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Each quarter our members take a close look at their local counties and municipalities and review any changes or notable events in the areas of property taxes, tax assessments, personal property tax and other taxation issues, here is the most recent local tax update available.

Alabama Property Tax Updates

UPDATED March 2018

Alabama Legislature Requires Disclosure of Additional Information for Sales Comps in Tax Appeals

In March 2018, the Alabama Legislature passed a bill requiring certain disclosures for those intending to offer sales or lease comparables in tax appeals. SB182, which will be codified as Ala. Code (1975) §40-3-27, requires any party (taxpayer or taxing jurisdiction) introducing a sales or lease comparable in a tax appeal to disclose the following:

(1) whether the proposed comparable property was occupied or unoccupied at the time of the transaction; and

(2) whether the proposed comparable property was subject to any use, deed, or lease restriction at the time of the transaction that prohibits the property, on which a building or structure sits, from being used for the purpose for which the building or structure was designed, constructed, altered, renovated, or modified.

Under the new statute, the party introducing the sales or lease comparable must disclose this information at the time it offers the comparable into evidence. Failing to disclose the information carries a harsh penalty, resulting in the comparable being deemed inadmissible.

The new bill is effective immediately upon execution by the Governor, so taxpayers, counsel and appraisers must diligently review their sales and lease comps to ensure compliance with the new act.

Aaron D. Vansant, Esq.
DonovanFingar, LLC

American Property Tax Counsel (APTC)

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Arizona Property Tax Updates

UPDATED July 2017

Rooftop Solar Systems Cannot be Assessed by the Arizona Department of Revenue

In a unanimous published opinion at the Arizona Court of Appeals, the Court held that rooftop solar systems cannot be assessed or taxed by the Arizona Department of Revenue (“ADOR”).  Starting in 2013, ADOR reversed years of practice by unilaterally deciding that it could assess and tax rooftop solar systems owned by companies that lease and install the systems on customers’ properties.  ADOR argued that the panels were subject to assessment as equipment involved in the operation of an electric generation facility.  Taxpayers – represented by Mooney, Wright & Moore, PLLC – sued for declaratory relief in the Arizona Tax Court, arguing that ADOR did not have authority to assess the rooftop solar systems because they were not part of an electric generation facility.  Taxpayers also argued that the systems had no value for property taxation purposes pursuant to A.R.S. 42-11054(C)(2) because they were designed primarily for on-site consumption. 

Taxpayers sought a quick resolution, filing a motion for summary judgment within thirty days of filing the lawsuit.  Through various discovery delays, however, ADOR did not respond to the motion for summary judgment for over seven months.  Ultimately, ADOR responded with a cross-motion for summary judgment, arguing that ADOR had the authority to tax the solar systems and that, alternatively, A.R.S. 42-11054(C)(2) was unconstitutional and the systems should be assessed by local counties.  The Tax Court issued a declaratory judgment agreeing with Taxpayers that ADOR had no authority to assess the rooftop solar systems.  The Tax Court further ruled, however, that the rooftop systems were assessable locally by the counties and that A.R.S. 42-11054(C)(2) was unconstitutional. 

Both parties appealed.  In a complete victory for Taxpayers, the Court of Appeals (Division 1) affirmed the Tax Court’s ruling that ADOR did not have authority to assess or tax the systems.  The Court also reversed the Tax Court’s ruling that A.R.S. 42-11054(C)(2) was unconstitutional (under either the Exemptions Clause or Uniformity Clause).  The Court also reversed the ruling that the counties in Arizona should be taxing such equipment.  The also reversed the Tax Court’s denial of attorneys’ fees to Taxpayers – holding that the Tax Court abused its discretion by failing to grant Taxpayers their fees and costs as the prevailing party pursuant to A.R.S. 12-348.  Finally, the Court granted Taxpayers request for attorneys’ fees on appeal.  The opinion represents a victory for all taxpayers in curtailing an overreach by ADOR and a significant victory for the solar industry in Arizona.  It can be found at SolarCity Corp. v. Arizona Dept. of Rev., No. 1 CA-TX 15-0008 (May 18, 2017) (2017 WL 2180393).

 
Mooney, Wright & Moore, PLLC
American Property Tax Counsel (APTC)

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California Property Tax Updates

UPDATED March 2018

Tax Exemption for Rainwater Capture Systems

In June, California voters will be asked to approve Proposition 72 which would exclude rainwater capture systems from property taxation. Proposition 72 addresses one of California’s most significant ongoing issues, inadequate water supplies caused by droughts. If approved, Proposition 72 would exclude from the definition of re-assessable “new construction” facilities designed to “capture, retain and store rain water flowing off a building rooftop or other manmade aboveground hard surface for subsequent onsite use.” The property tax exclusion would apply to rainwater capture facilities which are newly-constructed on or after January 1, 2019. In addition, the exemption would only apply to the initial purchaser who purchased a new building from an owner-builder who did not already receive the rainwater capture facility exclusion. The exclusion would be obtained by filing a claim with the local property tax assessor.
 
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Greenberg Traurig, LLP
American Property Tax Counsel (APTC)

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Canada Property Tax Updates

Updated July 2017

New Rules in Ontario

The Assessment Review Board (“ARB”), which provides the first and only level of administrative law review of assessment appeals in Ontario, has changed its rules.

The ARB new rules are effective April 1, 2017. There are 122 rules and several Practice Directions.  Most significantly, all appeals will be grouped as either “General” or “Summary”.  General proceedings have a detailed schedule to be adhered to unless it is altered by the parties with the consent of the ARB. All appeals are deemed to be general proceedings unless they are specified as summary proceedings.  The details include specified hard dates for inspections, productions, examinations for discovery, motions, exchange of witness statements and reports.

All of this means that the litigation before the ARB will be increasingly complex and rule-bound. It is not an area for amateurs. 

J. Bradford Nixon
Nixon Fleet & Poole LLP
American Property Tax Counsel (APTC)

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Colorado Property Tax Updates

Updated March 2015

Colorado Begins Its 2015 Reassessment

Bi-annually, Colorado Assessors perform a revaluation/reappraisal for purposes of assessing the value of Colorado property using a “base period” method. In tax years 2013 and 2014, nonresidential property values were based on sales, income and cost data from a “base period” commencing on January 1, 2011 and ending on June 30, 2012. A new “base period” with its likely higher values now comes into play. 2015 is a revaluation year in which Colorado County Assessors will reappraise the value of real property. Under Colorado law, 2015 and 2016 nonresidential property values will be based on sales, income and cost data from a base period commencing January 1, 2013 and ending June 30, 2014.

Given the general upward trend in real estate values since the last base period ending June 30, 2012, many property owners may expect to see an increase in their property values and consequently, their property taxes for 2015 and 2016. The assessors are required by law, absent significant changes in the property after the base period, to use the same value for tax years 2015 and 2016. Even if an appraised value does not increase, budget demands will likely incentivize cities, counties and other taxing entities to maximize tax revenues by increasing the mil levies that determine the assessed value and the resulting tax, to the extent permissible by a Colorado Constitutional Amendment that limits tax increases called the "Tabor Amendment".

Beginning May 1, 2015, County Assessors will mail the 2015 Notices of Valuation for real property. The property owner will have a very short period of time to evaluate these notices and protest the value set on the property. Protests of valuation for most Colorado counties must be filed by May 31, 2015. Protests of valuation for Denver County properties must be filed no later than November 15, 2015. Our property tax attorneys know the critical legal and business factors that affect real property values and classifications. We are prepared to meet with property owners to assist in evaluating their property tax situation and, when appropriate, plan their strategies for their 2015 property tax protests.

Larry R. Martinez, Esq.
Berenbaum Weinshienk PC
American Property Tax Counsel (APTC)

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Connecticut Property Tax Updates

Updated March 2016

Tax Appeal Settlement Enforced

After engaging in extended settlement discussions, the owner of a shopping center and the City of Waterbury agreed to settle a tax appeal with a verbal understanding which touched all pertinent items. Indeed, a Superior Court noted that “[t]he terms of this agreement could not be clearer. There is no question . . . that the parties clearly understood the basis of an agreement and the impact on each of the parties.”

