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)

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)

UPDATED september 2019

State Board of Equalization Considers “Modernizing” California’s Property Tax System

California’s State Board of Equalization (SBE) is conducting a series of hearings focusing on “Modernizing California’s Property Tax System: Opportunities, Challenges & Emerging Issues.” The first hearing was held in San Diego on September 19. During the hearing the SBE received testimony from several witnesses about the declining number of qualified appraisers available to work at the SBE, in county assessor offices, and in the private sector. The SBE also heard testimony about how a “split” tax roll would significantly increase the workloads of county assessors and property tax practitioners due to the increase in the number of valuations to be performed every year. Finally, the SBE received information about and suggestions for improving California’s property tax system, including revisions to the SBE’s Property Tax Rules and the Assessors’ Handbook. The SBE is planning to hold three additional hearings on “modernizing” the property tax system before the end of 2019.

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Greenberg Traurig, LLP 
American Property Tax Counsel (APTC)

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)

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)

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)

UPDATED september 2019

Property Appraiser has Burden of Complying with Professionally Accepted Appraisal Practices

In an action challenging the assessment of TPP, a Florida Court recently ruled that the property appraiser was statutorily required to present evidence that it calculated obsolescence of the TPP in accordance with professionally accepted appraisal practices.

At trial, taxpayer did not dispute that property appraiser could assess TPP based on the cost approach. The Court found that the property appraiser provided sufficient evidence that he determined the reproduction cost of the TPP as well as the effect of deterioration in accordance with professionally accepted appraisal practices.

However, the property appraiser had the additional burden of showing that he determined obsolescence of the TTP in accordance with professionally accepted appraisal practices. The court determined that the property appraiser failed to meet this burden because he did not present testimony that his methodology complied with professionally accepted appraisal practices, and taxpayer’s expert testified that the property appraiser failed to sufficiently examine comparable sales in determining obsolescence in violation of professionally accepted appraisal practices.

Case citation:  Darden Restaurants, Inc. v. Singh, 266 So. 3d 228 (Fla. 5th DCA 2019)

Daniel Wolfe Esq.
Rennert Vogel Mandler & Rodriguez, P.A.
American Property Tax Counsel (APTC)

UPDATED SEPTEMBER 2019

Condo Valuation Tied to Examination of Documents

In Glynn County Bd. of Assessors v. SIO Propco I, LLC, 2019 Ga. App. LEXIS 386 (June 25, 2019), the Georgia Court of Appeals reversed the trial court’s decision granting partial summary judgment for the taxpayer. The trial court held, as a matter of law, that the tax assessors were required to deduct the value of club membership rights from the price used to value certain interests in condominium units.  The Court of Appeals reversed, holding that the documents governing the sale and transfer of the units and membership in the club created an issue of fact as to the degree to which obtaining a club membership was bound up with the sale of the condominium units. The Court of Appeals also held that the trial court also erred in holding, as a matter of law, that the tax assessors were required to extract the value of specific percentages of annual club dues from the gross sales price of comparable sales to determine the values of other properties.

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

Updated september 2019

A Battle of the Experts in Idaho

The Supreme Court recently decided a property tax case involving the value of a food processing facility: SSI Food Services, Inc. v. Stender. The case presented “a battle of the experts” with a range of values. Selecting a value between the two originally presented, the Board of Tax Appeals cut the value by approximately half. On appeal, Canyon County produced a new rebuttal expert with a value just under the original assessed value. The district court adopted that value based in part on the cost approach. It found further support in the value assessed when the taxpayer purchased the property in 2013 plus subsequent investments. The taxpayer appealed based in part on a lack of evidence of the amounts it invested in the facility. But the Supreme Court faulted the taxpayer for failing to rebut the County’s evidence on that issue at the trial and affirmed the district court’s decision.
 
Michelle DeLappe and Norm Bruns
Foster Garvey
American Property Tax Counsel (APTC)

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)

UPDATED september 2019

Indiana Tax Court to Assessor: "Taxpayers deserve more than taxation by trickery"

On May 24, 2018, the Indiana Tax Court in Switzerland County Assessor v. Belterra Resort Indiana, LLC partially reversed the Indiana Board of Tax Review, ordering a further reduction to the values of its hotel, riverboat casino, golf course and related property for the 2009 to 2014 assessments – resulting in Taxpayer’s right to additional refunds. The Court’s opinion included instructions for recalculating Taxpayer’s assessments. On remand, the Indiana Board ordered reassessment of the property but abdicated any oversight role in the recalculations. More than a year later, the assessments remained unchanged. Taxpayer, accordingly, asked the Tax Court to enforce its order. In response, the Assessor argued that the Tax Court lacked subject matter jurisdiction to consider the request. Before the Court rendered a decision, Assessor claimed that final assessed values, in fact, had been assigned and the refunds had been consummated. Therefore, Assessor contended that only a local trial court had jurisdiction to hear Taxpayer’s refund dispute.

