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Jefferson County Real Property Valuation Notices Are “In The Mail”
The Board of Equalization for Jefferson County sent out the 2009 valuation notices on Tuesday, June 9, 2009. Jefferson County is home to metropolitan Birmingham and many of the surrounding suburbs. The valuation date for purposes of the notice is October 1, 2008 and will be the basis for calculation of the ad valorem tax bill due on each parcel for October 1st, 2009 (delinquent December 31, 2009). All tax parcels in Jefferson County will receive a notice even if the Board has not changed the value from that of the prior year. The address for the notice is the address that appears on the records of the Tax Assessor. Should any taxpayer or agent have a new mailing address, you may want to make sure the notice is forwarded to the new address or call the BOE directly (205-325-5566) for the new value.
A taxpayer has 30 days to file a written protest of the new valuation with the BOE. The BOE has instituted a requirement that protests be made via filling out and returning the yellow valuation notice card sent to taxpayers. We do not believe that failure to use the yellow card is justifiable grounds to deny a taxpayer the right to protest, however, good practice suggests that one should comply with the BOE’s request.
While some of the procedures have changed, the information that the BOE is looking for remains substantially the same. For commercial real property, the BOE will typically consider the most recent three years of income and expense statements, as well as any comparable sales information that is presented. The BOE is also interested in any recent appraisals as well as information about the property that bears on its value, i.e., functional obsolescence, deferred maintenance, environmental issues, leasing problems, restrictive covenants, easements and servitudes. Information about comparable sales or leases, in the case of owner occupied property, is also helpful.
Typically, the BOE will send out the final results of all protests dated the same day. This is to prevent confusion as to the commencement date for the 30 day period to appeal to Jefferson County Circuit Court. Most taxpayers in Jefferson County who appeal real property results appeal pursuant to local legislation that allows for the value on appeal to be decided by a panel of three real estate professionals.
Benjamin J. De Gweck
DonovanFingar, LLC
American Property Tax Counsel (APTC)
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Arizona Court of Appeals Holds That Taxpayer May Not Establish Obsolescence Based on Factors within Its Control
Taxpayer is a telecommunications company that operates a network of fiber optic telecommunication lines throughout North America. As the economy expanded, Taxpayer rapidly expanded its network capacity in anticipation of perceived increases in future demand. As it turned out, however, taxpayer overbuilt its network and the value of its property was impaired. Taxpayer challenged the Arizona Department of Revenue's (“ADOR”) valuation of its property based on the premise that the ADOR had failed to adequately account for functional and economic obsolescence. The Court of Appeals held that a taxpayer cannot establish obsolescence because of factors within its control. The court observed that Taxpayer's business decisions and overbuilding were within its control and thus do not support its claim of economic obsolescence. As the tax court explained, “[m]ere erroneous business judgment does not create obsolescence.” Level 3 Communications, LLC v. Arizona Dept. of Revenue, 2009 WL 2195048 (Ariz.App. 2009).
Douglas S. John
Bancroft Susa & Galloway
American Property Tax Counsel (APTC)
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Assessment in Ontario
The notices are out for the reassessment for 2009 taxation based on a January 1, 2008 value. In previous articles, we have raised issues as to where that may lead given the present economic circumstances facing North America.
What we must now be alerted to is not only the value as determined but also the implementation of the “phase-in” and tax capping regimes now within the discretion of the local municipalities. The legislative scheme has changed dramatically as a result of the new reassessment to allow a phase-in of those values for commercial/industrial properties over a four-year period upon which is placed a municipal tax capping/clawback regime.
What is extremely important to note is that not only does an appeal with respect to the assessment returned for 2009 impact the base 2008 value, the appeal may also reference the 2005 value set forth in the Notice of Assessment as the benchmark for the “phase-in”.
A right of appeal exists with respect to that benchmark valuation, particularly in circumstances in which it is something other than that originally established for the 2006/2008 cycle. It is complexity on top of complexity. The last date for appeal for the 2009 taxation year is March 31, 2009.
Richard Poole
Walker Poole Nixon, LLP
American Property Tax Counsel (APTC)
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Updated December 2009
2010 Proposition 13 Trend Factor Expected to Be Negative
Under Proposition 13, which was adopted by California voters in 1978, property tax values are allowed to increase by no more than 2% annually. Next year, for the first time in Prop. 13’s history, the annual property tax increase may be a decrease of perhaps as much as 1% due to a decline in the California Consumer Price Index to which the Prop. 13 value trend factor is tied. This decrease will result in across-the-board property tax reductions for all properties which are currently being assessed at their Prop. 13 value cap. The 2010 Prop. 13 value trend factor will be announced by the SBE in mid-December.
Cris K. O’Neall
Cahill, Davis & O'Neall, LLP
American Property Tax Counsel (APTC)
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Updated December 2009
Will Tiger’s Tale Lower Property Taxes
Recently a friend of mine mentioned that he never liked Tiger Woods. Since Tiger’s popularity, my friend found it more difficult to schedule tee times at his golf club. We have all heard how Tiger Wood’s success in golf has spurred on a new generation of golfers.
Private golf courses are taxed, among other ways, based upon income generated. As golf’s popularity increased, so did golf course revenue and golf course value (to the extent that the value was separated from the value of the homes surrounding the golf course). Now that Tiger Wood’s reputation has suffered, many are speculating that many of his endorsements will be withdrawn. Some are also speculating that the popularity of golf will wane was well. Consequently, revenue to golf courses may decline which should translate to a decrease in value of golf courses. Lower value should equal lower taxes.
Kenneth S. Kramer
Berenbaum Weinshienk PC
American Property Tax Counsel (APTC)
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Updated June 2009
Property Valuation Topics:
Unusual Event: Three Appraisers Agree
The taking of a former Volkswagen auto dealership and repair facility consisting of approximately 2.5 acres with a gross building area of slightly more than 19,000 square feet generated a confluence of appraisal opinion perhaps not seen since the last solar eclipse.