Well after discussions concluded, the City asserted the lack of authority of its Corporation Counsel to bind the City, especially as to the aspect of the case involving a penalty waiver for nonpayment of taxes. Arguing that Connecticut law and City of Waterbury ordinances did not permit her to waive the penalty, the Corporation Counsel nevertheless “admitted during (oral) argument that other similar penalty assessments may have been settled without specific . . . approval . . . . also.”

Holding that the property owner should not forfeit the benefit of its settlement under these circumstances, its motion to enforce the agreement was granted.

Elliott B. Pollack
Pullman & Comley, LLC
American Property Tax Counsel (APTC)

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Delaware Property Tax Updates

UPDATED September 2017

Delaware Court Unlocks Opportunities to Reduce Property Tax Burden

Managing expenses is one of the best ways to ensure the long-term profitability of investment properties.  Owners of real property know that achieving reductions in property tax assessments can be challenging under the best of circumstances, and distinctions between state tax systems can make minimizing the real estate tax burden across a commercial or industrial portfolio a daunting task.  But a recent decision by the Delaware Supreme Court provides taxpayers with a new, yet surprisingly familiar, opportunity to reduce the burden of property taxes on their properties in The First State.

Delaware’s tax assessment system shows its age
Under Delaware Law, property must be valued at its “true value in money,” a term interpreted to mean the property’s “present actual market value.”  However, in order to implement the Delaware Constitution’s mandate of tax uniformity, Delaware applies a base year method of assessing property, meaning that all property in a jurisdiction is assessed in terms of its value as of a certain date, then that value remains on the property indefinitely until the jurisdiction performs a general reassessment.  For Delaware’s northernmost county, New Castle County, the last reassessment occurred in 1983, so all property in the County is valued as of July 1, 1983.

A major challenge to contesting property tax assessments in Delaware is that a taxpayer must determine the property’s market value in 1983.  Determining what a property is worth today is not always easy, but proving a property’s value three decades ago has proven increasingly difficult.  Furthermore, because the County makes no regular adjustments to a property’s assessed value, the County asserts that a property should be valued as it existed in 1983 or, if it was built after 1983, as if it is new and undepreciated.

Delaware’s courts have explained that taxpayers have two options in assessment appeals: they can use data from the base year (by, for example, finding sales of comparable properties in or around 1983, or using prevailing market rents and capitalization rates from 1983) or they can calculate the current market value of the property and “trend back” that amount to 1983.  The County Board of Assessment Review has expressed a near-absolute preference for 1983 data, and rarely finds a taxpayer’s trending formula acceptable.

The inequities of this system are blatant.  Under the county’s interpretation of the base year system, a 34-year-old building located next door to a similar new building should be assessed and taxed at the same level, despite that buyers, sellers, and tenants might value the buildings quite differently.  If the owner of the 30-year old building wanted to contest its assessment, the owner would have to identify data for new buildings in 1983.  Of course, as time marches on and years turn to decades, relevant data from the base year becomes increasingly difficult to find.

Taxpayers highlight the system’s obsolescence
Taxpayers have raised many challenges to Delaware’s assessment system, but most successful challenges are fact-specific, and no recent court has gone so far as to order Delaware’s counties to complete a reassessment.  But after several attempts, the taxpayers in Commerce Associates LP v. New Castle County Office of Assessment underscored the largest flaw in the system.

One Commerce Center is an office condominium building in Wilmington, Delaware.  Each office condominium was originally assessed by the County upon construction in 1983.  After keeping the same tax assessment for decades, the owners of several of the condominiums challenged their assessments in 2015.

Before the County Board of Assessment Review, the owners presented five different analyses: two relied on comparable sales transactions (one using 1983 sales of buildings that were about 32 years old, and one using modern asking prices trended back to 1983 using the Consumer Price Index); two relied on income (one using 1983 data, and one using 2015 data trended back to 1983 using CPI); and a cost approach using the original construction costs and reflecting depreciation.  These approaches showed that the properties were overassessed by more than 40%.

The County presented evidence of the condominiums’ sale prices in 1985, when each unit was relatively new.  The County also presented an income approach using 1983 data and a cost approach reflecting no depreciation.  The County’s approaches all supported the original assessed values, and the Board ultimately denied the taxpayers’ appeals.

Delaware’s Court approves a decrease in value
After having their appeals denied by the Superior Court, the taxpayers brought their challenge to the Delaware Supreme Court.  In a tersely-worded decision, the Supreme Court reiterated that all relevant factors bearing on the value of a property in its current condition must be considered.  While the County argued that no depreciation was needed because the properties were brand new in 1983, the Court noted that the properties were, in reality, more than 34 years old.  Failing to account for their age and the resulting depreciation (or appreciation) resulted in a flawed value.

Although the Court’s decision has yet to be implemented by the County, its effects will likely be widely felt.  Most properties in New Castle County built after 1983 are assessed without any depreciation.  Because each tax year brings with it a new opportunity to challenge an assessment, property owners can bring a new appeal to the Board every year reflecting the property’s current depreciation.  Ultimately, this could result in the downfall of the decades-old base year assessment, as the County finds it necessary to update assessments for a larger number of properties.

A number of questions remain unanswered by the Court’s ruling.  How should properties be valued in areas that were rural in 1983 but are now highly developed?  How can appreciation and depreciation be quantified and reconciled?  Future cases will need to resolve these questions, but for now, owners of Delaware property should evaluate their portfolios and determine whether opportunities exist to improve profitability by reducing property taxes.

Benjamin A. Blair
Faegre Baker Daniels LLP
American Property Tax Counsel (APTC)

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Florida Property Tax Updates

UPDATED March 2018

Assessment of "Vertical Subdivisions"

A new law in Florida addresses a longstanding issue regarding taxation of mixed use high rise properties often referred to as vertical subdivisions.  Many recent real estate developments are created with “lots” in the sky with distinct ownership of each component. Even if these vertical lots are owned by separate owners, county property appraisers in Florida were not required to issue separate tax folio numbers. This created issues related to allocation of the taxes among different owners and the lien of taxes that would be imposed if the owner of one component failed to pay its share of the total tax bill.  Beginning with the 2018 tax roll, the new law requires property appraisers to issue separate tax folios for each “parcel” of a multi-parcel building which is identified in a recorded instrument.  It also specifies that the land underlying the multiple parcel building may not be separately assessed, but rather must be allocated to each parcel in proportion to the just value of all the parcels.  This is similar to the way  condominium units are currently assessed in Florida.  The statute also recognizes that some or all of the parcels in a multiple parcel building can be further subdivided into condominium units.  This new law will resolve allocation and lien issues but will present interesting valuation challenges for vertical lot owners.

Juie M. Schwartz, Esq.
Rennert Vogel Mandler & Rodriguez P.A.
American Property Tax Counsel (APTC)

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Georgia Property Tax Updates

UPDATED March 2018

County's Failure To Schedule Settlement Conference Leads to a Loss

In Hall County Bd. of Tax Assessors v. Westrec Properties, Inc., 2018 Ga. LEXIS 42 (Case No. S17A1421, decided on January 29, 2018), the Georgia Supreme Court affirmed the trial court’s grant of the taxpayers’ motion for summary judgment based on the county Board of Tax Assessors’ failure to send notice of a settlement conference within 45 days of its receipt of the taxpayers’ notices of appeal and before certification of the appeals, as required by the amendment to O.C.G.A. § 48-5-311 (g)(2), which went into effect on January 1, 2016.  The Court held further that although the appeals were initially filed in the administrative process in 2015, the appeals were not considered filed until the date the taxpayers’ notices of appeal to Superior Court were filed with the Board of Tax Assessors, which was after the effective date of the new statutory amendment. The Court stated that the law means what it says: if the Board of Tax Assessors elects not to hold a settlement conference, the appeal terminates in the taxpayer’s favor, and if the taxpayer chooses not to participate in the conference, he loses the opportunity to seek fees and costs in Superior Court.


