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New Property Owner Must Follow Administrative Appeal Route Started by Previous Owner.
The owner of the property did not appeal the value for 2007. The owner of the property did appeal the value for 2008. A new owner purchased the property before the SBOE hearing. After losing in the SBOE, the new owner filed suit appealing both 2007 and 2008. The suit was filed after the expiration of the time for appealing a decision of the SBOE, but before the December 15th deadline for the filing of a suit in the event no administrative appeal was filed. The Court dismissed the 2008 claim reasoning that once the administrative appeal was filed for 2008, the new owner stepped into the shoes of the previous owner and had to follow that administrative process, including filing the complaint within the time the previous owner would have had. Jewel Investment v. Maricopa County, TX2007-000633.
Douglas S. John
Bancroft Susa & Galloway
American Property Tax Counsel (APTC)
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Increasing Assessments in a World of Declining Market Values
All properties in the Province of Ontario, the industrial and commercial heartland of Canada, have been reassessed to a January 1, 2008 valuation date for a four-year cycle of taxation years: 2009-2012.
Increases in commercial and industrial values generally range from 40-60 per cent from 2005 to January 1, 2008, while property values after January 1, 2008 are declining significantly. The tax increases flowing from the very significant assessment increases from the last reassessment in 2005, will be phased-in over four years. The divergence between increased assessment values and declining market values will create significant problems for taxpayers.
In Ontario, despite the statutory valuation date of January 1, 2008, there may be very good opportunities to bring forward evidence related to the decline in market value arising from current economic conditions, and achieve reduced assessments and taxation.
J. Bradford Nixon
Walker Poole Nixon, LLP
American Property Tax Counsel (APTC)
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Updated December 2008
Business Personal Property Audits No Longer “Mandatory”
On January 1, 2009, California’s local assessors will no longer be required to conduct four-year audits of all taxpayers with over $400,000 of trade fixtures and business personal property. California Assembly Bill 550 (AB 550) removes the “mandatory audit” provision in Revenue and Taxation Code Section 469, and instead requires assessors to conduct “a significant number of audits.” In enacting AB 550, the Legislature’s intent was “to provide assessors with discretion in selecting which business taxpayers to audit, thereby adding an element of unpredictability to the audit process … .” The California State Board of Equalization plans to modify Property Tax Rules 191, 192 and 193, all of which pertain to audits, to conform to AB 550’s amendment of Section 469. The State Board of Equalization has requested interested parties to submit to it suggestions for revising Rules 191-193 (see SBE Letter to Assessors No. 2008/059) .
Cris K. O’Neall
Cahill, Davis & O'Neall, LLP
American Property Tax Counsel (APTC)
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Updated December 2008
Is a Private Prison Residential Property?
Should a private prison be taxed as residential property under Colorado property taxation law? Colorado provides an alternate tax rate for residential property. The commercial assessment rate is 29% of market value, whereas residential property is currently taxed at 7.96% of market value. Several private prison companies have established private prisons and one has contracted with the State of Colorado to operate prisons on behalf of the State. Currently these prisons are taxed at the commercial rate.
Colorado law defines residential improvements as “a building, or that portion of a building, designed for use predominantly as a place of residency by a person, a family, or families. C.R.S. 39-1-102(14.3) Houses, along with apartment buildings and nursing homes fall within this definition. It is reasonable to conclude that a prison should also fall within this definition and receive the benefit of the residential tax rate. The savings would be enormous to the taxpayer.
Kenneth S. Kramer
Berenbaum, Weinshienk & Eason, P.C.
American Property Tax Counsel (APTC)
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Updated December 2008
Homeowners Association Appeals Assessor’s Valuation of Common Areas
Breezy Knoll is a private vacation community located on a lake in the rural town of Morris comprised of 19 individual residential properties.
The Association own parcels used as a parking lot and tennis court and a 10 foot strip located along the shoreline of the lake. The three parcels are affected by easements in favor of the Breezy Knoll residents which assure them exclusive access to these areas; the Association must maintain them for the benefit of its members.
After substantial ad valorem assessments of these properties were upheld at trial, the Connecticut Supreme Court ruled that because of the easements and restrictions placed on the three parcels by the Association, they had no intrinsic market value and the benefits they create for the individual lot owners should be added to the value of the lot owners’ properties for property tax purposes. Since the “Association’s members are not likely to consent to release these easements and restrictions – a necessary prerequisite to marketability”, the Supreme Court held that the properties should have been valued at nominal amounts only.