On August 15, 2019, the Tax Court issued its order on Taxpayer’s request for enforcement. The Tax Court first noted that it retains jurisdiction over its decisions until final disposition. No final disposition had yet occurred here, so the Court retained jurisdiction over the case. The Tax Court (like any other court) inherently possesses the authority to ensure that its instructions are carried out. The Indiana Board was obligated to oversee compliance with the Court’s assessment instructions. By fulfilling its oversight function, the Indiana Board reduces “the possibility that additional judicial resources must be expended” and “insulates an assessor – typically a party in property assessment cases – from the appearance that she advanced her own self-interest.”

The Court admonished the Assessor for her tortured efforts to avoid complying with its unambiguous order, observing:

Here, the Assessor’s post-decision actions and claims appear to be intended to reduce the adverse effects of the Court’s decision. First, the Assessor conjured an ambiguity in the Court’s instructions for calculating the corrected assessments where there was none. Then, when corrected values were issued presumably based on that conjured ambiguity, the Assessor invented procedural infirmities to prevent the Court from enforcing its decision. Taxpayers deserve more than taxation by trickery, and the Court will not countenance such actions.

The Court ordered the Indiana Board to verify and provide written notice that the corrected assessments comply with the Court’s instructions.

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Faegre Baker Daniels LLP
American Property Tax Counsel (APTC)

Evidence of Construction Costs and Comparable Assessments Insufficient to Challenge Indiana Homeowner's Assessment

In Guthrie v. Clark County Assessor (August 13, 2019), Taxpayer challenged the 2018 assessment of her home, pole barn and other improvements before the Indiana Board of Tax Review.

She argued that the actual construction costs were below the assessed value. Taxpayer’s husband was a builder and contractor, and he built the improvements with help from subcontractors. Moreover, he failed to keep all of the receipts and could not fully separate the costs from three other homes which he was constructing. Nevertheless, he reported spending less than the property’s assessed value on the property, which at $334,600 equated with $116 per square foot.

In addition, Taxpayer presented a summary of the assessed values to sales prices for home sales in the neighborhood for 2017 and 2018. She also provided assessment information for thirteen neighborhood homes, showing a median year of construction of 1970, a median depreciation adjustment of -35%, and a median assessed value of $78 per square foot. Taxpayer argued that because the subject property was new, it should be assigned its own neighborhood and should receive no positive neighborhood factor.

Assessor attacked the Taxpayer’s evidence on various grounds. Among other arguments, the Assessor asserted that Taxpayer’s “analyses also failed to comply with the Uniform Standards of Professional Appraisal Practice (“USPAP”).”

The Indiana Board found that Taxpayer’s arguments regarding depreciation and the neighborhood factors was merely attacking the assessment methodology used by the Assessor, which is insufficient to rebut the presumption that the assessment is correct.

Taxpayer “came up short” arguing that comparable assessments indicated a lower value under Ind. Code § 6-1.1-15-18 (Section 18) or under equity and uniformity principles. The Board explained:

To effectively use an assessment comparison approach, parties must show the properties are comparable to the subject using generally accepted appraisal and assessment practices. To establish that properties are comparable, the proponent must identify the characteristics of the subject property and explain how those characteristics compare to the characteristics of the purportedly comparable properties. Similarly, the proponent must explain how any differences between the properties affect their relative market values-in-use.

(Citations omitted). Taxpayer failed to meaningfully compare the subject property to the purported comparable properties. “While the properties may share similarities to the subject due to their location, [Taxpayer] failed to discuss their characteristics in any detail.” In addition, she failed to explain why adjustments to the comparable sales were unnecessary. And she failed to calculate and present a requested value.

Taxpayer’s uniformity and equity argument likewise failed. She presented no sales ratio study, and provided no market data to show the subject property’s market value – meaning she did not show the sales ratio for the subject property in order to compare it with those of neighborhood properties.

Testimony regarding costs of construction was too vague to be probative, the Board concluded. Evidence suggested that the costs incurred may, in fact, have been below market. Finally, the board noted that “there is no indication that [the husband’s] estimates complied with USPAP.”               

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Faegre Baker Daniels LLP
American Property Tax Counsel (APTC)

UPDATED March 2019

The Time to Negotiate Iowa Property Tax Assessments is Now

On April 1, 2019, assessors around the state of Iowa will release their property tax assessment values.  This starts the clock for negotiations.