Lisa F. Stuckey
Ragsdale, Beals, Seigler, Patterson & Gray, LLP
American Property Tax Counsel (APTC)

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Idaho Property Tax Updates

Updated March 2018

If at First You Don’t Succeed . . .

In December, we reported on a brand new Idaho Supreme Court decision holding that the J.R. Simplot Foundation’s new JUMP facility in Downtown Boise was not entitled to a charitable exemption from property taxation while the property was still under construction.  This left the parties with the knotty problem of how to determine the market value of a partially constructed special purpose – very special purpose -- facility.  That issue was held in abeyance at the trial court level while the parties litigated the availability of the exemption. Now that the Supreme Court has ruled on the exemption question, the valuation issue is reactivated with a trial date in January 2019.  Meanwhile, the Idaho Legislature has stepped in to make sure this type of situation does not recur.  Projects under construction for a tax-exempt purpose can apply for a provisional exemption during construction.  This statutory solution has a retroactive effective date of January 1, 2016.  Surprisingly, the bill’s fiscal statement says there will be no effect on either state or local taxes.

Norm Bruns and Michelle DeLappe
Garvey Schubert Barer
American Property Tax Counsel (APTC)

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Illinois Property Tax Updates

Updated March 2015

The Story of Real Estate Taxes - 2015

Chicagoans should be wary about their 2015 Real Estate Tax Bills. Up to now, Chicago Taxpayers have fared much better than their suburban neighbors when it comes to real estate taxes. Tax Year 2015 may well mark the beginning of a “Perfect Tax Storm” in Chicago.

In 2015, all property lying within Chicago will be re-valued. It seems very clear that the Assessor has determined that the Great Recession has become an event of history and that most segments of the real estate market are well on the way to recovery.

Thus far, new valuation Notices have only been sent to the property owners in one of the eight townships that comprise the City of Chicago. We have been able to review the new values. On average, the assessed values in that township have increased approximately fifteen (15%) percent. Multi-family residential properties have increased beyond twenty (20%) percent, single family residences and condominiums have risen to triple digit increases in some cases. Based on what we have seen in the first townships, we have to forecast even greater increases for most of the other townships.

Real estate values are only one component in the calculation of real estate taxes. The other critical component is the Tax Rate. The Tax Rate is determined by dividing the total budgets of all the Municipal and County agencies which provide services to the public by the total taxable value of the service area. That will include school districts, police, fire, park districts and more.

In 2015 and 2016, the pension deficits of the City agencies are about to reach catastrophic proportions. The Mayor’s staff is looking to Real Estate Taxes to reduce these deficits.

A PERFECT TAX STORM!

James P. Regan
Fisk Kart Katz Regan & Levy, Ltd.
Telephone:  (312) 726-1833
American Property Tax Counsel (APTC)

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Indiana Property Tax Updates

UPDATED March 2018

Starting in 2019 Indiana General Assembly imposes Heavy Equipment Rental Excise Tax in lieu of Personal Property Tax

In its 2018 legislative session the Indiana General Assembly enacted and the Governor approved House Enrolled Act No. 1323, which starting in 2019 imposes a new excise tax on “heavy rental equipment” while removing such equipment from taxation as personal property.  “Heavy rental equipment” under new Ind. Code § 6-6-15-2 is personal property, including attachments, which is owned by a person that is classified under 532412 of the North American Industry Classification System Manual (“establishments primarily engaged in renting or leasing heavy equipment without operators that may be used for construction, mining, or forestry, such as bulldozers, earthmoving equipment, well drilling machinery and equipment, or cranes”) and that is a retail merchant in the business of renting heavy equipment. The property may not be intended to be permanently affixed to any real property, and it must not be subject to registration for use on a public highway.  It does not, however, include equipment rented for mining purposes or equipment subject to abatement during the calendar year.  To qualify the rental period must not exceed 365 days or must be open ended with no specified end date.

The legislation imposes a new excise tax upon the rental of heavy rental equipment from a retail merchant and from a location in Indiana.  The tax rate is 2.25% of the gross retail income received by the retail merchant for the rental.  Transactions are exempt if the “rentee” (the word used in the statute for the party renting the equipment) is the United States, the State of Indiana or a political subdivision.  The transaction is also exempt if it is a sub-rental by the rentee to a third party and the rentee was subject to the tax.  The rentee is liable for the tax, and the transaction is sourced to the business location of the retail merchant from which the heavy rental equipment is rented.

Starting with the January 1, 2019 assessment date, heavy rental equipment that is rented or held in inventory for rental or sale and the rental of which would be subject to this new excise tax will not be subject to Indiana’s personal property tax.

Brent A. Auberry
Faegre Baker Daniels LLP
American Property Tax Counsel (APTC)

Preserving Historical Buildings Found to be an Exempt Charitable Purpose

The Indiana Board of Tax Review on February 26, 2018 applied a partial exemption to a building owned by Historic Landmarks Foundation of Indiana, Inc.  The Foundation is a non-profit organization with a mission of historic preservation.  It educates the public about contemporary rehabilitation and preservation, provides financial support to local organizations, and acquires historic properties that appear threatened.  Properties are resold with protective covenants that require the new owners to complete the restorations.  The Foundation has bought and sold more than 500 properties since 1968 – including the subject three-story building in downtown Edinburgh.

The Foundation claimed an exemption for the January 1, 2016 assessment date under two statutes:  (i) the fine arts exemption under Indiana Code § 6-1.1-10-18 (for property owned by an Indiana not-for-profit corporation that “is organized and operated for the primary purpose of coordinating, promoting, encouraging, housing, or providing financial support to activities in the field of fine arts,” including architecture, and (ii) the charitable-purpose exemption noted above.

The building did not qualify for the fine arts exemption.  The evidence showed that the Foundation may have been organized to preserve and support architecturally significant buildings but it was not operated primarily for that purpose.  The Foundation “focused at least as much, if not more, on preserving sites for their historical value as it did on preserving sites for architectural significance.”  History and architecture may overlap, but they are not the same the Board reasoned.

But the property was partially exempt under the charitable-purpose exemption.  Citing Indiana Tax Court precedent, the Board explained:

[Foundation] had a charitable purpose: preserving the historic character of Edinburgh’s commercial district, at least part of which—the building under appeal—had fallen into disrepair. [Foundation] owned and used the property to further that charitable purpose. It renovated and stabilized the building and attempted to sell the property subject to covenants obligating any buyer to maintain and preserve the building in its historic condition. Similarly, [Foundation] either actually or constructively occupied the property while it was doing those things.

However, the building’s first floor was leased and there was no evidence showing it was occupied by the tenant for an exempt purpose.  The property thus qualified for a two-thirds exemption.  The Board’s decision can be viewed at http://www.in.gov/ibtr/files/Historic_Landmarks_Foundation_%20of_IN%2041-002-16-2-8-01282-16_etc.pdf.

Brent A. Auberry
Faegre Baker Daniels LLP
American Property Tax Counsel (APTC)

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Iowa Property Tax Updates

UPDATED March 2017

Narrow property tax appeal window opens in April 2017

Iowa property owners will have a narrow window to appeal their January 1, 2017, assessments – which values essentially apply to both the 2017 and 2018 tax years. Appeals to the local board of review may be filed no later than April 30, 2017.   Taxpayers may be able to achieve a reduction before the local Board of Review. If not, the Taxpayer may pursue relief before a local District Court or the Iowa Property Assessment Appeal Board. 

Brent A. Auberry
Faegre Baker Daniels LLP
American Property Tax Counsel (APTC)

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Kansas Property Tax Updates

Updated June 2014

New Changes To Kansas Property Tax Appeal Procedures

Commercial taxpayers alarmed by recent Kansas Court of Tax Appeals ("COTA") decisions initiated a call for reform of the system. The initial group of taxpayers contacted legislators directly. Soon they were joined by many groups including the Kansas State Chamber of Commerce and the Kansas Association of Realtors. The recommendations received wide-spread support and House Substitute for Senate Bill 231 was signed by Governor Brownback.