Agreeing that the three properties owned by the Association were valuable if the easement and restrictions were not considered, in the unanimous opinion by Chief Justice Chase Rogers, the Supreme Court ruled that the market value of the properties had “effectively” . . . been transferred to (the lot owners) who are entitled to enjoy them . . . namely, the individual owners within Breezy Knoll who constitute the Association’s membership.
“In other words”, the Chief Justice ruled, “the assessments of the individual properties owned by the Association’s members should reflect the enhancement to the value of their properties attributable to the easements and restrictions.”
Breezy Knoll Association, Inc. v. Town of Morris , 286 Conn. 766 (May 13, 2008)
Elliott B. Pollack
Pullman & Comley, LLC
American Property Tax Counsel (APTC)
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DC Real Property Tax Office Jolted By $20 Million Fraud
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.
David A. Fuss, Esq.
Wilkes Artis, Chartered
American Property Tax Counsel (APTC)
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In Florida, County Property Appraisers generally can not challenge taxing statutes on the grounds that are unconstitutional. However, in recent years, the courts have recognized two limited 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.
In 2007, based on the second exception, above an appellate court permitted a property appraiser to challenge the constitutionality of a statute as a defense to a taxpayer’s lawsuit seeking a tax exemption. That case was appealed to the Florida Supreme Court which resolved a conflict among the district courts on this issue. The court held that a “property appraiser acting in his or her official capacity does not have standing to raise the constitutionality of a statute as a defense in an action filed by a taxpayer.” This ruling clearly resolves the matter and prevents County Property Appraisers from challenging the validity of the taxing laws.
Julie M. Schwartz
Berman Rennert Vogel & Mandler, P.A.
American Property Tax Counsel (APTC)
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Updated December 2008
A Critical New Year for Filing Returns Which are Due Soon
This is a critical year for metropolitan Atlanta-area taxpayers to be proactive in filing returns of fair value. Failing to do so may leave taxpayers with excessive taxes based on valuations or appraisals performed long before the economic downturn -- which are now irrelevant to current market evaluations. Valuations based upon any appraisal or sale before August, 2007 are suspect. The taxing authorities may be basing taxes upon evaluations on vacant properties or which produce far less revenue than anticipated. Owners and advisors anticipating new evaluations in 2009 will be sadly disappointed because many counties will not send out new notices, hoping to maintain existing tax appraisal values, particularly if property owners have not registered an objection to the existing value by filing a new return indicating a lower value. If there is no new notice, the value remains the same, and there is nothing from which to appeal.
In Georgia, taxpayers file returns of fair market value (as of January 1) by either March 1 or April 1, depending upon the county of the location of the property. In most counties, returns must be received by the taxing authority by the deadline or postmarked by the US Postal Service (NO private meter stamps) by the deadline. Check with each county if postmarks are permitted. This is not a year where appeal rights will be nearly as important as returns, because most property values may well not be changed by the assessors.
If no return is filed for 2009, it is as if the same property is returned as the preceding year and at its previous final evaluation. Those who disagree with last year's evaluation and do not file returns will lose their appeal rights, a devastating mistake and major trap for taxpayers who expect a notice from which they can appeal. Values merely carry forward from year to year unless a return is filed in a timely manner, which is much earlier than the tax notices regarding any changes are mailed. Literally hundreds if not thousands of taxpayers will experience major surprises when they receive no notices but later do receive tax bills based upon the 2008 evaluation (and possibly at an even higher millage rate) and have no recourse.
If a value were established by an appeal, the value carries forward for the next two years, unless it is returned at a different value or if changes to the property affect its value. If the final value in an appeal is satisfactory for the next year, no return should be filed; however, continued scrutiny and vigilance are required in a period of declining values.
Atlanta and other Georgia communities had dramatic upward revisions in property assessment valuations for commercial and industrial properties in 2008 despite major reductions in actual real estate values. Landowners and their representatives should reevaluate their properties' fair market values and act timely to assert and to establish those values with the taxing authorities, addressing problems early with capable advisors. Advisors should be proactive in informing and working with their clients early and aggressively. Unfairly high taxes can be the death knell for properties, resulting in lower values, forced sales and even foreclosure because of the inability to service the taxes, insurance based on the high values, and debt service where refinancing or restructuring is difficult if not impossible. The need for early action and professional involvement in the first month or two of the new year is essential for the property owner to have the best chance to establish a fair, current, sustainable and reasonable value.
