalization ratio is important in determining whether or not an assessment is proper. The State Department of Revenue Administration publishes the equalization ratios in May or June of each year. A taxpayer may not be able to fully analyze the merits of his case until the equalization ratio is known. If the assessors deny the abatement application an aggrieved party may file a petition at the State Board of Tax and Land Appeals or in the Superior Court no later than September 1, 2008.

New Jersey taxpayers would be well advised to obtain yearly real estate appraisals on any real property owned or leased in the state. Because our state does not prepare annual assessment appraisals, municipal wide revaluations do not take place for many years. It is not unusual to observe some jurisdictions that have not revalued for more than 10 years. During that length of time, property values can change dramatically. Since New Jersey is a market rent state, only the current market value, based on current economic data can be used to value the property. The only way that current market value can be determined is though an appraisal that measures current data. The fact that a property may be encumbered by a lease that is 5 years old is of no moment. Only the current fee simple market value of that property for the year under assessment is valid.

Owners and net lessees of rent producing properties in New York City will have to use a new on-line data entry program developed by the Department of Finance to report last years income and expenses. This program called “RPIE-2006” is a mandatory filing that must be made no later than September 4, 2007. Each property must log on and create a password, complete the form, submit it on-line, print out a copy, sign it and mail it to the Department of Finance. The mailing must be post marked no later than September 5 th.

Failure to file the RPIE carries penalties including a hold on assessment review and in many cases large increases in the next year’s tax assessment.

Another reminder, all taxpayers who have filed appeals at the Tax Commission will need to file petitions in Supreme Court by October 24 th to preserve their appeal rights.

North Carolina imposes its property tax on business personal property - principally machinery and equipment, computers, furniture and fixtures and motor vehicles. The tax is imposed broadly, but is subject to various exemptions. Intangible personal property is generally exempt from tax, with the exception of leasehold interests in exempt real property and capitalized software purchased from unrelated third parties, both of which are assessable. See N.C.G.S. 105-275 (40)

Recently, several counties (e.g. Wilkes, Guilford and Forsyth) have begun to audit taxpayers' books and have been discovering for assessment "capitalized salaries" associated with software. The capitalized salaries accounts of taxpayers may include compensation paid to third parties, such as consulting firms engaged to work on packages such as SAP, or may be the salaries of other independent contractors or of the taxpayers' own employees.

.These amounts are capitalized pursuant to the requirements of SOP 98-1, Accounting for the Costs of Computer Software Developed or Obtained for Internal Use, published by the Accounting Standards Executive Committee, American Institute of Certified Public Accountants.

This is an area where law, accounting and information technology intersect, with predictably controversial and complex implications for property taxation. Clearly, not all amounts included in the capitalized salary accounts are assessable; equally clearly, some portions of these accounts related to the installation of software purchased from third parties may be assessable. Deciding what is assessable and what is not is a team effort involving in-house tax, accounting and IT personnel as well as analysis by experienced property tax counsel.

Ohio is in the process of phasing out the personal property tax along with its franchise tax. These taxes are being replaced by a broad Commercial Activities Tax (CAT). However, with change comes “growing pains”. Tax payers that have or should remove business fixtures from real estate values will find resistance from assessors in agreeing to reductions from real estate assessments for business fixtures. Business fixtures are those fixtures that are for the benefit of the business and do not benefit the real estate although they are affixed and may be permanent.

Ohio law has determined that business fixtures are personal property and are taxed as such. In the past a determination that an item was a business fixture was not welcomed by taxing authorities, however the fixture did not escape taxation completely. If a property were excluded from the real estate rolls it would be picked up on the personal property tax return. Now that the personal property tax is nearly phased out taxing authorities have been reluctant to classify business fixtures as personal property. However, diligent pursuit of fair taxation can lead to lower taxes in Ohio.

Like many states, Oklahoma applies much higher assessment ratios to public service corporations than to other taxpayers. Public service corporations pay twice the tax of other taxpayers on properties of equal value. Since federal deregulation of the natural gas industry in the 1990's, there has been an ongoing dispute whether gas gathering companies should be classified as public service corporations. A recent attempt to reclassify a gas gathering company was successfully defeated in court. In Chesapeake Energy Marketing, Inc. v. State Board, 2007 OK CIV APP 79, the court ruled that the State cannot reclassify gas gathering companies until a Legislative Task Force completes further study of the issue. Currently, most gathering companies are locally assessed. As a result of Chesapeake, the status quo should be maintained for the foreseeable future. This represents a significant victory for gas gathering companies in Oklahoma.