An opinion not otherwise notable for establishing new law (it was not necessary) or in parsing a difficult fact pattern addressed the property owner's appeal of the Connecticut Commissioner of Transportation's award of $2,129,000. Happily for the appellant, the Commissioner's appraisal was "updated" to $2,786,000.
The second appraiser who testified at trial for the State of Connecticut valued the property at the time of taking at $2,750,000. The property owner's appraiser put forth a market value of $2,785,000. All appraisers used methodologies other than the sales approach.
As Judge Trial Referee Samuel Freed observed, "In most cases of this sort, the court is charged with taking into account the divergent opinions expressed by the witnesses of the claims advanced by the parties. . . . What is quite noteworthy in this case is the lack of diversity in the opinions advanced by the experts presented by the parties." Essentially, the court observed, the appraisers' conclusion was "unanimous".
State of Connecticut v. Auto Corner, LLC , Docket No. CV‑0740‑32622, March 31, 2006.
Elliott B. Pollack
Pullman & Comley, LLC
American Property Tax Counsel (APTC)
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Wilkes Artis, Chtd.
American Property Tax Counsel (APTC)
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A recent bill changes the presumption of correctness in Florida property tax appeals. Under the new law the appraiser must prove by a preponderance of the evidence that its assessment was arrived at by complying with statutory requirements and professionally accepted appraisal practices. If the appraiser fails to prove this, then its assessment does not have a presumption of correctness.
If the appraiser succeeds in its showing, then the taxpayer must prove by a preponderance of the evidence that the assessment does not represent the just value of the property or is arbitrarily based on appraisal practices different from those applied to comparable property in the county. If the taxpayer makes this showing, then the special magistrate shall establish the assessment if there is competent, substantial evidence of value in the record. If the record lacks such evidence the matter must be remanded to the property appraiser with directions from the magistrate.
This new statute takes effect for 2009 assessments and represents a substantial change in favor of taxpayers challenging their assessments.
Julie Schwartz
Berman Rennert Vogel & Mandler, P.A.
American Property Tax Counsel (APTC)
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Updated December 2009
Property Taxes Leap Into The Headlines
As we warned, 2009 was a critical year for Georgia taxpayers to be proactive in filing returns of fair value. Relatively few taxpayers did, despite pleas and plummeting property values, resulting in the predicted gnashing of teeth by taxpayers who received no property tax assessment reductions but higher tax bills from increased millage rates; they have no remedy.
One result is an unprecedented series of articles in the Atlanta Journal Constitution (ajc.com) running for eight consecutive days entitled “Why you’re paying too much in property taxes.” The Sunday article alone dominated the front page and four full interior pages. While the articles stress residential inequities between stated and actual property values, the same applies even more so to commercial and industrial valuations. Atlanta was especially impacted because of county-wide reassessments carried out in 2007 which impacted 2008 values before the plunge. Subsequent articles targeted each of the major Atlanta metropolitan counties and the responses and defenses of the county property tax officials regarding actions they took.
While it is too late to address 2009 inequities where no return was filed, once again we urge taxpayers to file returns proactively asserting the proper values prior to March 1 or April 1, 2010, depending on the county. It is critical to retain professional help to make sure the returns are properly filed and that appropriate analysis is done to ascertain and to assert a proper and defensible value; relying upon counties to reduce assessed values in 2009 was fruitless, and relying upon them to do so in 2010 is nothing less than reckless. Values may well remain locked into 2008 prices (much less 2009) with rocketing millage rate increases (Gwinnett County, for example, increased its millage rate by 21%.) In Georgia property tax returns cannot be ignored, and appropriate action must be taken no later than April 1 (and in some counties, by March 1.)
Owners and advisors waiting for new notices may be sadly disappointed because many counties may again not sent out new notices, hoping to keep existing values. If the value is the same, there is nothing to appeal, and the debacle of 2009 will be repeated in 2010, only worse. If you want the proper value on your property in Georgia, you must timely assert it and defend it.
Lisa F. Stuckey
William J. Seigler III
Herbert H. Gray, III
Ragsdale, Beals, Seigler, Patterson & Gray, LLP
American Property Tax Counsel (APTC)
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Updated December 2009
Assessed Values Down, But Tax Rates Up
County treasurers in Idaho mailed their property tax bills in mid-November, and taxpayers are now facing a December 21 due date for the first half payment. Taxpayers who scrutinize their bills closely will see that some taxing districts increased their levy rates quite significantly. Ada County, for example, increased its levy rate by 14.5 percent. The City of Boise raised its rate by 14 percent. For many taxpayers, the rate increases will be offset in whole or in part by decreases in their assessed values. However, owners of commercial properties should be aware that the macro effect is an unfavorable tax shift -- from homeowners to businesses – because in the aggregate residential values decreased more than commercial values. In Ada County, residential value declined by 12 percent while commercial values went down by only 6 percent. Next year may be a time to look more closely at your Idaho values.
Norm Bruns
Garvey Schubert Barer
American Property Tax Counsel (APTC)
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Updated December 2009
Dramatic Reductions to Tax Assessment Levels in Chicago & Cook County
In Illinois, all properties located outside the City of Chicago and Cook County are assessed for real estate tax purposes at exactly 33.33% of their fair “cash” or market value. However, in Chicago and Cook County, different types of properties have been assessed for many years at different levels of assessment ranging from 16% of fair market value for homes and smaller residential properties to as much as 38% of fair market value for larger commercial properties such as hotels and office buildings. This historical classification system exists only in Chicago and Cook County and is legally authorized by a long-standing local Ordinance known as the Cook County Classification Ordinance.