Pursuant to Iowa Code § 441.30, from April 2 until April 25, aggrieved taxpayers may contact local assessors and make an informal request that the assessment be changed.  This can result in a written agreement with the assessor to correct or modify the assessment, or an agreement by the assessor to file a recommendation with the local board of review that the assessment be changed.  Assessors around Iowa take this period seriously.  The time to consider negotiations is now.

Here is a brief overview of the Iowa appeal deadlines:

• January 1 – Assessment date (Iowa Code § 441.46)
• April 1 – Assessor’s release assessment values (Iowa Code § 441.23)
• April 2-25 – Time to negotiate with assessors (Iowa Code § 441.30)
• April 30 – Iowa Board of Review protests due (Iowa Code § 441.37)
• Later date of May 31 or 20 days after board of review opinion – Deadline to file appeal with PAAB or district court (Iowa Code §§ 441.37A, 441.37B, 441.38)

This email address is being protected from spambots. You need JavaScript enabled to view it. and Elizabeth Carter
Faegre Baker Daniels LLP
American Property Tax Counsel (APTC)

Updated september 2019

Kansas Board of Tax Appeals rejects Korpacz /IAAO methodology for Big-Box Retail Properties

The Kansas Board of Tax Appeals recently issued a decision in various tax appeals for Walmart stores located in Johnson County, Kansas. 

 The County hired Peter Korpacz, MAI, and Bliss & Associates to appraise the properties.  The County also hired Dr. Tom Hamilton, MAI,  to join Korpacz in advocating for the new IAAO method of valuing the illegitimate “fee simple subject to a lease”.  

The properties were owner-occupied but Korpacz valued the property ‘as if leased to Walmart with 20 years left on a lease’.  He utilized the sales comparison and income approaches to value the properties and relied on sale leaseback and build-to-suit comparables for both approaches.   The taxpayer’s expert, Gerald Maier, MAI, excluded build-to-suit and sale leaseback comparables to value the property in fee simple. 

 The Board ruled that the County’s methodology was contrary to Kansas law, which prohibits the use of build-to-suit comparables without proper appraisal adjustments to limit the value attributable to the leased fee interest.  The Board reaffirmed Kansas is a fee simple state and not a leased fee state. 

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Property Tax Law Group, LLC
American Property Tax Counsel (APTC)

UPDATED september 2019

School Board's Ark Park Appeal Won't Float

A number of states allow school boards and other taxing jurisdictions to challenge an assessor's valuation of taxable properties.  The Kentucky Claims Commission recently affirmed that such challenges are not permitted under Kentucky law.  Grant County Board of Education v. Ark Encounter, LLC, Kentucky Claims Commission Final Order No. K-25927 (May 31, 2019), involved the Grant County PVA's assessment of the "Ark Park," which is a "life-sized" replica of Noah's Ark.  The Grant County Boarrd of Education challenged the PVA's assessment, arguing that the "Ark Park" had been undervalued by the PVA, thus depriving the school district of substantial tax revenue.  The Claims Commission held that the school board does not have standing to challenge a tax appeal.

The relevant Kentucky statute, KRS 133.120(10), says that tax appeals may be brought by "Any persons aggrieved by the decision of the [local] board, including the property valuation administrator, taxpayer, and department. . . ." The Claims Commission employed a narrow reading of the term "aggrieved" to find that the school district had not been deprived of any legal rights, and thus lacked standing to appeal.

The case is currently under appeal.

Michele M. Whittington
Morgan Pottinger McGarvey
American Property Tax Counsel (APTC)

Updated september 2019

But It's A Nice Round Number...

For the 2017 Tax Year, the Taxpayer protested a gross over-valuation of its casino/hotel property by the Assessor for Bossier Parish (the “Assessor”). The dispute concerns both the casino/hotel property and the land valuations (land underlying the casino/hotel, the RV parking lot and the employee parking lot). After a full trial on the merits, the five-member state commission charged with overseeing the correctness of property tax assessments – the Louisiana Tax Commission (“LTC”) – rendered a decision that in large part corrected the injustice and numerous errors contained in the Assessor’s overvaluation and consequent unfair assessment regarding both the casino/hotel property and the land valuation.

The Commission determined that both the Taxpayer’s appraisal and its Staff appraisal were flawed for different reasons, but also determined that sufficient information was submitted enabling the Commission to reconcile the issues in each of the appraisals and calculate a new, correct income approach to value.  In its decision, the Commission actually offered values of the casino/hotel property using both the cost approach and the income approach, ultimately concluding that the income approach was the more reliable method for valuing the casino/hotel income-producing property.  