Lisa F. Stuckey
Herbert H. Gray III
William J. Seigler III
Ragsdale, Beals, Seigler, Patterson & Gray, LLP
American Property Tax Counsel (APTC)
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Updated December 2008
Low Income Housing Bill Looms for Upcoming Legislative Session
The next regular session of the Idaho Legislature convenes on January 12, 2009. It appears the Legislature will be asked to involve itself in the property tax valuation of low income housing. Some states have special statutes for this property type, but at the moment Idaho is in the majority of states that simply rely on the general concept of market value. Unfortunately, the application of that concept has been far from simple. The Idaho courts, rather than providing clarity, have muddied the waters. In 1997, the Idaho Supreme Court said that the restrictions on low income housing must be taken into consideration for property tax valuation purposes. Then, in 2006, the Court said that the federal income tax credits for low income housing should be included in valuing the real estate. Taxpayers and assessing officials are hoping for clarification from the Legislature, but discussions to date reflect significant differences of opinion.
Norm Bruns
Garvey Schubert Barer
American Property Tax Counsel (APTC)
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Updated December 2008
The Real Estate Market : The Wrong Target for Assessors
The Christmas Shopping Period has brought into strong focus the perilous situation of retail. Every means possible has been used to bring potential shoppers into the stores. Ultimately, such efforts may enable retailers to lower inventories, but that may not be sufficient to allay significant losses.
In an economy that relies so heavily upon consumer spending, retailers, big and small, find themselves in a survival mode.
At the same time, local governments, facing huge budget deficits, appear to be targeting the retail real estate market with higher and higher real estate assessments. In the past few weeks, we have seen assessments rise to the point where small stores of 4,500-6,000 square feet have received assessments that will generate real estate taxes from $9.00 - $13.00 square foot in Cook County’s south and southwest suburbs. Community Shopping Centers anchored by grocery stores have been valued in one DuPage Township of $175 to $185 per square foot, when every other Township has maintained values below $135 per square foot. Regional and Super Regional Malls are losing credit worthy national tenants and depending more and more upon temporary tenants, which in some cases, do not pay any base rent but only a percentage of sales above a certain level.
There are so few recent sales of retail properties that it is impossible to establish a 2008 Real Estate Market. 2005, 2006 and 2007 sales do not reflect a current Market though Assessors insist on using such sales. By the time, government recognizes the depressed real estate market, the market will be rebounding and government will point to rising values.
Cook County retailers are still facing another issue. Sales Tax rates are now at 10.25%. Why would someone shop in South Holland, when it is almost as convenient to go to Northwest Indiana or to the collar counties. This is just another pressure on the Cook County Retailer. Lower gas rates and lower sales tax rates make it much more attractive to go to Will County or to Indiana to shop.
There is a continuing need to bring these issues before the Assessing authorities. Nobody knows more about Retail Real Estate than the owners. The current perils must be presented in such a way that the effects of declining sales on Retail Real Estate become apparent and intuitive.
James P. Regan
Fisk Kart Katz and Regan, Ltd.
American Property Tax Counsel (APTC)
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Updated December 2008
Property Value Changes Announced On Tax Bills
Indiana's property tax system continues to change due to the legislated tax reform earlier this year. Unlike in the past, Notices of New Assessments will not be mailed in most cases next 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 annual tax bill. 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 future tax bills, and be aware of appeal deadlines from those bills.
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 December 2008
Payment Of Taxes Under Protest For 2008 Tax Year
The date to pay taxes under protest this year is December 22, 2008. Any taxpayer that does not already have a 2008 valuation appeal can pay one-half of the taxes due under protest. It is necessary to complete and file a payment under protest (PUP) form. The form needs to arrive prior to or with the payment. A corporate officer or employee is generally allowed to sing the PUP and to appear and testify on behalf of the corporation. However, duly authorized representatives not licensed to practice law in Kansas may not practice law on behalf of the artificial entity. PUP forms can be obtained from the offices of any county treasurer. Kansas law changed the name of the administrative tax court to the Kansas Court of Tax Appeals. You can visit their new web site at www.kansas.gov/cota.
Linda Terrill
Neill, Terrill & Embree, L.C.
American Property Tax Counsel
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Updated December 2008
Downtown Louisville Property Assessments Subject to Dramatic Increases
Property owners in Louisville’s downtown Central Business District (“CBD”) have noticed dramatic increases in their property tax assessments for 2008. The increases are largely the result of a land study that was performed by the Jefferson County PVA’s office. The PVA utilized a number of “land only” sales in the downtown area (some over 20 years old) and then applied an upward annual adjustment to the sales prices. Projected land values for all of the CBD were then determined through the use of regression analysis. As a result, some property owners saw increases in the “land” portion of their assessments of over one hundred percent. Owners of surface parking lots and other vacant land were particularly hard hit by the increases, since the PVA assumed that these properties were all available for redevelopment in connection with a new downtown sports arena project.