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.

Taxpayers in Tennessee should be familiar with the requirements of paying taxes while an appeal is pending before the Boards of Equalization. Taxpayers have two options. .

First, a taxpayer may pay the entire amount of taxes as billed. If the appeal is successful and the assessment reduced, then the government is required to refund the excess taxes paid, plus interest as provided under Tennessee law.

Alternatively, a taxpayer may pay only the undisputed amount of taxes. If, at the conclusion of the appeal, additional taxes are owed, then those taxes, plus interest at the same rate the government pays on refunds, must be remitted.

Taxpayers should comply with Tennessee law regarding the payment of taxes pending the resolution of an appeal. Failure to comply may result in the imposition of interest and penalty at a rate of 18 percent per year.

Property owners throughout Texas are currently receiving 2007 tax bills, which are due on January 31, 2008. Although property tax valuations are generally protested before May 31 of the tax year and become final if not protested, relief may still be available.

If an owner’s tax value exceeds the correct value by more than 33%, the owner may file a motion with the county Appraisal Review Board prior to February 1, 2008 to request a value change.

However, this remedy is only available if the owner 1) did not file a protest on the property for the current tax year, or 2) the owner protested the property but did not present evidence at the administrative hearing. Further, the owner must pay the taxes on the property prior to the due date.

Further, if a property owner is dissatisfied with the appraisal review board decision, the property owner may file a lawsuit in district court to contest the decision.

For many years Utah has recognized that an appraiser must consider the impact environmental contamination has on the value of property. Typically, Utah courts and administrative agencies have stated that both costs to remediate the contamination and the costs associated with any environmental stigma should be considered. Recent cases have noted that even though the remediation costs may exceed the total value of the property in an uncontaminated condition, the property may still have taxable value. If the improvements on the property are still being used for their intended purpose, the courts have stated that the property has a value in use that is subject to property tax. In such situations, the remediation costs have been applied to reduce or eliminate the assessed value of the land but no reduction has been applied to the value of the improvements that are still being used.

A new Virginia Code provision permits Northern Virginia jurisdictions to adopt an ordinance imposing an additional tax of up to $0.25/$100 of assessed value on retail, office, hotel and industrial properties. Jurisdictions in the Tidewater area may adopt an ordinance increasing assessments on these property types by as much as $0.10/$100 of assessed value.

This measure is aimed at funding transportation related improvements in the jurisdiction imposing the tax. To be effective in 2008, an ordinance must be adopted in calendar year 2007. Adoption does not automatically impose the tax or raise the rate on commercial properties. Instead, it provides the legal framework for the jurisdiction to adopt an additional tax in subsequent years. The first year such a tax may be imposed is 2008.

The first Northern Virginia jurisdiction to adopt such an ordinance is Fairfax County. Other Northern Virginia jurisdictions may soon follow Fairfax’s lead.

Washington’s property tax system is administered at the county level of government for the most part. The state has a supervisory role, however, and in that role the Department of Revenue employs a staff of appraisers who are available to perform “advisory appraisals” for county assessors. Advisory appraisals can be quite problematic for taxpayers, and sometimes they even create problems for the assessor. The advisory appraisal program was contracting in recent years, but in a somewhat surprising move the 2007 Legislature funded an expansion of the Department’s advisory appraisal staff. This year’s assessment cycle was unaffected, but next year will be one to watch closely. Requests for next year’s advisory appraisals are being considered right now. Beware if you get a letter informing you that your property will be the subject of an advisory appraisal. It may sound like a good thing in theory, but in practice it can spell trouble.

Two Wisconsin Courts Reject Assessors’ Attempts To Overassess Golf Properties

In two recent decisions, Wisconsin circuit court judges have rebuffed attempts by assessors to assess private golf courses at more than their fair market value.

In North Hills Country Club v. Village of Menomonee Falls, a country club was located on land zoned for park use. The assessor disregarded the zoning and assessed the property as if it were available for commercial and residential development. At trial, the assessor argued that the court should disregard the actual zoning, on the theory that the property owner could apply for a zoning change and that the Village would be likely to grant it. The court rejected the assessor’s argument, concluding that the Village “engages in a game” by “tax[ing] its citizens for a use expressly not allowed” by its own zoning code.

In Lac La Belle Golf Club v. Village ofLac La Belle, the court held that the assessor had failed to take into account the significant recent downturn in the market value of golf properties, which has resulted from an oversupply of newly built golf courses and the change in economic demand from golf-only facilities to family-friendly facilities which offer fitness centers, swimming and tennis in addition to golf.