The Commission’s Decision also determined that both the Assessor’s and Staff appraiser’s land valuations were unreliable, and further determined that “The Taxpayer’s land appraisal is the most reliable information and evidence provided regarding the land value.” Accordingly, the Commission determined the total land value to be the same as the Taxpayer’s local land appraisal expert.

The Assessor appealed the LTC decision to the District Court which affirmed the LTC’s finding of 65% obsolescence (using the cost approach method) based upon the record evidence of obsolescence – none of which was refuted by the Assessor.  The District Court was however silent on the land valuation issue. The Assessor appealed the District Court decision to the Second Circuit Court of Appeal.

The Second Circuit Court of Appeal ordered that the LTC adopt the appraisal report of the LTC staff appraiser in which the cost approach was used to value the subject property. Interestingly, both parties (Taxpayer and Assessor) and the LTC refuted the staff appraisal report during the LTC hearing on the matter, and neither the parties, nor the LTC requested that the appraisal report be adopted on appeal to the District Court or the Second Circuit Court.

The Second Circuit found that the Assessor “arbitrarily refused to consider additional obsolescence in his 2017 assessment, which was an abuse of the Assessor's discretion,” and as a result, his 2017 assessment was incorrect.  However, the Court also determined that the LTC “arbitrarily and capriciously assigned an obsolescence factor [65%], which was in error.” The Court then fashioned a remedy that requires the LTC to adopt the appraisal of a staff employee that uses a 30% obsolescence factor that is not supported by anything other than that employee’s belief that it would yield a “nice round number.”  Additionally, the staff appraisal report referenced by the Second Circuit included the casino/hotel property, but included only part of the land – the land on which the casino/hotel sits –and did not include the other two parcels of land.  Thus, the Second Circuit was silent on the valuation of two of the land parcels.

The Court’s decision fails to address the record presented by the taxpayer – most importantly the opinion of the taxpayer’s expert, and the factual back-up he provides for those opinions.  The expert opinions of the only qualified expert appraiser to testify were not even mentioned in the decision, indicating that evaluation of the record in its entirety did not occur. The decision mentions the expert appraiser once, but does not discuss his analysis or the substance of his opinions at all. The decision also does not recite his qualifications, credentials, or professional associations and experience. The decision is also devoid of any discussion or any of the evidence presented by the taxpayer’s other witnesses – including the General Manager of the casino/hotel - on which the LTC’s decision was clearly based.

Both the Assessor and the Taxpayer have filed applications for re-hearing to the Second Circuit.  Bobby Edmiston, Assessor v. Louisiana Riverboat Gaming Partnership d/b/a Diamond Jacks Casino and Resort, No. 52, 948 (La. App. 2 Cir. 9/9/2019

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

Property Tax Exemption

The operator of lease-to-own stores claimed an exemption from Orleans Parish ad valorem taxes on the grounds that the leased personal property was being used in the homes of its customers. However, the Fourth Circuit found that the applicable ad valorem tax exemption applies to owners using their property in their own homes as opposed to a commercial owner leasing out personal property to customers for use in their homes. Aaron's, Inc. v. Foster, No. 2019-CA-0443 (La. App. 4 Cir. 09/25/2019).

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

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)

UPDATED September 2019

Upcoming 2020 Reassessment and Mid-Cycle Appeal Deadline

Major markets in Maryland set to be reassessed as of 1/1/2020 are Bethesda & Chevy Chase (Montgomery County), Laurel & Bowie (Prince George’s County), Hanover & the BWI Airport area (Anne Arundel County), Mount Vernon & Midtown (Baltimore City) and Towson (Baltimore County).  Even if your property is not set to be reassessed, a mid-cycle appeal can be filed.  It must be noted by January 2, 2020.  Please contact Wilkes Artis to review your property to determine if a mid-cycle appeal is warranted.   

Kevin E. Kozlowski, Esq.
Wilkes Artis, Chartered
American Property Tax Counsel (APTC)

UPDATED JUNE 2019

In Massachusetts Be Prepared for Expensive Access to Justice

The deadline for filing most petitions to the Massachusetts Appellate Tax Board is approaching. The filing fees required to enter your petition are the highest in the nation. The filing fees generally started at $100 for property assessed at up to $1,000,000. For assessed values over $1,000,000 the filing fee is .10 cents per thousand in addition to the $100. This incremental increase in filing fees increases to a maximum of $5,000. A $5,000 filing fee would apply to $50,000,000 assessment, a $4,000 filing fee would apply to a $40,000,000 and so on. These filng fees apply to every fiscal year assessment is appealed, e.g. if there are two years pending at the Appellate Tax Board two separate filing fees must be paid. The filing fees are a significant expense. If you are not aware, these filing fees can be an unpleasant surprise.