A number of downtown property owners have already appealed these increases. Property owners who did not already appeal are precluded from doing so for the 2008 tax year; however, they may still challenge the increases by appealing their assessments for 2009.
Bruce F. Clark
Michele M. Whittington
Stites & Harbison PLLC
American Property Tax Counsel
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Updated December 2008
Court Rules Assessors have Right to Challenge Tax Commission Public Service Property Valuations
The Louisiana Constitution provides that the local assessors shall value and assess all taxable property in the state of Louisiana except public service properties which are valued by the Louisiana Tax Commission. The Louisiana Court of Appeal, First Circuit, has ruled that local assessors may object to the public service property valuation determinations of the Louisiana Tax Commission. Entergy and the Louisiana Tax Commission had challenged the right of an assessor to object to the valuation of certain public service property assets of Entergy contending that the Louisiana Tax Commission is responsible for public service property valuations. See Gisclair v. La. Tax Commission, 2008 WL 4764336 (La.App. 1 Cir.), 2008-1616 (La.App. 1 Cir. 10/31/08)(unreported decision). In Gisclair, the court determined that the local assessor does have the right to challenge the fair market valuation determination of the Louisiana Tax Commission. This decision will adversely impact public service property taxpayers by allowing assessors, who are not well versed in the unit valuation methodology used by the Louisiana Tax Commission in valuing public service properties, to challenge the valuation determinations of the Louisiana Tax Commission.
Christopher J. Dicharry
Kean, Miller, Hawthorne, D'Armond, McCowan & Jarman, L.L.P.
American Property Tax Counsel (APTC)
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Updated September 2008
Now Is The Time To File In Maine
Most communities have sent out their fiscal year 2009 property tax bills. The fiscal year 2009 has an assessing date of April 1, 2008. If a taxpayer wishes to appeal the assessment he must file an Abatement Application with the assessor within 185 days from the commitment date. The commitment date is usually several days before the tax bills are actually sent out. When computing the filing deadline, the taxpayer must pay particular attention as to when the commitment date occurred. Once the Abatement Application is filed the assessor has 60 days to act upon the application. This 60-day period provides a very good opportunity for the taxpayer to present its case to the assessor. After the 60-day period the taxpayer has the right of further appeal. As a practical matter in most cases it is before the assessor that most meaningful results are attained.
David G. Saliba
Saliba & Saliba
American Property Tax Counsel (APTC)
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Updated December 2008
In Massachusetts Now Is The Time To File
Most jurisdictions in Massachusetts will be sending out their actual fiscal year 2009 property tax bills at the end of December. In most jurisdictions the deadline for filing an application for abatement is February 1, 2009. The fiscal year 2009 has an assessing date of January 1, 2008. The issue in most tax appeal cases is what the fair market value of the subject property was on January 1, 2008. In some cases the palpable evidence of a decline in market value as of January 1, 2008 was not available until after January 1, 2008. For example sales of comparable properties during calendar years 2008 & 2009 or leases signed during calendar years 2008 & 2009 may be helpful in showing the true market value of the subject property on January 1, 2008.
Now may be the time to file for an abatement of property taxes.
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 December 2008
Michigan Property Classification Appeals Can Reduce Taxes
Under Michigan law, starting in 2008 certain property classes obtain significant property tax rate reduction. Additionally, 35% of the remaining taxes that are paid on industrial personal property may be taken as a refundable Michigan Business Tax Credit by the business paying the tax.
Prior to these recent favorable property tax changes, few property tax appeals involved a property’s classification. Illustratively, in the past, for personal property, it usually was of no consequence whether the personal property was classified as commercial, industrial or agricultural. Therefore, when a property’s classification was litigated the issue typically was whether the property was real or personal property.
While the new favorable property tax provisions have made property classification very important, in recent years the legislature has not changed the laws that determine a property’s classification. Nor has the legislature changed the provisions relating to classification appeals.
As a result, the area of property classification is one where there is now far more litigation than ever before and many of the cases involve issues of first impression. Furthermore, the issues involved in these appeals include both substantive and procedural ones. In fact, there are significant issues relating to the appropriate path to appeal a property’s classification.
To date the State Tax Commission has been extremely involved in these classification appeals. Given the tax dollars at issue in these appeals, it is not surprising that thus far many of the Commission’s decisions have not been favorable to taxpayers. However, recently the Honigman firm was able to obtain a favorable ruling that will be of significant benefit to the taxpayers impacted.