Some provisions in the new law include:

  • Changes the name of the state agency from the Court of Tax Appeals back to the Board of Tax Appeals ("BOTA") to eliminate any confusion that COTA is a real court instead of a state agency.
  • Provides for optional de novo review. This change would ensure a taxpayer could have court of competent jurisdiction hear the taxpayer's evidenc e and decide the case. A party could also appeal directly to the Court of Appeals on the record if they choose.
  • Requires one member of BOTA to be a licensed general real property appraiser. That person will join the other two positions be filled with an attorney and a CPA. This change will occur upon the next vacancy.Directs BOTA to issue a Summary Order within 14 days of the hearing. If either party wants to appeal they have 14 days to request BOTA prepare a Final Order. BOTA will have 90 days to prepare that Order. If neither party wants to appeal, the matter will be over without BOTA issuing a Final Order. If the Order is not done within the 90 day time period, BOTA must refund to the taxpayer any filing fees paid.
  • If a case is not decided in the year it was filed and a protective appeal must be filed for a subsequent year(s), the taxpayer will not be charged a filing fee.
  • Open up the Small Claims Division to more appeals by raising the valuation ceiling from $2 million to $3 million.
  • And required BOTA to change their policy and now require a simultaneous exchange of evidence in cases.

Few expect BOTA to embrace the change as they have already issued Directives and Memoranda with new procedures that appear to be the first salvos to circumvent the law. Watch here for updates!

For a full copy of the bill go to www.kslegislature.org.

Property Tax Law Group, LLC
Linda Terrill, Attorney
American Property Tax Counsel (APTC)

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Kentucky Property Tax Updates

UPDATED March 2018

Changes to Kentucky Personal Property Tax Return

The Kentucky Department of Revenue (KYDOR) has made some significant changes to its personal property tax return.  The "floor" value for property in all classes has been decreased from 20% to 10%. Kentucky taxes personal property that is still in use, regardless of the age of the property.  For many years, property was taxed at a minimum of 20% of its original cost, without regard for the actual market value of that property.  KYDOR has cut the "floor" value to 10%, and has also revised its economic life tables.  These changes will benefit taxpayers with older property.

KYDOR has also revised its conversion factors to incorporate straight-line depreciation.  The old factors used the economic lives of the property plus standard inflation indices.  The new methodology eliminates the inflation indices and relies solely on economic useful life.  At first glance, it appears that this change may increase the taxable value of the property. The factors to be applied to newer property are lower than the factors on previous returns, meaning that the property will have a higher taxable value.

The effect of these changes will vary according to the age and type of property that the taxpayer is reporting, but it appears that any benefit received from the "floor" change may be offset by the factor change.

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Morgan & Pottinger
American Property Tax Counsel (APTC)

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Louisiana Property Tax Updates

Updated March 2018

Louisiana Voters Formalize Exemption for CWIP

During its regular 2017 legislative session, the Louisiana Legislature recognized the need to formalize an exemption for construction work in progress (“CWIP”). Act 428 was approved by the voters in October, and adds an additional subsection to Article VII, Section 21 of the Louisiana Constitution, which lists property that is exempt from ad valorem tax assessment. The new provision exempts from ad valorem tax all property delivered to a construction project site for the purpose of incorporating the property into any tract of land, building, or other construction as a component part, including the type of property that may be deemed to be a component part once placed on an immovable for its service and improvement. This exemption applies until the construction project is completed, i.e., occupied and used for its intended purpose. The exemption does not apply to: (1) any portion of a construction project that is complete, available for its intended use, or operational on the date that property is assessed; (2) for projects constructed in two or more distinct phases, any phase of the construction project that is complete, available for its intended use, or operational on the date the property is assessed; and (3) certain public service property.

It is clear in Louisiana that CWIP is exempt from property taxes until construction is “completed.” The exemption thus remains effective until the construction project or given construction phase of the project is ready to be used or occupied.Paste or type article here.

Angela W. Adolph
Kean Miller LLP
American Property Tax Counsel (APTC)

 

So How Much is Nothing Worth?

Axiall, LLC owns a number of salt caverns in Assumption Parish, Louisiana. Several years ago, a salt cavern failed in Assumption Parish.  The Louisiana Department of Natural Resources subsequently promulgated regulations that severely curtailed Axiall’s ability to use its salt caverns.  However, the local Assessor rejected Axiall’s assertion that, under the new regulations, the property was essentially worthless.  Upon review, the Louisiana Tax Commission agreed with Axiall.  The Commission found that the salt caverns were to be valued under the guidelines for oil and gas properties and that they were not being, nor could they be, used for a commercial purpose due to the new restrictive regulations. The Commission determined a nominal fair market value for the properties.

On appeal, the district court in Assumption Parish reversed. See Wayne Blanchard v. Axiall, LLC, Docket No. 035890, Div. B, 23rd Judicial District Court. The district court found first that the properties should have been valued as ordinary business assets, not oil and gas properties, despite the fact they were intended to be used for oil and gas storage.  The district court next found that Axiall used the caverns for commercial production of brine for its manufacturing establishment and for disposal.  Accordingly, the district court reinstated the Assessor’s valuations.  The matter is currently on appeal to the Louisiana First Circuit Court of Appeal. 

In the meantime, the Louisiana Tax Commission considered a very similar case by another taxpayer. See Blue Cube Operations, LLC v. Assumption Parish Board of Review, Docket No. 16-22007-001. In its decision, the Commission doubled down, and emphasized that brine wells are no different from oil and gas wells and that the local Assessor’s refusal to value brine wells under the guidelines for oil and gas properties was invalid, incorrect, and an abuse of the Assessor’s discretion. The Commission further noted that the local Assessor had submitted no evidence explaining or justifying his valuation of the salt caverns. The Commission noted that it could only speculate that the Assessor must have determined the salt caverns to have some commercial use. However, the taxpayer presented specific and compelling evidence clearly establishing that the salt caverns had no separate commercial value and were not (and could not) be used to store hydrocarbons as intended. Finally, the Commission concluded that, until the process to convert the caverns for the storage of hydrocarbons is completed, they are simply holes in the ground without any inherent additional commercial value. The Commission then determined a nominal fair market value for the properties. The local Assessor has appealed this decision to the district court in Assumption Parish.
 
Angela W. Adolph
Kean Miller LLP
American Property Tax Counsel (APTC)

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Maine Property Tax Updates

Updated December 2014

Ignoring The Assessor's Inquiries Can Be Fatal To Your Appeal

In Maine the assessor may require the taxpayer to answer in writing all proper inquires as to the nature, situation, and value of the taxpayer's property liable to be taxed. This request can include income, expenses, manufacturing or generational efficiencies, manufactured or generated sale price trends, or other related information. A taxpayer has thirty days to respond to the inquiring. Upon written request a taxpayer has an automatic thirty day extension to respond to the inquiring. The failure to supply the information will bar the taxpayer the right of appeal. Please be aware that some assessors use this provision of the law to inundate the taxpayer with inquires. The property of some of these inquires is questionable and some inquires appear to be patently improper. These inquires can be a cynical attempt to have the taxpayer's appeal dismissed for failing to comply with an inquiry.

David G. Saliba
Saliba & Saliba
American Property Tax Counsel (APTC)

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Maryland Property Tax Updates

UPDATED September 2017

Tax Rates and Tax Bills

The Counties and Incorporated Cities have all sent their tax bills that are due by the end of September. Some jurisdictions allow for two payments in September and December which is notes on the tax bills. While we saw a 2% decrease in the tax rate in Montgomery County for this tax year, this came after several years of tax rate increases. Therefore, for budgeting purposes, we recommend being conservative with future year tax rates.