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

UPDATED september 2019

Michigan Property Taxation Traps Another Taxpayer

Since the enactment of Michigan’s Proposal A over two decades ago, many a property taxpayer has unexpectedly suffered a tax increase that might have been avoided with better tax planning, and/or more effective advocacy in a tax appeal. Michigan property transfers can be especially painful. Property taxes are based on a property’s taxable value, and generally, taxable values are capped to the lesser of inflation or 5%, except in the year following a transfer of ownership. In that year, the taxable value is uncapped to equal 50% of the true cash (market) value.

On September 12, 2019, the Michigan Court of Appeals issued its most recent transfer of ownership decision in the case of Puppy’s Cubby v City of Farmington Hills. This case involved a transfer from a husband and wife as joint tenants, to a limited liability company of which the husband was the sole member.   The taxpayer claimed the transaction was not a transfer of ownership because it was between commonly controlled entities. The Court ruled in favor of the City, finding that under the joint tenancy the husband did not have control, rather the husband and wife had equal control. Consequently, the Court concluded that the joint tenancy and the limited liability company were not entities under common control.  

The outcome in this case is very troublesome. The taxpayer’s objective was to transfer property that was jointly owned by spouses, into an LLC owned by one of the spouses, without having the taxable value uncap. The Legislature has unambiguously provided that a “transfer of ownership” does not include a transfer between spouses. Yet, the subject transfer resulted in the uncapping.

Taxpayers have options in how they structure their transactions, and in how their tax appeals are pursued. The unfortunate outcome in this case confirms the importance of taxpayers working with experienced property tax legal counsel in planning property transactions, and in having property tax appeals pursued.  

Mark Hilpert and Stewart Mandell
Honigman LLP
American Property Tax Counsel (APTC)

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)

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)

Updated september 2019

Tax bills have been issued, but it’s not too late to challenge the assessment.

In Nevada, the annual property tax bills were mailed in July. Since then I’ve received calls from anxious property owners saying “this isn’t what I expected; is there anything I can do about it?” At this point some remedies are no longer available, but it is worthwhile to critically review the assessment because there are still some avenues for relief that can be pursued.

In reviewing an assessment it is important to understand that the actual tax assessed on a parcel is the result of two separate calculations. First, a gross property tax is calculated by multiplying the taxable value of a parcel by the assessment rate (35%), which is set by statute, and the tax rate for the district in which the parcel is located.

Of the three components used to calculate the gross property tax, only the taxable value can be challenged by a property owner appeal. However, for most parcels, the time to appeal the taxable value has expired. The only exceptions are situations where the secured roll published by the assessor in December of 2018 did not include the parcel at issue or the particular value that the assessment is based on. This usually occurs where a parcel has been divided to create new parcels or where there has been new construction. The taxable value of parcels that fit these exceptions can still be challenged. The petition can be filed with the county board of equalization until January 15, 2020.

Second, the gross property tax can potentially be limited by the tax cap. In Nevada, 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 (in Clark County, the tax cap factor for the current tax year is 3% for owner occupied residential property and certain low income residential rental properties and 4.8% for all other property) 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. Most properties have not experienced an improvement to or change in use, so a property owner can simply compare the current year assessment to the assessment made in the preceding tax year; if the taxes have increased by more than the applicable percentage an appeal should be considered.

The tax cap also limits the taxes assessed on some new parcels; parcels that did not exist in the preceding tax year. These new parcels are identified as either new parcels for development, which do not receive any benefit from the tax cap, or remainder parcels, which do benefit from the tax cap. New parcels for development are either (a) vacant parcels which were created by a subdivision map creating individual lots for residential, commercial or industrial development or on which there has been new construction sufficient to identify the use of the property or (b) improved parcels whose primary use has changed. If neither of these conditions apply, the new parcel should be treated as a remainder parcel and, as such, it might be entitled to a tax cap abatement.

If the assessment of a parcel does not reduce the gross property tax by a tax cap abatement and the property owner believes it should, a petition can be filed with the county assessor on or before June 30, 2020.

In summary, property tax bills should be critically reviewed because some avenues for relief are still available. Reductions in the taxes assessed can be achieved by challenging the valuation of new parcels and new construction or by questioning the manner in which the tax cap abatement has been applied.  

 
Paul D. Bancroft
McDonald Carano
American Property Tax Counsel (APTC)

Updated March 2019

New Hampshire Inventory Blanks are Due April 15

In New Hampshire every taxpayer must file an Inventory Blank with the local assessors by April 15 in order to preserve their right of a future property tax appeal. The requirement of filing an Inventory Blank can be waived by a city or town. Many cities and towns, by way of local election have waived the requirement of filing Inventory Blanks. In cities and towns that require the Inventory Blank on or before March 25 of each year the Inventory Blank form is sent to each taxpayer. The Inventory Blank requires that the taxpayer provide under oath a description of the real estate taxable, other information needed by the assessing officials to assess the property at its true value, and a census of all persons occupying the premises among other things. If you receive an Inventory Blank from the assessors do not ignore it otherwise you will be at the doom of the assessors.