Michigan taxpayers are well advised to work with knowledgeable Michigan property tax counsel in order to determine if there is anything that can be done to appropriately reduce property taxes based on their property’s classification. For many taxpayers, a favorable classification appeal could result in substantial tax savings.
Stewart L. Mandell
Honigman Miller Schwartz and Cohn, LLP
American Property Tax Counsel (APTC)
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Updated December 2008
Tax Rates and Assessments Up; Values Falling
For the first time since 2001, commercial effective tax rates are climbing. Taxpayers are finding out not only that are their properties hit with higher rates, but are also assessed at all-time highs. This is especially troubling, given the recession and its undeniable impact on property values.
Assessors may not be reacting to the market changes quickly or strongly enough. Assessments are usually tied to market sales of comparable properties, and with the credit freeze, transactions have virtually stopped. This is a normal precursor to sharply lower asset values for real estate. By the time this trend is fully appreciated by assessors, properties will be coping with taxes due from prior incorrect valuations.
It’s important that owners and managers react to the market shift by protecting their interests. The appeal deadline in Minnesota, April 30, is approaching. No commercial taxpayer should ignore that remedy this year.
Mark K. Maher
Smith, Gendler, Shiell, Sheff, Ford & Maher, P.A.
American Property Tax Counsel (APTC)
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Updated September 2008
Year’s End; Taxes Due
Property owners in Missouri should be receiving their tax bills, within the next several weeks. Some will suffer sticker shock at the amount of the bill. Others may have appeals pending or have already sought relief through the appeal process. If an appeal is currently pending before the State Tax Commission it is required that taxes paid (due December 31, 2008) be accompanied by a protest letter. The letter should be attached to the check. For property owners who do not have appeals pending, nothing can be done about the 2008 bill. However, 2009 will be a reassessment year in Missouri setting the value of the property for tax purposes for the two year cycle. Missouri counties may have different appeal dates. Property owners should be reviewing their property values to determine if an appeal is warranted. Owners should be alert for possible notices of increase in valuation by the Assessor for 2009.
Jerome Wallach
The Wallach Law Firm
American Property Tax Counsel
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Updated December 2008
Nevada to Send out Property Tax Bills for the 2009-10 Tax Year
The Nevada property tax appeals season is very compressed. Taxpayers unaware of the deadlines can easily miss an opportunity to challenge their property’s valuation. Most Nevada counties will be mailing out their 2009-10 tax year notices of value between the middle and end of December 2008. Nevada law requires that the values be posted prior to January 1, 2009. Some counties, such as Washoe County have already posted the 2009-10 values on their website. A taxpayer dissatisfied with the county assessor’s valuation may file an appeal with the county board of equalization by January 15, 2009. Failure to file a timely appeal bars any further challenge to valuation of the property. State law requires that all county board of equalization hearings be completed by the last day of February. Taxpayers aggrieved by the county board of equalization’s decision may file an appeal to the State Board of Equalization no later than March 10, 2009.
Douglas S. John
Bancroft, Susa & Galloway
American Property Tax Counsel
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Updated December 2008
In New Hampshire Now May Be The Time To File
Most jurisdictions in New Hampshire have sent out their tax year 2008 property tax bills. The tax year 2008 has an assessing date of April 1, 2008. In most cases the deadline for filing an abatement application with the local assessors is March 1, 2009. In New Hampshire the assessment ratio is an integral part of most property tax appeals. If a property has a market value of $1,000,000 and the assessment ratio is 90% the just and proportionate assessment is $900,000. If the assessment ratio is 110% the same property would have a just and proportionate assessment of $1,100,000. The problem is that the New Hampshire Department of Revenue Administration doesn¹t officially determine assessment ratios until the spring of 2009 which is after the March 1, 2009 abatement application filing deadline. If there is a significant doubt as to the justness of the assessment it behooves the taxpayer to protect his rights by filing before the March 1, 2009 deadline.
David G. Saliba
Saliba & Saliba
American Property Tax Counsel (APTC)
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Updated December 2008
Two Crucial Steps to Have Standing Before the Tax Court
All property must be reviewed annually to determine the effect of market forces on all assets. In conjunction with this process, the following steps should be taken in order to have standing before the Tax Court.
- Review all assets to determine if there is an intangible component that should not be reflected as real property value in the assessment. Hotels, regional shopping centers and senior living facilities all have significant intangible values.
- The filing deadline for all appeals in New Jersey is April 1, 2009. At the time of the filing of the appeal, all property taxes and municipal charges must be paid in full in order to have standing to file an appeal.
All written requests from the local assessor’s office for income and expense information must also have been answered in a timely fashion. Failure to respond to such a request will result in the dismissal of an appeal.