Illinois also has a constitutional requirement that no level of assessment for any class of property can exceed two and one-half times the level of assessment for any other class of property. Recent sales ratio studies performed by the Illinois Department of Revenue suggested that homes and smaller residential properties in Chicago and Cook County were being assessed under the Ordinance at “de facto” levels of assessment of approximately 10% to 11%, rather than the 16% level of assessment provided for in the Ordinance. These “de facto” levels of assessment were creating a potential violation of the Illinois Constitution because two and one-half times the “de facto” 10% residential level of assessment would be 25%, significantly lower than either the existing 36% ordinance level of assessment for industrial properties or the 38% ordinance level of assessment for commercial properties.
In an effort to resolve the constitutional issue surrounding the existing Classification Ordinance, the Cook County Board recently amended the Ordinance to dramatically reduce the levels of assessment for all properties located in Chicago and Cook County (Classification Ordinance enacted September 17, 2008). Vacant land (previously assessed at 22% of fair market value) and smaller residential properties (previously assessed at 16% of fair market value) were both reduced to 10% levels of assessment. Larger apartment buildings (over six units) that were previously assessed at 20% of fair market value have been reduced to 16%, with a further reduction to 10% of fair market value by the 2011 tax year. Finally, the levels of assessment for all commercial and industrial properties located in Chicago and Cook County were reduced from 38% and 36% respectively to only 25% of their fair market value in order to ensure compliance with the Illinois Constitutional “2.5 to 1” requirement.
These dramatic level of assessment changes were made effective immediately with the 2009 tax year (taxes payable in 2010). Moreover, the changes amount to dramatic reductions in the levels of assessment for commercial and industrial properties of approximately 35% (from their previous 38% and 36% levels of assessment respectively to a uniform 25% level of assessment for both property types). The amendments to the Classification Ordinance also raise several important issues such as (1) whether or not the restructuring of the levels of assessment will result in an overall increase in the 2009 tax rates and, if so, whether the rate increase will completely offset the anticipated tax reduction that would have resulted from the lower levels of assessment, (2) whether or not the amendments will result in a shifting of the tax burden from one group of taxpayers (such as commercial property owners) to another class of taxpayers (such as residential owners), and (3) whether or not the amendments will produce a decline in tax revenue that may have to be absorbed by the various taxing districts, such as the local School Districts, who are currently subject to annual tax cap legislation. We will keep you advised as to new developments in Chicago and Cook County, Illinois, in this regard as they occur.
Jeffrey A. Brown
Fisk Kart Katz and Regan, Ltd.
American Property Tax Counsel (APTC)
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Updated September 2009
Recent Indiana Tax Court Decision Opens Doors For Not-For-Profit Tenants
In a decision issued by the Indiana Tax Court on July 24, 2009, the court found that a not-for-profit church leasing space from a for-profit corporation was entitled to a tax exemption. Traditionally, under Indiana law, real property must be both owned and used by a not-for-profit entity to qualify for a property tax exemption. The court's decision in this particular case, Oaken Bucket Partners, LLC v. Hamilton County Property Tax Assessment Board of Appeals and Hamilton County Assessor, deviates from the general rule. This case may open doors for not-for-profit tenants in centers owned by for-profit corporations. However, this case is specific in its ruling. The not-for-profit tenant in this case was a church and the court found that the lease to the church was below market rent, concluding that leasing space below market rent signifies a charitable purpose. This charitable purpose to assist the church with the furtherance of its religious purposes confers a benefit to both the public and private sectors. Thus, the exemption was granted as a charitable purpose. The Indiana Tax Court's decision has been appealed. This is a case to watch as it could affect many not-for-profit non-owners in Indiana.
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.
American Property Tax Counsel
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Updated February 2008
2009 Valuations Are Out - Time to File an Appeal ?
The 2009 appeal season is upon us. Most, if not all, of the new 2009 real property values are mailed in the month of March to property owners across Kansas. If you did not receive a 2009 valuation notice, you can contact the county appraiser’s office ( http://www.kansas.gov/kcaa/appraisers/main.htm ). Some counties have valuation information on-line. To see if the county has on-line information, check here. http://www.kansas.gov/kcaa/links.htm .
Taxpayers desiring to appeal their 2009 valuation have 30 days from the date the valuation notice was mailed. The directions to appeal are required by state law to be included on the valuation notice. The first level of appeal is with the county. If you are not satisfied with the results of that informal hearing, the next level of appeal is to the Kansas Court of Tax Appeals (“COTA). Additional information on how to protest can be found on the COTA website. http://www.kansas.gov/cota/
MISS THE APPEAL DATE? No problem. Kansas generously permits a taxpayer to avail themselves of one (and only one) of three opportunities to pursue property valuation reductions. A taxpayer can (1) file an appeal within 30 days of the date the valuation notice is mailed, or (2) pay the first half taxes under protest on or before December 20 th; or (3) pay the second half tax under protest on or before May 10 th of the year after the valuation year. If the ownership of the property changes during the calendar year, the new owner can also pursue a tax appeal even if the prior owner had.
Linda Terrill
Neill, Terrill & Embree, L.C.
American Property Tax Counsel
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Updated December 2009
Court Grants Second Bite At The Tangible Property Apple
A recent circuit court decision has reversed a Department of Revenue policy denying tangible property taxpayers the ability to challenge an audit after the assessment had been paid. In Department of Revenue v. Cox Interior, Inc., (Aug. 27, 2009), the taxpayer paid an assessment, and later filed for a partial refund. Revenue denied the claim because Cox had failed to file a protest within forty-five days of the date of the assessment.
The Franklin Circuit Court held that a taxpayer’s failure to file a protest did not preclude the taxpayer from later seeking a refund of the tax paid. The Court stated that the Department’s policy “would effectively require the exhaustion of two administrative remedies instead of one” and “simply erects unnecessary procedural obstacles to obtaining a refund.” The Department has appealed the ruling to the Kentucky Court of Appeals.