Make sure that the tax bills are paid by September 30th to avoid steep penalties and interest.

Emily K. Betsill, Esq
Wilkes Artis, Chtd.
American Property Tax Counsel (APTC)

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Massachusetts Property Tax Updates

UPDATED March 2018

Ignoring the Assessors' Request for Information is a trap for the unwary

Most taxing jurisdictions in Massachusetts will not send out their actual Fiscal Year 2019 property tax bills until the end of Calendar Year 2018.  The Fiscal Year 2019 has an assessing date of January 1, 2018.  In most cases the condition of the property both physical and financial and the condition of the real estate market as of January 1, 2018 is pertinent in valuing the property for Fiscal Year 2019.  Many assessors have sent out requests for information to property owners requesting information regarding the financial and physical condition of their properties as of January 1, 2018. The responses to these requests are generally due within sixty days of the request.  The failure to answer a request timely will likely bar the right of a Fiscal Year 2019 tax appeal.  In addition, the assessors may levy a $250 penalty for the failure to answer these requests for information.

David G. Saliba
Saliba & Saliba
American Property Tax Counsel (APTC)

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Michigan Property Tax Updates

UPDATED March 2018

Michigan’s May 31 Property Tax Appeal Deadline!

Michigan property taxpayers should now have their 2018 assessment notices. May 31, 2018 is the deadline for a Michigan Tax Tribunal property tax appeal for most Michigan business property, including real property that the assessor has classified as industrial or commercial.

Michigan property taxes are calculated using taxable value. Generally, 2018 taxable values increased 2.1%. While, 2018 taxes will not be calculated using the 2018 assessed value, or state equalized value, there are situations where taxpayers might want to pursue an appeal of those values. Knowledgeable Michigan property tax counsel can assist with making such decisions.  

Appealing Special Assessments in Michigan

The Michigan Court of Appeals recently offered guidance on successfully challenging a special assessment in Michigan.   Previous cases established that special assessments would be presumed valid, and to prevail, taxpayers would have to establish that one of the two following standards was not met: (1) the improvement funded by the special assessment failed to confer a special benefit to the assessed property beyond that provided to the community as a whole; or (2) the amount of the special assessment was not reasonably proportionate to the benefits derived from the improvement, with such benefits measured by the increase in the value of the property as a result of the improvement.

In Thakur v Farmington Hills, decided March 15, 2018, the Michigan Court of Appeals upheld the special assessment for reconstruction of a road. The taxpayer had introduced a study of paired sales before and after other road improvements which showed little or no increase in value after the improvements occurred. The Court discounted the study stating that it was not specific enough to the subject property, and although the study measured the value of properties before and after improvements, the Court ruled that legal test should be the difference in the subject property’s value “with” and “without” the improvement. For these types of appeals, taxpayers would be well advised to confer with experienced Michigan property tax counsel.
 
Stewart Mandell
Honigman
American Property Tax Counsel (APTC)

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Minnesota Property Tax Updates

Updated December 2017

Minnesota Property Tax Update

Many Minnesota property taxpayers with pending appeals before the Minnesota Tax Court have seen their petitions resolved recently. The court expedited the trial calendar by compressing scheduling orders, eliminating a large backlog of filed, unresolved appeals.  It is expected that the pay 2017 appeals, filed last spring, will soon receive scheduling orders from the court.

Minnesota assessing jurisdictions are busy posting values for the 2018 pay 2019 assessment. Assessors are evaluating the active sale transaction market for both commercial and multifamily properties, and deciding what sectors will see increases.   Overall value increases in most jurisdictions over the last few years have led to significant drops in the effective tax rates, which have helped temper the tax impact from valuation increases.  Apartment owners in particular are bracing for increases, as the sale market for this property type has continued be very active, and jurisdictions continue to follow that activity up.

As always, commercial and apartment property owners are advised to have their assessments reviewed annually by a professional, to ensure that their properties stay competitive and are not overassessed. In Minnesota, the deadline for filing a petition to challenge the pay 2018 taxes is April 30th, 2018.

Mark Maher.
Smith, Gendler, Shiell, Sheff, Ford & Maher
 American Property Tax Counsel (APTC)

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Missouri Property Tax Updates

Updated June 2016

Personal Property Statute

On August 28, 2015 the Missouri Legislature enacted Section 137.122.1 which requires county assessors to apply the “standardized schedule of depreciation” to determine assessed value of personal property which will be “presumed to be correct.”

Owners may challenge the assessment by presenting substantial and persuasive evidence of value.

It appears many county assessors are resisting using the depreciation concept in setting assessed value. Only time will tell how this plays out.

Jerome Wallach
The Wallach Law Firm
American Property Tax Counsel (APTC)

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Nevada Property Tax Updates

Updated December 2017

Whether to challenge a valuation is an increasingly complicated decision.

County assessors in Nevada mailed their tax year 2018-19 notices of value in early December 2017. Many of these notices reflect double digit increases in valuation. These values can be challenged by filing an appeal to the county board of equalization. The deadline for doing so is January 15, 2018. However, the partial abatement from property tax, which is commonly referred to as the tax cap, has made the decision of whether to challenge a property’s valuation more complicated.

Despite an increase in a property’s valuation, the amount taxes can increase from year to year is limited by a tax cap that applies to the tax liability, not the taxable value. The tax cap is calculated by (a) increasing the taxes paid in the preceding tax year by an applicable tax cap factor and (b) adding the tax attributable to “any improvement to or change in the actual or authorized use of the property” that was not included in the assessment for the prior year.

The applicable tax cap factor is determined annually for each county. It is the greater of the following two criteria:  (a) the average percentage change in the assessed value of all taxable property in the county over the preceding 9 years, or (b) twice the percentage increase in the CPI for the immediately preceding calendar year.  But, in no event can the applicable percentage be less than zero or more than 8%. The official percentage will not be announced until later this spring, but for Clark County the tax cap factor for tax year 2018-19 should be 4%.

In a rising market, the cumulative effect of calculating the tax based on the tax cap, instead of a property’s valuation, can be dramatic. For example, we successfully reduced the taxable value of an industrial property to $11,500,789 for tax year 2013-14. Now, five years later, the valuation of the property has increased by over 51%, but the net tax has only increased by 10% - an average annual increase of approximately 2%.

The advent of the tax cap in Nevada has complicated the question of whether or not a valuation appeal is warranted. Despite an increase in a property’s value, the tax cap often obviates the need for an appeal. But, when an appeal is warranted the tax cap will often extend the benefit of the reduction to future tax years. Our property tax attorneys know the critical legal and valuation factors that affect the tax treatment of property in Nevada and are prepared to assist property owners in evaluating and, when appropriate, challenging that tax treatment.
 
Paul D. Bancroft
McDonald Carano
American Property Tax Counsel (APTC)

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New Hampshire Property Tax Updates

Updated March 2018

In New Hampshire Proving the Equalization Ratio is a Prerequisite to a Valid Property Tax Appeal

A person aggrieved by his assessment may have filed a Tax Year 2017 Abatement Application with the local assessor.  That Application was generally due no later than March 1, 2018.  The median equalization ratio when applied to the market value can have a significant impact on the degree of merit a case has.  The proper assessment of a property is generally the market vlaue mutiplied by the median equalization ratio.  The market value of the property is one-half the issue and the equalization ratio is the other half of the issue.  The equalization ratio is as important as the market value.  At trial both the market value of the subject property and the median equalization ratio utilized by the assessor must be proven to the satisfaction of the Judge.  The failure to prove both the median equalization ratio utilized and the market value of the property means no tax relief.