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

Updated MARCH 2019

New Jersey Tax Court Analyzes Freeze Act Invocation and Waiver

A recent New Jersey Tax Court opinion analyzed whether a tax payer waived N.J.S.A. § 54:51A-8 (“Freeze Act”) protections pursuant to a settlement agreement that expressly invoked Freeze Act application only for the freeze year immediately following the appealed tax year. In 160 Chubb Properties, LLC v. Township of Lyndhurst, the Tax Court held that the taxpayer did not waive Freeze Act application to the second freeze year because Freeze Act protections must be deliberately and intentionally waived. Although the settlement agreement invoked Freeze Act protections for the first freeze year, the agreement did not expressly mention the waiver of application to the second freeze year. Importantly, the Freeze Act is self-executing, thus, invocation is not necessary for its application. Without any indication that the taxpayer requested or agreed to waive Freeze Act protection rights, application to both freeze years was enforceable. 160 Chubb Properties, LLC v. Township of Lyndhurst, 30 N.J. Tax 613, 624-25 (N.J. Tax Ct. 2018).

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

Updated September 2018

Expanding the Workforce in Construction: Inclusive Initiatives for Women and Minorities Proves Critical for Ever‐Evolving NYC Construction Industry

New York City represents the best of real estate development on a global spectrum. From the record-breaking economic sales, to record-breaking building heights, the complexity and success of this industry rests on the shoulders of its committed, dynamic, knowledgeable, and diverse workforce.

This workforce is made up of many roles – developers, architects, legal counsel, and construction personnel. Take a stroll through any New York City street and you will undoubtedly witness a construction site underway. The hammering, demolition, concrete mixing, safety signaling, and drilling make up the musical medleys that fill the every-day tunes this magical City is best known for.

For that reason, it’s imperative that the construction workforce advance and grow. One initiative that has gained momentum and added a dynamic impact to the construction world is the growing rate of women-owned construction firms and women construction workers on-site. The construction world has been predominately male-oriented, but the inclusion of women in the workforce has only strengthened the industry and given it a greater edge.

Marcus & Pollack LLP, a leading real estate tax firm in New York City, has recognized this trend. Recently, Marcus & Pollack created a new department specifically tailored to assist women and minority owned business in the bidding and contract award process on major construction projects throughout New York City.  Marcus & Pollack LLP works hand-in-hand with leading developers to include women owned business on their job-sites at every level – from general contractors and construction managers to all lower-tiered trades.

Marcus & Pollack LLP can be the catalyst in bringing significant numbers of women and minority owned businesses and construction labor into the bidding and contract award process. Marcus& Pollack LLP’s involvement and representation of many of the owners and developers involved in new construction projects enables the initiative to be established and pursued at the very early stages of planning and project development.

As advisors in property tax aspects and tax incentive programs, Marcus & Pollack LLP advocates the inclusion of minority and women owned firms on construction sites by counseling clients to include at least three minority and/or women owned companies in every request for proposal or construction labor throughout the project. The initiative has been widely accepted and implemented.   

Further, women and minority owned firms and construction workers are also given access to Marcus & Pollack’s database of on-going, active construction sites looking to hire. By matching these minority and women owned firms or construction labor to projects currently underway throughout New York City, the overall construction schedule is helped to steadily progress because construction needs are being met by an able, capable, and dynamic workforce.

For more information, please contact Joel Marcus or Kristine Loffredo at This email address is being protected from spambots. You need JavaScript enabled to view it. or (212) 490-2900.

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

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)

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)

UPDATED september 2019

Entity Transfer Issue before the Supreme Court of Ohio

Entity transfers, often in the form of LLC transfers, have been the topic of interest to Ohio Boards of Revision, Boards of Education and taxpayers in recent years.  Transferring real estate through an entity transfer, rather than a direct transfer of real estate, requires only the filing of an exempt conveyance form and a deed indicating the exempt transfer.  No consideration is reflected on these documents.

When called into question, the Ohio Board of Tax Appeals (BTA) has treated the transfer of a corporate entity whose sole assets are real estate (or real estate related) as the sale of real estate.  The BTA followed this precedent in Palmer House.[1]  The subject property was an apartment building that transferred from LLC to LLC. The local Board of Education (BOE) relied on the publicly available mortgage related to the transfer, along with the deed and exempt conveyance fee statement.  The BOE filed a complaint based on the mortgage but was unable to establish a sale price at the local Board of Revision level.  On appeal to the BTA, the BOE obtained the purchase agreement, settlement statement and a financing appraisal through discovery.  The BOE submitted these additional documents and argued the entity transfer price was equal to the value of the real property.