Bruce F. Clark
Michele M. Whittington
Stites & Harbison PLLC
American Property Tax Counsel
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Updated September 2009
Louisiana Court Finds Commerce Clause Violation in Taxation of Interstate Natural Gas Pipelines
The Louisiana Court of Appeal, First Circuit has upheld a district court decision finding the Louisiana’s system for assessing interstate natural gas pipelines violates the Commerce Clause. See Transcontinental Gas Pipeline Corporation, et al vs. Louisiana Tax Commission, et al, 2009-0628 (La. App. 1 st Cir. 8/10/09), --- So.3d ----, 2009 WL 2461597*. Under Louisiana’s pubic service property assessment routine, all interstate natural gas pipelines are assessed by the Louisiana Tax Commission at 25% of fair market value. Most intrastate natural gas pipelines are locally assessed at 15% of fair market value. The courts found that the interstate natural gas pipeline taxpayers did show competition with intrastate natural gas pipelines and that the disparate assessment rates violated the Commerce Clause. The Louisiana Court of Appeal, First Circuit declared the “pipeline company” definition in the public service properties portion of Louisiana ad valorem tax law unconstitutional. See La. R.S. 47:1851(K). The litigating pipelines had advocated for the more tailored remedy of 15% central assessment by the Louisiana Tax Commission and contended that there was no need to declare La. R.S. 47:1851(K) unconstitutional. The ruling invalidating La. R.S. 47:1851(K) could affect hundreds of pipelines that have no interest in the litigation, including oil and commodity lines. The decision is on appeal to the Louisiana Supreme Court.
*
Transcontinental Gas Pipeline Corporation was dismissed from the litigation prior to hearing
Christopher J. Dicharry
Kean, Miller, Hawthorne, D'Armond, McCowan & Jarman, L.L.P.
American Property Tax Counsel (APTC)
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Updated June 2009
Maine Tax Bills Are Being Committed
In Maine many jurisdictions are in the process of committing their 2009 tax bills. These tax bills have an assessing date of April 1, 2009. The tax bills are usually sent out to the taxpayers within a few weeks of the commitment date. The taxpayer must file an abatement application with the local assessor within 185 days from the commitment date. The assessor has sixty days to either act on the abatement application, unless the applicant has consented in writing to further delay. If the assessor fails to act, the applicant is deemed to be denied. The applicant then has a right to further appeal to the municipal Board of Assessment Review if one has been establish by the municipality. If the municipality has not established a Board of Assessment Review, most commercial property appeals will be before the State Board of Property Tax Review.
David G. Saliba
Saliba & Saliba
American Property Tax Counsel (APTC)
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Updated December 2009
Most Jurisdictions In Massachusetts Are Sending Out Tax Bills
Most jurisdictions in Massachusetts will be sending out their fiscal year 2010 actual property tax bills by the end of December 2009. The fiscal year 2010 pertains to the period July 1, 2009 to June 30, 2010. The assessing date for fiscal year 2010 is January 1, 2009. For fiscal year 2010 each parcel of property must be assessed at the fair market value as of January 1, 2009. An owner, taxpayer or person who has an interest in the property in most cases has until February 1, 2010 to file an Application for Abatement with the local Board of Assessors. In most cases all property taxes must be paid timely by the due date in order to effectuate a valid appeal. The Assessors have 3 months to act upon the Application for Abatement. If the Assessors fail to act upon the Application it is deemed to be denied.
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 2009
2010 Provides New Michigan Tax Savings Opportunities And Challenges
This will be a unique year for Michigan property taxpayers. 2010 will mark the first time since Proposal A was passed in 1994 that taxable values for most properties will decline because the annual cap (multiplier) on taxable value permitted increases for 2010 will be less than one. However, the required value decline will only be 3/10 of 1%, and therefore given the trend in commercial, industrial and other Michigan property, many business property owners will be filing appeals to obtain substantially larger reductions.
Although valuation appeal opportunities exist for 2010, taxpayers also may have exposure. The Michigan Department of Treasury has announced plans to appeal property classifications for 10,000 parcels before the end of the year. These appeals seek to challenge the various parcels’ current “industrial” classifications and, thus, put the reduced tax rate and Michigan Business Tax Credit for related personal property parcels at risk. If a taxpayer receives notice of an appeal, a prompt and timely response is necessary to preserve the taxpayer’s rights. Also, for personal property owners involved in industrial activity who lease real property, the classification of the landlord’s real property could impact the taxes payable on that personal property. Honigman is handling the lead classification cases that are currently pending at the Michigan Court of Appeals and Honigman attorneys are available to discuss potential tax ramifications on these classification issues.
Stewart L. Mandell
Honigman Miller Schwartz and Cohn, LLP
American Property Tax Counsel (APTC)
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Updated December 2009
Funding Cuts, Plummeting Values Lead to Tax Rate Increases in Minnesota
Minnesota commercial and industrial properties were recently greeted with forecasts for 2010 taxes at higher effective tax rates. For some jurisdictions, this is the second consecutive year of rate increases, after 7 or 8 years of tax rate drops.
Rates are climbing for a variety of reasons. Chief among these are: reduced growth in the tax base, due to lack of development and new construction; significant valuation reductions in residential properties that shift the burden to the commercial sector; big valuation cuts in the commercial sector, putting upward pressure on rates; a transfer of funding responsibility for many programs from the state to local governments; and the potential withholding of local governmental aids from the state to the localities as part of budget-balancing measures.
Mark K. Maher
Smith, Gendler, Shiell, Sheff, Ford & Maher, P.A.