David G. Saliba
Saliba & Saliba
American Property Tax Counsel (APTC)

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New Jersey Property Tax Updates

Updated September 2017

New Jersey Tax Court’s Increasingly Heightened “Why and Wherefore” Standard

A recent unpublished New Jersey Tax Court opinion typifies the Tax Court’s trend towards requiring heightened support for evidence of property value. In Benedetto v. Little Ferry Borough, the Tax Court reduced the assessments under appeal subsequent to a lengthy scrutiny of the appraisers' reports/testimony. The Tax Court explained that “the court is faced with the responsibility of applying its own judgment to the evidence presented to determine the true market value of the subject property.” Benedetto v. Little Ferry Borough, No. 006900-2014, 2017 N.J. Tax Unpub. LEXIS 53, at 31 (N.J. Tax Ct. Sept. 6, 2017). For example, the Tax Court rejected plaintiff’s appraiser’s 5% downward market condition/time adjustment to three comparable rentals because “plaintiff's appraiser offered no objective market data or surveys to support his 5% adjustment.” Id at 28.  Although the Tax Court acknowledged that the country experienced an economic recession during such time, accounting “for ‘rapidly declining’ rental rates between [January 2009] and the October 1, 2009 valuation date” was insufficient support for the adjustment. Id.

Additionally, the Tax Court rejected four of the defendant’s comparable sales as accurate evidence of true market value. The Tax Court explained that “defendant's appraiser failed to offer any data or credible market evidence disclosing that a 7.5% downward supportive office adjustment is justified for a warehouse with 20% supportive office… yet no downward supportive adjustment is warranted for a warehouse with 18% supportive office.” Id at 61.

In rejecting the above and other adjustments/comparables, the Tax Court explained that under N.J.R.E. 703, an expert must provide the “why and wherefore” of his or her opinion – an expert’s testimony must be rooted in facts, science, data, or the opinions of other experts. Id at 59.

Although in Benedetto the Tax Court reduced the assessments after its own value analysis, other recent Tax Court cases have simply affirmed assessments under a similar rationale. For example, in VBV Realty, LLC v. Scotch Plains Twp., the Tax Court affirmed the assessments under appeal because neither appraiser adequately justified and supported value opinions upon sufficient information and data. The Tax Court accorded no weight to plaintiff's appraiser's sales comparison approach or income capitalization approach because he did not verify or consult with any individual involved in the transactions/sales of property used to value the subject property. Furthermore, the Tax Court was unable to determine fair market value for the subject property based upon defendant's appraiser's value opinion because he did not provide a base of data to support the value adjustment. VBV Realty, LLC v. Scotch Plains Township, 29 N.J. Tax 548, 553 (N.J. Tax Ct. 2017).

Gregory S. Schaffer, Esq.
Garippa, Lotz & Giannuario
American Property Tax Counsel (APTC)

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New York City Property Tax Updates

Updated June 2015

Assessing Generators in New York City

The Department of Finance, after years of not assessing generators owned by tenants or used by media companies is now beginning to assess them. Questionnaires have been sent out to owners and to tenants about generators. Owners and tenants should check to see if they have received anything in the mail, as the Department of Finance has been sending them to the last known address they have on file, which is not always accurate or adequate notification. Determine if you have an emergency power generator which is being separately assessed, and contact your attorney. These assessments can carry huge penalties and interest if not paid even if they are sent improperly, and can be a threat.

Joel R. Marcus, Esq.
Marcus & Pollack, LLP
American Property Tax Counsel (APTC)

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New York State Property Tax Updates

Updated December 2002

Hijacking the Assessment Review Process 

New York consistently ranks as one of the highest taxed states in the nation, and local property taxes are 79 percent higher than the national average. Boards of Assessment Review face high rates of complaints and increased pressure by the local governing body to control refund liability.

The evidentiary demands of many Boards have escalated sharply and many initiatives have been criticized as mere attempts by the local governing body to deliberately discourage taxpayers from exercising their right to seek a fair assessment, in conflict with the spirit of New York's Real Property Tax Law.

Perhaps the most flagrant attempt to hijack the review process as a tool to curtail the property owner's right to a fair assessment is found in a recently proposed local law by the new Nassau County Executive. The controversial proposed law requires only commercial property owners who file appeals of their property's assessments to submit a certified appraisal as a condition precedent to reducing an assessment. In the alternative, owners may submit a "bona fide" counteroffer - defined as no less then 85 percent of the County's assessment, or withdraw the appeal altogether. Owners who fail to exercise one of the above options forfeit their right to judicial review and are subject to a $5,000 fine.

Nassau County spends approximately $150 million annually to pay down a $1.1 billion debt from past tax refunds even as taxpayers file more than 100,000 protests annually. More than 80 percent of the annual refund liability goes to commercial property owners. The proposed law by the new County Executive seeks to punish commercial property owners for exercising their constitutional right to a fair assessment and equitable tax burden.

The controversial law must be codified by the Nassau County Legislature as well as the New York State Legislature, which must issue a "home rule" message to authorize the change. However, State Senator Craig Johnson (D-Port Washington) has rejected the County Executive's request to introduce the state legislation, citing concerns that the legislation would be unfair to commercial property owners and was unconstitutional on its face. Of the many concerns with the proposed law, it was rejected by Sen. Johnson because it is punitive and bullies commercial property owners to settle within a 15 percent margin that deprives the owner of the right to a fair assessment and an opportunity to be heard.

Michael Martone
Koeppel Martone & Leistman, L.L.P.
American Property Tax Counsel (APTC)

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North Carolina Property Tax Updates

Updated September 2015

North Carolina

The North Carolina General Assembly has enacted legislation which exempts from property tax the increase in the value of real property held for sale by a builder. Effective for tax years beginning January 1, 2016, and applicable to improvements made after July 1, 2015, improvements to single family or duplex residential real property held for sale by builders and commercial real property held for sale by builders are excluded from taxation as long as the property is held for sale. Applications for exclusion must be filed annually.

Charles B. Neely, Jr.
Nancy S. Rendleman
Williams Mullen
American Property Tax Counsel (APTC)

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Ohio Property Tax Updates

UPDATED march 2018

Deficient Evidence and the “Bedford Rule”

The Supreme Court of Ohio reversed two Franklin County Board of Revision (BOR) decisions in March, finding the evidence accepted by the Board for each to be lacking.  In both cases, the Court found the evidence to be so deficient that it amounted to a legal error to rely on it.

In the first case, South-Western City Schools Bd. of Edn. v. Franklin Cty. Bd. of Revision[1], a taxpayer offered the testimony of an appraiser at the BOR in support of its requested reduction.  Evidence of a sheriff sale and appraisal created for the sheriff’s sale with a valuation date six months from tax lien date were also in the record. The BOR adopted the sheriff’s sale appraisal value.  On appeal from the BOR to the Ohio Board of Tax Appeals (BTA), the BTA found the evidence insufficient to determine value but enough to show the original value was incorrect.  It sent the case back to the BOR to make a finding of value based on competent evidence.

Similarly, in South-Western City Schools Bd. of Edn. v. Franklin Cty. Bd. of Revision[2], the Supreme Court found the evidence offered to be so inadequate that relying on it was legal error.  Here, the deficient evidence offered by the taxpayer at the BOR was a printout containing information about one comparable sale marked with the notation “not arm’s length.” It was the only evidence submitted.  No appraiser appeared, and no appraisal was submitted.   In this case, the BTA felt there was sufficient evidence to show that the original value was too high, and that reduction granted by the BOR reduction was supported by the record.

Under Ohio case law (Bedford rule)[3], once a BOR has granted an owner’s requested reduction based on competent and “minimally plausible” evidence, an opposing party who appeals must prove the value they are seeking rather than relying on the reinstatement of the auditor’s original value.  However, this rule does not apply if the evidence relied upon by the BOR was deficient to the extent found in these two cases.  Relying on such incompetent evidence in each case resulted in legal error.

The Supreme Court reversed the BTA decisions in both cases. It was legal error for the BOR to rely on deficient evidence and further error for the BTA to find such evidence met the threshold of minimal competence that would require application of the Bedford rule.