John Garippa
Garippa, Lotz & Giannuario
American Property Tax Counsel (APTC)
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Updated December 2008
Property Taxes to Compensate for NYC Budget Shortfall?
The 2009/10 Assessment Roll will be released on January 15, 2009. The last day to appeal those assessments is March 1, 2009. Most rent producing properties will also need to file the prior calendar year’s certified statement of income and expenses by March 24 th.
Significant budget cuts are now affecting all City agencies, particularly The Department of Finance and The Tax Commission. Therefore, it is important to have appeal papers thoroughly prepared and filed as early as possible in order to achieve meaningful relief.
A revenue shortfall from all sources of taxes will require a further real estate tax rate increase for the January 1, 2009 payment. The taxes should be increased about 7% according to sources close to the Mayor and City Council. The $400 residential rebate checks are now in jeopardy and might not be issued this year.
Joel Marcus
Marcus & Pollack, LLP
American Property Tax Counsel (APTC)
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Updated December 2008
NC Property Tax Appeals are Based on Market Value as of the Revaluation Date
Real property in North Carolina, as in other jurisdictions, has suffered a loss of value due to the recession and financial crisis. However, due to the nature of real estate valuation for assessment purposes in North Carolina, in most NC counties taxpayers will not be able to take these factors into account in real estate appeals for January 1, 2009 assessments.
In NC, real property is typically valued on either a 4 or 8-year cycle for property tax assessment. As of January 1, 2009, the following counties will undergo revaluation: Alamance, Caldwell, Chatham, Cumberland, Duplin, Edgecombe, Forsyth, Gates, Harnett, Lenoir, Martin, Mitchell, Nash, Orange, Pitt, Polk, Rockingham, Stanly, Stokes, Swain, Transylvania, Warren and Yadkin. These counties will have to take into account factors affecting fair market value as of that date.
However, all other counties will continue to use the values set at the time of the last revaluation and taxpayers' appeals will have to be based on the value of their properties as of January 1st of the revaluation year. Although some post revaluation date factors may be taken into account ( e.g., a change in the legally permitted use of the property or certain physical changes to the property), by and large, value challenges have to be based on the market in effect at the time of the revaluation.
Charles B. Neely, Jr.,
Nancy S. Rendleman,
Robert Shaw
Williams Mullen
American Property Tax Councel (APTC)
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Updated September 2008
Even when Values Are Down, Assessments do Not Follow the Trend
Taxing authorities in Ohio are responding to the credit crisis and the housing meltdown in a way that may not benefit taxpayers. Several counties have approached the state tax director seeking approval to not increase assessments due to the housing crisis. The State has responded that the counties are required to show that in whole the assessments of the county are supported by the market place. Some County auditors are trying to hold on to values and spin the reassessment into benevolently not raising assessments.
As taxpayers we must be diligent in our pursuit of fair assessments and make certain that although values may not change during reassessment, that our properties are actually fairly assessed. The fall marks the period of certification of tax rolls in Ohio. The period in which taxpayers can file claims begins in January. Watch out for assessments that do not fall with the market.
J. Kieran Jennings
Siegel Siegel Johnson & Jennings LLC
American Property Tax Counsel (APTC)
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Updated December 2008
Oklahoma Provides an Exemption for Manufacturing Facilities
Under Oklahoma law, the owner of a new or expanded manufacturing facility can qualify for a five (5) year property tax exemption for real and personal property used in the manufacturing process. To qualify for the exemption, the owner must satisfy statutory criteria for increased annual payroll and capital investment. The five (5) year exemption period ordinarily begins on January 1 following initial qualifying use of the property. The owner must apply for the exemption by March 15th, or lose the exemption for that year. If the exemption is granted, the Oklahoma Tax Commission values the property and the State of Oklahoma pays the taxes during the exemption period.
Taxpayers with property in Oklahoma should be vigilant in taking advantage of this valuable exemption.
William K. Elias
Elias, Books, Brown & Nelson, P.C.
American Property Tax Counsel (APTC)
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Updated March 2008
April 1 st Is An Important Tax Date For Property Taxpayers
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.
David L. Canary, Esq.
Garvey, Schubert & Barer- Portland Office
American Property Tax Counsel (APTC)
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Updated September 2008
Pennsylvania Courts Review Reappraisal System
Pittsburgh, Pa played host to the Pennsylvania Supreme Court this September. The issue brought to the Court by Clifton et al, and Pierce v. Allegheny County was whether the state law that permits a county to establish a base tax year is unconstitutional. Currently state law permits the County to establish a base tax year. In 2005 Allegheny County decided to ignore the reassessment and use 2002, the date of the last reassessment as a base year. A great number of the counties in Pennsylvania use base years. The result of the base year is that counties do not have regular reassessments; and they rely on a sales ratio study to create perceived uniformity.