American Property Tax Counsel (APTC)
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Updated December 2009
Appeal Deadline Confusion Reigns
In an effort to achieve consistency concerning filing deadline dates for appeals to the County Boards of Equalization, the Missouri legislature may have created more confusion than it abated. Recent legislation (Senate SB 711 (2008)) designates the 2 nd Monday in July the Board of Equalization appeal date for non-first class counties and St. Louis City but did not amend Section 137.385 RSMo controlling the date for appealing in first class counties. The deadline for appealing to the Board of Equalization in first class counties remains “before the 3 rd Monday in June.” The books aren’t delivered to the Clerk until July 1.
The prudent course is to appeal prior to the 3 rd Monday in June though the assessor’s values may not be known.
SB 711 attempts to allow political subdivisions until October 1 to set levies. There remains an unchanged provision in 67.110.1 RSMo setting levies by September 1.
This confusion can be viewed by accessing the Missouri State Tax Commission’s website which includes a real property assessment timeline
Jerome Wallach
The Wallach Law Firm
American Property Tax Counsel
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Updated December 2009
Property Tax Bills for the 2010-11 Tax Year Are To Be Sent Soon
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 2010-11 tax year notices of value between the middle and end of December 2009. Nevada law requires that the values be posted prior to January 1, 2010. A taxpayer dissatisfied with the county assessor’s valuation may file an appeal with the county board of equalization by January 15, 2010. 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, 2010.
Douglas S. John
Bancroft, Susa & Galloway
American Property Tax Counsel
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Updated December 2009
In New Hampshire Now Is The Time To Appeal Tax Year 2009 Assessments
In New Hampshire most cities and towns have sent out their tax year 2009 tax bills. These bills pertain to an assessing date of April 1, 2009. In New Hampshire real estate must be valued at market value. The State of New Hampshire does not have a personal property tax. A correct property tax assessment is arrived at by multiplying the equalization ratio by the market value. The declining real estate market may cause many cities and towns to have a 2009 equalization ratio in excess of 100%. An equalization rate in excess of 100% may cause an assessment for a particular property to be more than market value. The New Hampshire Department of Revenue Administration will publish the equalization ratios for the various cities and towns in the spring of 2010. In the interim, the deadline for the taxpayer to file a 2009 Abatement Application with the local assessors is generally March 1, 2010.
David G. Saliba
Saliba & Saliba
American Property Tax Counsel (APTC)
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Updated September 2009
Catch a Falling Knife
Property values have declined significantly across all types of property in New Jersey over the past 18 months. While this has resulted in record numbers of property tax appeals, actual transactions between buyers and sellers demonstrating this erosion of value are limited. This can be problematical when dealing with finite valuation dates in evidentiary proceedings. Tax court judges will not accept the unsupported opinions of expert witnesses proffering the fact that a property has declined in value without supporting transactions.
An alternative that may be used to support valuation theories may be to use other economic indices to demonstrate an erosion of value. This supporting data may include an analysis of various stock market indices, unemployment statistics, housing statistics, office occupancy statistics, and an analysis of quarterly Federal Reserve statistics.
The point to consider is this: value can continue to erode even if there are no discrete sales available between buyers and sellers. The analogy here is that it is difficult to catch a falling knife.
John Garippa
Garippa, Lotz & Giannuario
American Property Tax Counsel (APTC)
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Updated March 2009
Luxury Decontrol of Apartments Ruled Illegal When Building Owner Received Tax Abatement Benefits
In a stunning reversal, the Appellate Division of the State Supreme Court ruled that notwithstanding a State Agency’s regulations and opinion to the contrary, rent stabilization provisions which permitted vacancy, high rent or luxury decontrol of apartments were illegal when a property was receiving J-51 tax abatement benefits. The J-51 program grants certain tax exemptions and abatements for property improvements and unfortunately applies stricter rent stabilization restrictions. Until this decision, the owners of Peter Cooper Village and Stuyvesant Town, an 80 acre 11,200 unit residential complex had been able to increase apartments up to market rents when they were vacated, exceeded $2,000 in rent or the household income exceeded $175,000. This ruling overruled a lower court decision, which held that the owners could seek market rents when the apartments became vacant or luxury decontrolled. This latest ruling will limit the rents the owners may charge now and in the past. A further appeal is expected.
Joel Marcus
Marcus & Pollack, LLP
American Property Tax Counsel (APTC)
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Updated December 2009
Personal Property Valuation Appeals
The North Carolina Court of Appeals, in a significant taxpayer victory, has just given further instructions to the North Carolina Property Tax Commission (“PTC”) as to how personal property valuation appeals should be handled. See In the Matter of Appeal of: IBM Credit Corporation, COA 08-1514 (N.C. App. Dec. 8, 2009). While the case involved the valuation of computer equipment, the decision also has significance for real estate appeals, as it relates to how the PTC should weigh the evidence and support its decision once the taxpayer has met its burden of proof at trial and the burden of persuasion has shifted to the County.
In the first appeal of this case, the Court of Appeals held that the PTC had wrongly applied the law on burden of proof, reversing and remanding the PTC decision in favor of Durham County with instructions that the PTC apply the correct burden of proof framework. The PTC again ruled in favor of the County on remand. The taxpayer again appealed, and the Court of Appeals again reversed, stating that the PTC's failure "to explicitly make these findings (as to burden of proof) is problematic for this Court on review."
The Court of Appeals held that because the PTC final decision had failed to adequately address key issues necessary to arrive at the ultimate decision about the fair market value of the property being appraised, these omissions "result in conclusions which lack evidentiary support and are therefore arbitrary and capricious."
The court then proceeded to outline the deficiencies in the PTC final decision, giving explicit guidance to the Commission as to how it should deal with the case on remand.
The case is of importance in personal property appeals in that it requires counties in future cases to support their generally blind adherence to State-promulgated trending and depreciation tables with better evidence. Its greater significance, however, lies in its direction to the PTC to provide detailed support for its decisions once the taxpayer has met its burden of proof and the burden of persuasion has shifted to the county. In recent years, the PTC has tended to write relatively terse decisions, with little analysis and support for its conclusions.