[1] Slip Opinion No. 2018-Ohio-919

[2] Slip Opinion No. 2018-Ohio-918

[3] Bedford Bd. of Edn. v. Cuyahoga Cty. Bd. of Revision, (2007-Ohio-5237)

J. Kieran Jennings, CRE
Siegel Jennings Co., L.P.A.
American Property Tax Counsel (APTC)

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Oklahoma Property Tax Updates

UPDATED March 2018

Avoid Deadline Disaster

Under the Oklahoma Ad Valorem Tax Code a taxpayer has thirty (30) calendar days from the date of mailing of a notice of increase in value to file an informal appeal with the county assessor.  If no notice of increase in value has been issued, a taxpayer can still file an informal appeal by the first Monday in May.  The taxpayer has ten (10) working days from the date of the assessor’s informal hearing decision to file a formal appeal with the county board of equalization.  A taxpayer has ten (10) calendar days from the board’s final adjournment date to continue the appeal by filing a petition in district court. By statute, boards are to adjourn by May 31st, but they have the authority to extend their sessions so it is critical to confirm each board’s final adjournment date.  The lack of consistency in the computation of filing deadlines under Oklahoma law can create confusion, but it is essential that deadlines be met because failure to comply will bar an appeal.

William K. Elias
Elias, Books, Brown & Nelson, P.C.
American Property Tax Counsel (APTC)

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Oregon Property Tax Updates

UPDATED September 2017

Oregon’s Only Tax Court Judge Retires

The Honorable Henry C. Breithaupt will retire from the Oregon Tax Court on December 31, 2017 after nearly 16 years on the bench. Judge Breithaupt came to the bench after practicing state and federal taxation and business transactions at a prominent Portland law firm. Oregon is one of three states in the nation that has a dedicated tax court and the loss of its sole Tax Court Judge could potentially have significant impact on tax cases in Oregon. His experience and dedication to fairness in the courtroom has made him a respected adjudicator of the law.

The Oregon Tax Court is made up two divisions: the Regular Division and the Magistrate’s Division. The Magistrate Division began its proceedings in September 1997 and is intended to be a more informal appeals process with three Magistrates overseeing the appeals. The Magistrate has primary jurisdiction over tax appeals, it handles County appeals from the Board of Equalization, and is the first formal appeal step for industrial property and centrally assessed property tax appeals. The Regular Division is presided over by the Tax Court Judge and adheres to the Oregon Rules of Evidence and hears all cases de novo. Jurisdiction in the Regular Division arises from an appeal of a judgment in the Magistrate’s Division or by “special request” that a case be transferred into the Regular Division and forge the Magistrate hearing. Because Judge Breithaupt retired midway through his elected term, Governor Kate Brown will make an appointment to fill his remaining term. With just one Tax Court Judge presiding over all tax cases in Oregon, this next new appointment by the Governor will impact the Tax Court for years to come.

Cynthia M. Fraser
Garvey Schubert Barer
American Property Tax Counsel (APTC)

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Pennsylvania Property Tax Updates

UPDATED march 2018

Pennsylvania Taxpayers Enjoying Favorable Rulings in Appeals by Taxing Districts

In July 2017, the Pennsylvania Supreme Court issued a landmark decision in Valley Forge Towers Apartments wherein the Court ruled that in government-initiated assessment appeals (Pennsylvania is one of a handful of jurisdictions where taxing districts have a statutory right to file increase appeals), the government’s selection scheme for choosing properties to appeal must meet constitutional uniformity.  Above all, the Pennsylvania Supreme Court’s decision mandated that all real estate is a single class and that taxpayers must be uniformly treated, whether they are residential or commercial taxpayers.  It follows that the government may not create sub-classifications of property for different tax treatment, a holding which the Court stated ten times in its decision.

In the eight short months since the Supreme Court decision, taxpayers have been putting the Supreme Court’s decision to good effect.

First, taxpayers are pushing back by taking discovery from the taxing districts as to their methodology for selecting properties for appeals.  In the four counties where the issue has been contested, the trial courts have agreed that whether or not the taxing district’s scheme meets constitutional uniformity is a threshold issue before the valuation phase of the case can proceed.  Trial court decisions as to whether or not a particular taxing district scheme is uniform so far are mixed – as to be expected in a fact-based inquiry.  Of note is a Philadelphia trial judge’s decision to jettison 130 school-initiated appeals for failure to comply with constitutional uniformity in taxation.  Appeals to the Commonwealth Court (Pennsylvania’s intermediate appellate court) have been filed on this threshold issue already in at least two counties. 

More broadly, the Supreme Court’s decision underscores the need for a standard as to how all realty is to be taxed in Pennsylvania regardless as to whether it is residential or commercial.  In current practice, residential and commercial properties are taxed on different standards, thus the need for clarifying definitions in Pennsylvania’s statutes. 

[A]ll property in a taxing district is a single class, and as a consequence, the Uniformity Clause does not permit the government, including taxing authorities, to treat different property sub-classifications in a disparate manner.  Second, this prohibition applies to any intentional or systematic enforcement of the tax laws and is not limited solely to wrongful conduct.  Valley Forge Decision at 18 (emphasis added).

Currently, in Pennsylvania assessment practice, commercial properties are valued differently than residential properties.  If a commercial property is leased, the taxing districts answer not “what would a hypothetical buyer pay for this commercial realty on the open market” but rather, “what would a hypothetical buyer pay for this commercial realty on the open market, encumbered by this lease?” The only interest that is uniform across all categories is the fee simple unencumbered value.  Functionally, residential properties are taxed on a fee simple standard and commercial properties are not.  As Valley Forge makes clear, there can only be one standard because all realty is a single class.  The only uniform standard for all realty is to be taxed on the basis of fee simple unencumbered.  The Court in the Valley Forge decision lays out the roadmap that that the key is to tax all realty uniformly. 

Valley Forge holds that systematic disparate treatment (which is exactly what we have in practice now) between residential and commercial property taxpayers is unconstitutional.  The only way to get one uniform standard in Pennsylvania all realty is to include a definition in the statute that the standard is the same for all realty – fee simple unencumbered.

Sharon F. DiPaolo, Esquire
Siegel Jennings, Co., L.P.A.

American Property Tax Counsel (APTC)

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Rhode Island Property Tax Updates

Updated December 2017

File an account to protect your right of appeal

Now is the time for Rhode Island taxpayers to preserve their right of appeal for Tax Year 2018 by filing an account with the local assessor.  In most jurisdictions the Tax Year 2018 tax bill will be sent out during the summer of 2018. The Tax Year 2018 tax bill has a valuation or assessing date of December 31, 2017. In most cases the filing of a valid account by January 31, 2018 is a prerequisite to a valid appeal. The account must describe the property, claim a value of the property, and be signed under oath and notarized. Occasionally the assessors do not send out account forms. It is incumbent upon the taxpayer to seek out a form and properly complete and file it. It is possible for a taxpayer to construct his own account form, but it must include all the required information and be signed under oath, notarized and filed timely.

David G. Saliba
Saliba & Saliba
American Property Tax Counsel (APTC)

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South Carolina Property Tax Updates

Updated June 2011

South Carolina Enacts New Point of Sale Law

On June 14, 2011, Governor Nikki Haley signed a new law significantly amending South Carolina's controversial "point of sale" law requiring tax reassessment of properties whenever a sale has occurred. The prior law adopted in 2006, commonly known as "Act 388," placed a fifteen (15%) percent cap on reassessed values as part of the five (5) year countywide reassessment programs but sought to make up for the loss of revenue by requiring that properties be reassessed whenever there is a change of ownership.

Many in the commercial real estate market had expressed that Act 388 placed buyers of commercial properties at a significant competitive disadvantage with competitive properties whose property taxes had not increased. The new law, which does not apply to owner occupied residential properties, creates an exemption equal to twenty-five (25%) percent of any increase in valuation resulting from a change in ownership. The exemption does not permit a reduction in market value below the prior assessed value.