A ruling against the use of base years will likely create some short term drastic changes to the tax system in Pennsylvania and a flood of reassessments.
Also of interest is the Tech One case which is pending in the Commonwealth Court. The Tech One case challenges yet another ruling that is peculiar to Pennsylvania. The case seeks to overturn a 15 year old practice of utilizing long-term contract rents to establish market value. As that case develops APTC will keep you posted.
J. Kieran Jennings
Siegel Siegel Johnson & Jennings Co, LPA (Pennsylvania)
American Property Tax Counsel (APTC)
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Updated December 2008
In Rhode Island You Must File an Account
In Rhode Island the deadline for filing an account with the assessors is approaching. The proper and timely filing of an account is a jurisdictional prerequisite to a valid appeal in many property tax appeal cases. The account must be filed by January 31, of each year. It is possible to request an extension to file the account between March 1 and March 15th. The account must describe the parcel of property and claim a value as of December 31. The account must be notarized and signed under oath. Many assessors send the account forms to taxpayers. Other assessors make the account forms available at their office. Still other assessors ask that the taxpayer craft its own form. In any event the proper and timely filing of an account is required in most cases. Taxpayer beware the account needs to be filed properly and timely.
David G. Saliba
Saliba & Saliba
American Property Tax Counsel (APTC)
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Updated December 2008
Dismissed Appeal Due to Non-Payment of Taxes
Taxpayers’ right to appeal an assessment to the Tennessee State Board of Equalization is conditioned upon payment of the undisputed portion of the tax levied and payment of any delinquent tax. There has been much confusion in the administrative arena as well as the courts as to the practical implications of this “condition.” Traditionally, where this condition had not been satisfied, the State Board would merely hold the appeal in abeyance until the Taxpayer paid the past due amount.
Tennessee Taxpayers should be aware that the General Assembly amended the statute that imposes this condition on a Taxpayer’s appeal rights. The condition remains, but the statute now provides that “[f]ailure to pay the undisputed portion of the tax or any other property tax delinquency, or both, that have accrued on that property by the time of the hearing shall result in the appeal being dismissed without any further right to administrative appeal.” As a result of this amendment, Taxpayers' appeals will be dismissed if taxes are not paid by the hearing date.
According to at least one administrative judge, delaying the hearing of a case until the condition for appeal has been met, would frustrate the purpose of the legislation. For that reason, it seems likely that in Tennessee a Taxpayer who has unpaid property taxes as of the hearing date will lose his administrative appeal rights, and asking for the hearing to be rescheduled to allow the Taxpayer time to pay the taxes, will likely be denied.
Andrea M. McKinnon
Evans & Petree PC
American Property Tax Counsel (APTC)
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Updated December 2008
The Texas Legislature And Property Taxes
The Texas Legislature will convene on January 13, 2009 for its biennial five month legislative session. Each year, several hundred property tax bills are introduced. During the year and one half interim between sessions, House and Senate special committees examined property tax issues. Some of the primary property tax issues for 2009 raised by the committees and by others are as follows:
- Change the method of appointment of ARB members from appointment by the Appraisal District Board to another method.
- Authorize the Comptroller to adopt rules and monitor use of generally accepted appraisal techniques by Appraisal Districts.
- Change the Property Value Study performed by the Comptroller to an audit of performance of appraisal districts relating to appraisal methodology.
- Provide for more effective monitoring of the licensing of appraisal district personnel and tax consultants.
- Provide for simplification and clarification of the truth-in-taxation process relating particularly to determination of the effective tax rate.
- Provide a statewide office of property tax counsel to hear and respond to citizen complaints about the property tax process.
- Avoid changes by appraisal districts to the current effective property taxpayer remedies particularly with regard to equal and uniform.
Jim Popp
Popp, Gray & Hutcheson, LLP
American Property Tax Counsel (APTC)
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Updated September 2008
Rulemaking Request to Centrally Assess Cable Companies
Utah law provides that all property which “operates as a unit across county lines” is subject to central assessment by the Utah State Tax Commission. Utah Code Ann. § 59-2-201(1)(a). On June 27, 2008, Qwest Corporation submitted a rulemaking request to the Commission wherein it requested that the Commission amend its central assessment rule to explicitly included cable companies that provide two-way telecommunications services within its umbrella of central assessment. Qwest argued that the current operation of certain cable companies in Utah clearly satisfies this statutory requirement for central assessment. Comcast and other cable have opposed the rule claiming that they should be viewed as local operating units because of the franchise agreements they are required to enter into to with cities and counties in order to provide services. The Commission should issue a decision by the end of September as to whether they are willing to entertain rulemaking procedures on this issue.