If followed by the PTC, the IBM Credit Corp. decision should result in better reasoned opinions of the PTC and an opportunity for more thoughtful review on appeal by the Court of Appeals.
Charles B. Neely, Jr.,
Nancy S. Rendleman
Williams Mullen
American Property Tax Counsel (APTC)
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Updated March 2009
Critical Filing Deadline – March 31, 2009 Marks the Deadline for Filing Tax Complaints in Ohio.
With the economy in its current state taxpayers must be diligent in minimizing expenses. Contesting over assessed property taxes should be foremost on the list of ways to reduce costs. In order to contest the 2008 taxes payable in 2009 taxpayers must file with the county board of revision no later than March 31, 2009. Complaints must be received by the county by the deadline as such it is wise to have the complaint time stamped to prove that the complaint was timely filed.
Furthermore, taxpayers need to be aware that a tax complaint may have been filed against them by their local school district. Ohio is one of the few states where school districts will file a complaint with the county auditor (assessor) seeking to increase the taxes on properties within their jurisdiction. Although unwanted and expensive as well as potentially inequitable, it is well settled law that permits school districts to file tax cases.
Finally, Ohio tax law is full of pitfalls. Prior to filing taxpayers should seek counsel to ensure that the filing that they intend to make is meritorious as well as properly filed.
J. Kieran Jennings
Siegel Siegel Johnson & Jennings LLC
American Property Tax Counsel (APTC)
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Updated December 2009
Taxation of Intangibles in Oklahoma
On September 29, 2009, the Oklahoma Supreme Court ruled in Southwestern Bell Telephone Company, et al. v. Oklahoma State Board of Equalization that all intangible personal property is subject to taxation, unless specifically enumerated as exempt under Art. X, § 6A of the Constitution. The Court’s Opinion also clearly suggests that intangibles are taxable at the local level in the same manner as they are taxed against public service corporations. Southwestern Bell has filed a Petition for Rehearing, therefore the Supreme Court’s decision is not yet final. However, unless the Supreme Court reverses its decision, the taxation of all forms of intangible personal property owned by all taxpayers in Oklahoma is imminent. All taxpayers should carefully monitor the status of the Southwestern Bell case.
William K. Elias
Elias, Books, Brown & Nelson, P.C.
American Property Tax Counsel (APTC)
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Updated October 2009
December 31st Is Due Date for Filing Property Tax Appeals in Oregon
Property tax bills have arrived in the mail and, understandably, you are upset with the fact that in the current economic climate your taxes are going up, while your property value is going down. You have a right to appeal your property tax assessment to either the local county Board of Property Tax Appeals (BOPTA) or, if you are an industrial taxpayer, directly to the Magistrate Division of the Oregon Tax Court. However, your appeal must be filed by December 31, 2009, to be considered by BOPTA or the Tax Court.
So, what are you appealing? Unfortunately, the amount of property taxes you are paying cannot be the basis for appealing the assessment. Property taxes are the product of multiplying two numbers: the tax rate and the assessed value of the property. The tax rate is limited to 1.5 percent of real market value by Ballot Measure 5, plus any local option property tax approved by voters in your district. Only in very limited circumstances may property owners challenge the tax rate.
What you are appealing is the property’s assessed value. The assessed value is the lower of the Maximum Assessed Value (MAV) or the real market value (RMV) of the property. Under Ballot Measure 50, except for six exceptions, assessed value may not be increased by more than three percent per year – which becomes the property’s MAV. RMV, on the other hand, is the amount the property would sell for between a willing buyer and a willing seller in the open market in an arm’s length transaction. Both the RMV and the assessed value appear on the property tax bill. Typically, the assessed value will be a lower value than RMV, in which case you are being assessed on the property’s MAV.
To be successful in a property tax appeal, you must prove that the actual price for which you could sell your property as of January 1, 2009, its actual RMV (as opposed to the RMV appearing on the tax bill), is below the assessed value. How do you know what is the actual RMV of your property? First, if you recently purchased the property for less than the assessed value, the sale price is a very good indication of the property’s RMV. However, do not base your appeal upon the assessed value of other properties. The Tax Court has ruled that the assessed value of other properties is not a sufficient legal basis for seeking a property tax reduction.
An examination of the income generated by your income-producing property may give you an indication if the assessed value is too high. Income may be generated by lease or rental rates of commercial real estate that have been suffering from high vacancy rates. In the case of owner-occupied industrial property, RMV may be measured by the cash flow generated by the operating facility. If the income generated from the property is far below the expected rate of return of the debt and equity capital invested in the property, this may indicate that the property is overassessed because it suffers from functional or economic obsolescence.
Aside from the sale of your property at or near the assessment date, the best evidence of the property’s actual RMV is an appraisal of the property by a qualified expert for property tax purposes. It may be that your property has been appraised already for other purposes – insurance, partnership buyout, or estate planning purposes. These appraisals may give you an indication whether the assessment of your property is inappropriately high, or not. However, appraisals for property tax purposes require that the appraiser render an opinion of the real market value of the fee simple interest of the property as of January 1 st of the tax year. An insurance appraisal that estimates insurable or replacement value is not sufficient. Likewise, an appraisal for estate planning or investment purposes may not fit the requirements necessary for a property tax appeal.
A competent appraiser will determine the RMV of the property by use of one or more of the three approaches to value: the cost approach, the sales comparison approach, and the income approach. The cost approach adds the land value to the depreciated cost of the property’s improvements. The sales comparison approach compares the sale price (not assessed value) of comparable properties with the property being appraised and makes adjustments for any differences between the two. Finally, the income approach capitalizes either the market rental rate or the cash flow of the property by an appropriate rate of return that reflects the return on, and return of, the investment. Not all of these approaches may be applicable to the specific property being appraised, but all three will be considered by a competent expert.