The new legislation leaves several important legal arguments unresolved, most notably the date of valuation for property owners whose properties have decreased in value during the middle of the countywide reassessment cycle. Although the current law calculates property taxes based on the state of the property as of December 31st of the prior year, the South Carolina Attorney General's Office issued an advisory opinion in June 2010 stating that the valuation for any mid-cycle appeal was to refer back to date of the last countywide reassessment. Many South Carolina counties are not adhering to this advisory opinion. The new legislation does not address this issue.

Morris A. Ellison
William T. Dawson
Womble Carlyle
American Property Tax Counsel (APTC)

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Tennessee Property Tax Updates

UPDATED March 2018

Key Dates

Tennessee taxpayers should be familiar with key dates throughout 2018 so that appeals and payments will be timely.  Some dates vary by county.

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. 

It is important for taxpayers to be aware of the specific dates for timely compliance, appeals, and payments in their particular county.


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Evans Petree PC
American Property Tax Counsel (APTC)

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Texas Property Tax Updates

Updated March 2018

The Protests Are Coming! The Protests Are Coming

In April and May, Appraisal Districts will mail Notices of Appraised Value which set forth the taxable value of a property. It is important to note that these notices are sent only to the last known address in possession of the District and only if the value increases over last year or a notice is requested in writing.

A taxpayer may contest the taxable value by filing a Notice of Protest with the Appraisal Review Board for the District by May 15 (new deadline for 2018) or within 30 days of delivery of the Notice of Appraised Value.

A taxpayer may protest that the taxable value of the property exceeds the market value of the property. Market value is determined on a fee simple basis.

In addition, a taxpayer may protest based on equality and uniformity that the taxable value exceeds the median taxable value of a reasonable number of comparable properties appropriately adjusted

 
Greg Hart, Esq., CMI
Popp Hutcheson PLLC
American Property Tax Counsel (APTC)

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Utah Property Tax Updates

Updated July 2017

Utah Legislature Declines Cost Approach & Contract Rents for Special Purpose Properties

During Utah’s 2017 General Legislative Session, Senate Bill 43 was drafted to value special purposes properties using a replacement cost approach and relying on contract rents. Specifically, the bill stated that in assessing such properties, the assessor was to “consider, as a primary factor, the cost of constructing improvements that are equivalent to the improvements currently on the property” and also “shall consider the terms of the agreement that provides for the rental or lease of the special purpose property.” This would have essentially asked for a “value in use” and a “leased fee” valuation rather than the constitutionally mandated “value in exchange” and “fee simple” standard of valuation. Industry offered its opposition to this bill and the bill ultimately did not pass.

John T. Deeds
Holland & Hart LLP
American Property Tax Counsel (APTC)

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Virginia Property Tax Updates

UPDATED march 2018

2018 Appeal Deadlines Approaching

The 2018 assessments have been released in all Northern Virginia jurisdictions, and now is the time for property owners to focus on potential appeals.  In Arlington County, the assessed values of commercial office properties have decreased slightly while multi-family assessments are generally up.  In the City of Alexandria, commercial assessments are up slightly while apartment values have increased almost 8.0%.  Fairfax County has increased both commercial and multi-family assessments on average by about 3.0%.  Fairfax County has proposed an increase in the real estate tax rate for the current tax year, while Arlington and Alexandria are expected to remain flat.  Those rates will be reviewed and potentially adopted over the next several weeks.

Because market conditions have not drastically changed, the changes in assessed value may not adequately reflect the current value of a particular property.  Assessment appeal deadlines are coming up in Arlington County (April 16), and in Fairfax County, Alexandria and Loudoun County (June 1).  To discuss the merits of an appeal of your assessment, please contact us at the numbers listed below.

This email address is being protected from spambots. You need JavaScript enabled to view it. 202-457-7806
This email address is being protected from spambots. You need JavaScript enabled to view it. 202-457-7804
Wilkes Artis, Chartered
American Property Tax Counsel (APTC)

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Washington Property Tax Updates

Updated March 2018

School Funding Revisited: Legislature Faces Homeowners with Sticker Shock and Unhappy Supreme Court

Last year’s Legislature adopted significant property tax changes designed to satisfy a court decision requiring the state to fully fund K-12 education.  The 2017 legislation, emanating from the Republican-controlled Senate, had two main tax features: (a) beginning in 2018, a large increase in the state’s share of the total levy rate and (b) beginning in 2019, limits on local school district levies.  Four subsequent events sent this year’s Legislature back to the drawing board.  Control of the Senate shifted in the general election; the Supreme Court made it clear that the 2017 legislation failed to achieve full funding fast enough; the state’s revenue forecast went up significantly due to the strong economy; and this year’s property tax bills shocked homeowners due to the combined effect of the state levy increase and rapidly rising property values.  Consequently, this year’s Legislature budgeted an additional $935 million for the 2018-19 school year (prompting heavy criticism that this surplus should have gone to the state’s rainy day fund) and, for taxes payable in 2019 only, the Legislature reduced the state share of the levy rate.  
 
Norm Bruns and Michelle DeLappe
Garvey Schubert Barer
American Property Tax Counsel (APTC)

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Washington DC. Property Tax Updates

Updated march 2018

Proposed Changes to Commercial Property Tax Rate

As part of her proposed budget, Mayor Muriel Bowser has included a $0.02 increase in the commercial real property tax rate to help pay for dedicated Metro funding. Her proposal would increase the tax rate from $1.85 per $100 of assessed value, for each dollar of assessed value over $3 million, to $1.87 per $100 of assessed value. The first $3 million of assessed value would continue to be taxed at $1.65. While Mayor Bowser characterizes her proposal as a 1% tax increase, the tax rate is only one part of the equation. The other part of the equation is the assessment. Over the past 10 years the commercial tax rate has not meaningfully changed, yet the average office building’s RET liability has increased 122%. Increasing the tax rate by any amount only compounds the increased tax burdens District tenants are already facing. Landlords should continue to pursue their appeal rights to minimize these increases.

Scott B. Cryder, Esq.
Wilkes Artis, Chartered
American Property Tax Counsel (APTC)

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Wisconsin Property Tax Updates

Updated March 2018

Wisconsin Court Of Appeals Holds That Agricultural Land Classification Does Not Require That Crops Be Grown For A Business Purpose

In a decision issued on March 7, 2018, State of Wisconsin ex rel. The Peter Ogden Family Trust v. Board of Review, the Wisconsin Court of Appeals rejected the assessor’s position that crops must be grown for a business purpose for land to qualify for agricultural classification, which requires assessment at significantly below market value.

Beginning in 2012, the land at issue was classified as agricultural and agricultural forest based upon pine trees, apple trees, and hay the landowners planted on the property. In 2016, the assessor concluded that the property failed to meet the agricultural and agricultural forest classifications and reclassified the property as residential.  This resulted in an increase in the assessed property value from $17,100 as agricultural land to $886,000 as residential land.

The landowners objected to the 2016 assessment, and the board of review upheld the residential classification. The landowners filed an action for certiorari review, arguing that the change was erroneous because it was based upon the mistaken belief that for land to qualify as agricultural land, crops grown on the property must be grown for a business purpose. The circuit court upheld the assessment, and the landowners appealed.

The Court of Appeals examined Wisconsin statutes defining “agricultural land” and “agricultural use,” as well as the relevant Department of Revenue rule, and concluded that the plain language of the statutes and rule refers to “growing” the relevant crops, not marketing, selling, or profiting from them. The Court found that the board of review’s position that the land could not be “devoted primarily to agricultural use” without “minimal sales,” “valid economic activity,” and crops being “marketed for sale” was unsupported and contrary to law. The Court further rejected the board’s argument that the assessor did not impose a “business standard” when evaluating the use of the property, concluding that a review of the transcript of the board hearing demonstrated that the assessor and the board clearly—and erroneously—equated “agricultural use” with growing crops for a business purpose.

The Court thus held that to qualify for agricultural classification, it is sufficient that the land be devoted primarily to growing qualifying crops, whether or not those crops are grown for a business purpose.

Marie Bahoora
Michael Best & Friedrich LLP
American Property Tax Counsel (APTC)

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