Palmer House argued the transfer included assets other than real estate, in addition to potential liabilities.  It submitted its own, non-financing appraisal report and testimony to demonstrate the transfer included more than real estate. 

The BTA found that a sale of real estate, and only real estate, occurred.  The Board held that the use of an entity transfer did not alter the underlying intent of the parties to transfer real estate.

On appeal to the Supreme Court, oral argument was recently presented.  No decision has been issued.

Ohio Boards of Education regularly rely upon real estate sales to establish value increases in entity-transfer cases.  BTA decisions turn primarily on a demonstration that only real estate was transferred.  BOE’s have successfully established the transfer of real estate using corroborating sale documents, such as deeds and conveyance fee statements filed contemporaneous to settlement statements submitted as evidence.  Appraisals submitted in conjunction with these documents have also been shown to support value.  Conversely, BOE’s have lost these cases when relying solely on mortgages, deeds showing a $0 transfer, and exempt conveyance fee statements. Bank financing appraisals, on their own, have also been rejected as conclusive evidence that a transfer of just real property occurred.

The decision issued by the Supreme Court in this case will establish the burden of proof on a party seeking to establish an entity transfer as the value of real estate for taxation in purposes in Ohio. 

[1] Columbus City Schs. Bd. of Educ. v. Franklin Cty. Bd. of Revision, 2018 Ohio Tax LEXIS 1574 (Ohio B.T.A. July 25, 2018).

Kristopher Nicoloff
Siegel Jennings Co., L.P.A.
American Property Tax Counsel (APTC)

UPDATED september 2019

Taxpayer Documents are Protected as Confidential Under Oklahoma Law

In 2015 the Oklahoma Legislature amended 68 O.S. § 2835(E) to establish that all lists of property or other documents provided by a taxpayer to the assessor or the board of equalization, and all documents produced during discovery in any ad valorem tax appeal “shall be protected as confidential and shall not be available for inspection under the Open Records Act.” This is a very important protection that is afforded to all taxpayers.  It protects leases, rent rolls, financial statements and other sensitive information that may be produced in a tax appeal from public disclosure.  Taxpayers should be aware of this right in all dealings with assessors and boards of equalization.

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

UPDATED september 2019

Construction in Process Exemptions Require Strict Statutory Compliance

A company that is building an income producing manufacturing facility, a retail building, or a multifamily project should carefully review the statutes for an opportunity to request the assessor for a construction-in-process (CIP) exemption from property taxes. In Oregon, the CIP exemption is available for a maximum of two years. The exemption must be requested each year between January 1 and April 1. The property must be in the process of construction on January 1 and not in use or occupancy, or in the furtherance of production not less than one year from the time construction commences. Thus, the property must be under construction from January 1 to January 1 – or a full year to qualify for the tax exemption. ORS 301.330. A company that has been approved for an enterprise zone exemption may apply for a CIP exemption under ORS 285C.170. The company then must file for the CIP exemption, between January 1 and April 1, after the “assessment year” (calendar year starting on January 1 and ending on December 31) in which the property is placed in service for the enterprise zone exemption from the assessor. In a July 2019 unpublished decision before the Oregon Tax Court, United Street Car LLC v. Dept. of Revenue, the court addressed the timing of these exemptions and legislative intent behind the statutes.

Cynthia Fraser
Garvey Schubert Barer, P.C.
American Property Tax Counsel (APTC)

UPDATED September 2019

Pennsylvania Appellate Court Hears Argument in a Series of Taxpayer Constitutional Challenges to School District's Schemes to Select Taxpayers for Appeals Based on Economic Thresholds

In a series of arguments heard or scheduled to be heard in the summer and fall of 2019, the Pennsylvania Commonwealth Court will repeatedly address the issue of whether school districts’ schemes for selecting which taxpayers to appeal meet constitutional uniformity. 

The cases follow the Pennsylvania Supreme Court’s decision in July 2017 in Valley Forge Towers Apts. LP v. Upper Merion Area School District, 163 A.3d 962 (Pa. 2017).  In Valley Forge, taxpayers alleged that the school district filed increase appeals only against commercial property owners and not against residential owners. The Pennsylvania Supreme Court held in Valley Forge that all real estate is one class, that taxing districts cannot divide property into sub-classes, and that all real estate must be taxed uniformly which is a requirement of Pennsylvania’s Constitution.  Taxpayers read Valley Forge broadly based on its language, reasoning and policy.  Taxing districts read Valley Forge extremely narrowly, essentially limiting its reach to the facts of that case and taking the position that so long as the school district establishes a facially neutral policy in which it “considers” appealing residential properties even if it did not, in fact, appeal any residential properties, its policy is constitutional.