Taxpayers who own residential or commercial properties must first appeal their assessments to the BOPTA of the county in which the property is located. Taxpayers who own industrial property may elect to appeal to BOPTA, or skip BOPTA and appeal directly to the Magistrate Division of the Oregon Tax Court. It is highly recommended that taxpayers who desire to appeal the assessment of commercial or industrial property consult with a professional familiar with property taxation and the appeal process. However you chose to proceed, please remember that your appeal must be filed no later than December 31, 2009.
David L. Canary, Esq.
Garvey, Schubert & Barer- Portland Office
American Property Tax Counsel (APTC)
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Updated June 2009
Pennsylvania Long Held Ruling on Leased Fee Assessments is at Risk
The Commonwealth Court of Pennsylvania has recently decided Tech one Associates v. Bd of Property Assmnt and Rev. of Allegheny Cnty..No. 103 C.D. 2008 (June 1, 2009). In Tech One, the court stated that “fee simple, a fee simple determinable, a leasehold interest, or month to month lease are irrelevant.” The Court went to state that the Pennsylvania Supreme Court did not recognize “that leased property and non-leased property could be treated differently for real estate tax purposes” Further interpreting the Supreme Court in Maple Springfield, regarding uniformity stating that “a tax must be applied upon similar kinds of property with substantial equality of the tax burden on all members of the class.”
What does all of this mean? According to the dissenting opinion the court is requiring both the lease fee and the leasehold to be valued. Because the fee simple interest is the combination of both leased fee and the leasehold interests in the property; the state of Pennsylvania may require a fee simple approach to valuation. Although not startling to many taxpayers outside of Pennsylvania, this is a departure from nearly 17 years of leased fee decisions. Finally, it should be noted that the decision indicates that Marple Springfield is still good law. The case may not be final as the tax payer may have taken an appeal to the Supreme Court.
J. Kieran Jennings
Siegel Siegel Johnson & Jennings Co, LPA (Pennsylvania)
American Property Tax Counsel (APTC)
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Updated December 2009
You Must File An Account To Preserve Your Right Of Appeal
In Rhode Island a taxpayer must file an account with the local assessor by January 31 st of each year. That account must sufficiently describe the property both real and personal as of December 31 st. The taxpayer must claim a value of the property and the account must be filed under oath and notarized. A taxpayer may file a “notice to bring an account” by January 31 st. If that taxpayer files a timely “notice to bring an account” the taxpayer’s deadline for filing the account is extended until between March 1 st and March 15 th. The taxpayer must file an account even if the assessor does not send out an account form. In most cases the timely filing of a valid account is a prerequisite to a valid future property tax appeal. Many taxpayers have lost their future right of appeal for not filing an account timely or properly.
David G. Saliba
Saliba & Saliba
American Property Tax Counsel (APTC)
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Updated September 2009
Roll Back Taxes On South Carolina Agricultural Real Property
The South Carolina Tax Code (the “Code”) requires each county to appraise and equalize properties once every fifth year.* In 2007, the South Carolina General Assembly enacted the South Carolina Real Property Valuation Reform Act (the “Act”) which limited increases in reappraisals to fifteen percent in most circumstances.** The limitation does not apply when title is transferred or when use classifications change.
The Code establishes classifications of property for ad valorem taxation.*** Property classified as “agricultural” real property is assessed based on the fair market value of the property when used for agricultural purposes.**** Because agricultural real property is assessed at the “fair market value for agricultural purposes,” taxpayers owning agricultural real property and classified as such, pay significantly less in yearly ad valorem taxes than they would if the property were classified as residential or commercial properties.
The Act has created substantial difficulties for governments looking to replace lost revenues from property tax collections. One of the areas where county governments appear to be looking to recover lost revenues appears to be from large acreage tracts which had been classified as agricultural prior to development into residential and commercial projects.
The Code provides that a change in use of a property to any use other than agricultural triggers the assessment of roll back taxes. Roll back taxes allow the county to assess and collect taxes against the property in an amount equal to the difference, if any, between the taxes paid or payable on the basis of the valuation and the assessment of the property as agricultural and the taxes that would have been paid or payable had the property been classified, valued, assessed, and taxed for other uses such as residential.***** South Carolina statutes allow the taxing authority to collect roll back taxes for the year in which the use of the property changed and each of the five tax years immediately preceding in which the real property was valued, assessed, and taxed as agricultural real property.****** The amount can be substantial.
In the current economy, some taxing authorities are seeking to increase current tax revenues by reclassifying agricultural properties and potential future tax revenues by reappraising non-agricultural values of agricultural properties. The Code does not limit reassessment for roll back purposes. The practice is particularly difficult to track in that the agricultural property owner often does not notice the increase since the current agricultural taxes are subject to the fifteen percent (15%) limitation. By using this practice, counties appear to be looking to collect substantial roll back taxes when the property’s classification changes from an agricultural use. Taxpayers should be cognizant of any increase in the appraised value of agricultural property even in circumstances where the immediate impact will not be felt since such an increase may significantly increase a taxpayer’s roll back tax liability upon a change in use of the property.
*S.C. Code Ann. § 12-43-217 (Supp. 2008).
** S.C. Code Ann. § 12-37-3140(B) (Supp. 2008).
***
S.C. Code Ann. § 12-43-220 (Supp. 2008).
****
S.C. Code Ann. § 12-43-220(d)(1)(A) & (B) (the assessment ratio is determined by the taxpayer’s ownership structure).
*****S.C. Code Ann. § 12-43-220(d)(4).
******
S.C. Code Ann. § 12-43-220(d)(4).
Morris A. Ellison
William T. Dawson
Buist Moore Smythe McGee P.A.
American Property Tax Counsel (APTC)
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Updated December 2009
Tennessee Property Tax Deadlines
As the new year approaches, Taxpayers should be familiar with key dates throughout 2010 so that appeals and payments will be timely.