David J. Crapo
Wood Crapo LLC
American Property Tax Counsel (APTC)
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Updated December 2008
Virginia Law Allows for Appeal of Prior Years’ Real Estate Tax Assessments
During this time of unprecedented stress in the capital markets and the overall economy, many property owners are struggling to protect the bottom line. One often overlooked source of income is previously overpaid real estate taxes. Unbeknownst to many owners, Virginia allows taxpayers to challenge assessments from previous tax years.
The Code of Virginia allows the appeal of real estate taxes for a period of up to three years from the last day of the assessment year. For example, property owners could appeal their 2005 tax assessment until December 31, 2008, their 2006 assessment until December 31, 2009, and so forth. However, a handful of jurisdictions require appeal to the local Board of Equalization, and a few further restrict appeal rights to two years after the year in which the taxpayer was aggrieved. Wilkes Artis specializes in assisting aggrieved taxpayers navigate the administrative and judicial appeal process.
Ilene Baxt Boorman
Wilkes Artis, Chtd.
American Property Tax Counsel
(APTC)
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Updated December 2008
Department of Revenue Takes the Lead in Low Income Housing Controversy
The Washington Department of Revenue has published detailed guidance on the market value of affordable housing for property tax purposes. This is the culmination of a lengthy study group process that included taxpayers and assessors, as well as various outside speakers. The two publications resulting from this study are available on the Department’s web site. The Department will be following up with training sessions for both assessors and taxpayers. The hope is that this effort will bring peace to a troubled area of Washington tax law. A few states have special statutes for the property tax valuation of affordable housing, but Washington is in the majority of states that simply rely on the general concept of market value. Unfortunately, the application of that concept has been far from simple. The leadership demonstrated by the Washington Department of Revenue may be a useful example in the many other states facing the same issue.
Norm Bruns
Garvey Schubert Barer
American Property Tax Counsel (APTC)
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Updated December 2008
West Virginia Supreme Court Ruling Tough on Taxpayers Wanting to Contest their Assessment
The West Virginia Supreme Court of Appeals has held that the scheme of having the county commission sit as a board of equalization while serving as the chief fiscal agent for the county and deriving approximately 70% of its revenue from property taxes is not, on its face, unconstitutional. In West Virginia, the board of the equalization and review provides the first level administrative review of assessments. The Court also held that a taxpayer challenging an assessment bears the burden of proving by clear and convincing evidence that the assessment is incorrect. It reiterated that the State Tax Commissioner has very broad discretion as to what methods of valuation are applied in arriving at an assessment. The Court further held that upon appeal of an assessment to the circuit court on a writ of certiorari, the circuit court is to conduct a de novo review of the record below and may take additional evidence or may substitute its judgment on both facts and law for that made by the county commission sitting as a board of equalization and review. In Re: Tax Assessment Foster Foundations Woodlands Retirement, No. 33891; Bayer MaterialScience V. State Tax Commissioner et. al. Nos. 33378,33880 & 33881
Herschel H. Rose III
Rose Law Office
American Property Tax Counsel (APTC)
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Updated September 2008
Wisconsin Supreme Court Rejects Assessment Based On Above-Market Contract Rents
In a major decision rejecting an assessment theory which had been used by assessors across Wisconsin, Walgreen Company v. City of Madison, the Wisconsin Supreme Court unanimously held in July 2008 that property subject to a lease which provides for above-market rent cannot be assessed on the basis of the above-market income stream.
The taxpayer in Walgreen implemented a business model under which it leased the real estate for its retail locations rather than purchasing it. The taxpayer worked with developers who acquired the real estate and then built the stores to the taxpayer’s specifications. The leases contained contract rent payments designed to reimburse the developers’ land acquisition, construction, development and financing costs, and to provide a profit margin for the developers. The contract rent payments thus far exceeded market rent.
The Madison assessor, along with other assessors across the state, assessed the properties based on the above-market income stream under the leases, on the theory that a purchaser of the real estate would acquire the income stream under the leases and thus the income was attributable to the real estate.
The Supreme Court rejected that theory, however, holding that additional income attributable to an above-market lease represents a contract benefit and not increased real estate value. The Court held that a lease can never increase the value of real estate above its fair market fee simple value.
Robert L. Gordon
Michael Best & Friedrich LLP
American Property Tax Counsel (APTC)
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