January 1
Statutory assessment date. Property is valued “as of” that date.
March 1
Deadline to file personal property schedules in Tennessee counties.
May 20
Assessors certify values and, in the case of an increase, send out Notices of Assessment.
June 1
County Boards of Equalization convene to hear appeals. Taxpayers may lose their appeal rights if they do not appeal to the County Board.
August 1
General deadline for appeals to the Tennessee State Board of Equalization, or 45 days from the date the notice of the county board action was sent, whichever is later.
October 1
The majority of property taxes are due in most jurisdictions. The taxes become delinquent on February 28 of the following year.
It is important for taxpayers to be aware of these key dates for timely compliance, appeals, and payments.
Andy Raines
Evans & Petree PC
American Property Tax Counsel (APTC)
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Updated December 2009
A Last Chance to Challenge 2009 Property Taxes May Still Be Available
Property owners throughout Texas have received their 2009 tax bills, which are due on January 31, 2010. 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.
Pursuant to Section 25.25(d), Tax Code, if an owner’s tax value exceeds the correct value by more than one-third, the owner may file a motion with the county Appraisal Review Board prior to February 1, 2010 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. There is also a late correction penalty of 10% of the taxes finally due.
In addition, if a property owner is dissatisfied with the decision on this type of protest, the property owner may file a lawsuit in district court to contest the decision.
Jim Popp
Popp, Gray & Hutcheson, LLP
American Property Tax Counsel (APTC)
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Updated December 2009
Operating Property Leased by the Taxpayer is to be Included in Property Tax Assessments
Non-capitalized leased assets (“operating leased” assets) can pose a concern for appraisers. The cost of these assets does not show up on the taxpayer’s balance sheet, but the lease payments will be shown as a deduction on the income statement. These lease payments reflect the income going to the lessor of the operating leased assets. If the appraiser is preparing an income indicator of value these lease payments are effectively removing a portion of the value of the operating leased assets from the income indicator. If one is in a state that requires the valuation of the fee interest in the property, an adjustment may need to be made to the income approach to add the lessor’s interest in the leased property back into the assessment. The Utah State Tax Commission recently affirmed a method for adding a value for operating leased property into a yield capitalization income approach. The Commission explained that it would be appropriate to estimate the value of the operating leased property by capitalizing the resultant amount of the lease payments made for the property less depreciation associated with lease property. This capitalized amount for the leased property would then be added to the yield capitalization income amount derived for the taxpayer owned operating property.
David J. Crapo
Wood Crapo LLC
American Property Tax Counsel (APTC)
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Updated December 2009
Property Owners Should Plan for Increased Tax Rates in 2010
As property values fall, owners prepare for increases in real estate tax rates. A summary of what we expect in major Northern Virginia jurisdictions follows:
Arlington County: Anticipate average decline in 2010 assessed values of approximately 14% for commercial properties and an increase in the base tax rate of $0.05-$0.075/$100 of assessed value.
Fairfax County: Anticipate average decline in 2010 assessed values of approximately 18% for “Nonresidential” and an increase in the base tax rate of $0.105-$0.15/$100 of assessed value.
City of Alexandria: Anticipate average decline in 2010 assessed values of approximately 13% for commercial properties and an increase in the base tax rate of $0.05-$0.075/$100 of assessed value.
Loudoun County: Anticipate an overall decline in 2010 commercial assessments of approximately 5% and an increase in the base tax rate of $0.06 to $0.14/$100 of assessed value.
These are estimates only. Please call for guidance before relying on the above.
Ilene Baxt Boorman
Wilkes Artis, Chtd.
American Property Tax Counsel
(APTC)
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Updated December 2009
Upcoming 2010 Legislative Session
As a tough 2009 draws to a close, both taxpayers and the Washington Department of Revenue have begun examining items for the 2010 legislative session. One of the areas of focus will be the high burden of proof that Washington places on taxpayers who challenge their property valuations. Currently, taxpayers must show through “clear, cogent and convincing” evidence that the assessor’s valuation does not represent the fair market value of the property. This high threshold makes it difficult for taxpayers to overcome the presumption of correctness Washington affords assessor’s values. By lowering this high burden of proof to the more common “preponderance of the evidence” standard, taxpayers will have a fairer opportunity to challenge property values. In past legislative sessions, this has been portrayed as an issue of concern only to business taxpayers. Today’s real estate market makes it clear this is a concern for all taxpayers.
Norm Bruns
Garvey Schubert Barer
American Property Tax Counsel (APTC)
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Updated December 2009
Wisconsin Department of Revenue Proposes Change From Municipal to County Assessment
The Wisconsin Department of Revenue has recently proposed a fundamental change in Wisconsin assessment law, under which assessment functions for locally assessed property would occur at the county level rather than the municipal level.
Under current law, all assessment functions for locally assessed property, including both the valuation process and the appeal process, are conducted at the municipal level. Locally assessed property in Wisconsin includes all residential and commercial property, with the exception of manufacturing and utility property which is centrally assessed by WDOR.
Because all assessment functions occur at the municipal level, there are 1,851 separate and independent taxation districts in Wisconsin. Since most states conduct assessment functions at the county level, no other state has even close to that number of taxation districts. According to WDOR, moving to a county assessment system would eliminate issues of duplication, lack of uniformity and inconsistency in applying assessment standards, and would permit full value assessment of all state property on an annual basis. The change would also permit full transparency by having all assessment data easily accessible to the public online.
The change, if enacted by the Legislature in the form proposed by WDOR, would be phased in over a five year period. Information on the WDOR proposal is available at the WDOR website under “County Assessment” at http://www.revenue.wi.gov/html/local.html.
Robert L. Gordon
Michael Best & Friedrich LLP
American Property Tax Counsel (APTC)
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