Following the Supreme Court’s decision in Valley Forge there have been a series of taxpayer challenges to school selection schemes for increase assessment appeals where the schools’ schemes are based on some form of economic threshold.  In Pennsylvania, there is an appeal as of right to the Pennsylvania Commonwealth Court; there have been at least five (5) post-Valley Forge cases filed to the Commonwealth Court challenging school’s selection schemes including:

• The School District of Philadelphia v. Philadelphia Board of Revision of Taxes, 1493 CD 17 (Pa. Commw. Ct, August 22, 2019). Here, the City of Philadelphia School District used consultant New Jersey-based Keystone Realty Consultants to create scheme whereby the School purported to select properties for appeal where the additional taxes that could be created were at least $7,500. The trial court dismissed approximately 140 school-initiated appeals because the trial court found this policy to be unconstitutional. The Commonwealth Court heard argument on the school district’s appeal; on August 22, 2019 the Commonwealth Court issued its decision refusing to affirm or reverse the trial court and, instead, remanded back to the trial court to make an evidentiary record on the school’s selection scheme.

• Martel v. Allegheny County Board of Assessment Appeals, 568 CD18 (Pa. Commw. Ct. August 14, 2019(reported, amended opinion). Here, City of Pittsburgh School District filed on sale price.  Taxpayer filed a challenge, citing the Allegheny County local rule and Valley Forge.  The trial court ruled against the taxpayer; the taxpayer appealed.  The Commonwealth Court ruled against the taxpayer in early summer 2019, then rescinded and reissued its decision August 14, 2019 in which it ruled that the taxpayer had failed to exhaust its administrative remedy.  The taxpayer has filed a petition to the Pennsylvania Supreme Court seeking to have the Court take the case on appeal.  Taxpayer awaits the decision of the Pennsylvania Supreme Court as to whether to take the appeal.

• East Stroudsburg Area School District v. Dallan Acquisitions LLC, 529 CD 2018 (Pa. Commw. Ct.)(aka “Marshall’s Crossing”). Here, the Stroudsburg Area School District used consultant Keystone Realty Consultants as well.  The School took the position at trial that it had a policy of appealing properties where the additional taxes that could be created were at least $10,000.  However, the taxpayer adduced evidence that neither the school nor Keystone performed any calculations to ensure that the properties it selected met this threshold, and that the school did not appeal any residential properties even though taxpayer produced expert testimony that at least 12 houses met the criteria.  The trial court found the school’s methodology to be constitutional and taxpayers appealed.  This case was argued before the Commonwealth Court on September 9, 2019 and the parties await a decision.  Siegel Jennings, Co., L.P.A. is co-counsel for taxpayers on this appeal.

• Kennett Consol School District v. Chester Co. Board of Assessment, 253 CD 2019 (Pa. Commw. Ct.)(aka “Autozone”). Here, the school district admitted in discovery that it did not have a policy of its own, but rather, delegated its authority to set a threshold to a third party appraiser functioning as its consultant; the appraiser-consultant set a threshold of properties that are under-assessed by at least $1 Million and recommended 13 appeals. Based on this advice, the school filed increase appeals on 12 properties, none of which were residential. The school then engaged the same consultant-appraiser to prepare the appraisals.  The school appraisal on the subject property concluded that the property was under-assessed by $800,000 (thus, by its own evidence, the appeal did not meet its own threshold).  Taxpayer filed a motion to quash the appeal on the basis that the school’s appeal policy was unconstitutional.  The trial court denied the taxpayer’s motion and set the assessment based on the school district’s appraisal.  Taxpayer appealed to the Commonwealth Court.  This case, being handled by Siegel Jennings, Co., L.P.A. is scheduled for argument on November 12, 2019 before the Commonwealth Court.

• Bethlehem Area School District v. Northampton County Board of Revenue, 357 CD 2019 (Pa. Commonwealth Court)(aka “Lehigh Crossing”). Here, the school district consulted with Keystone Realty Consultants and set a policy of selecting properties that would yield at least $10,000 of additional taxes.  Minutes from school board meetings indicated that part of the reasoning for setting this threshold was to recoup tax dollars that had been lost by virtue of appeals filed by commercial property owners which the school believed shifted the tax burden to residential owners.  Since 2012, the school’s scheme yielded no appeals on residential properties.  The trial court granted the taxpayer’s motion for summary judgment, finding the school’s selection scheme to be unconstitutional, notwithstanding the fact that the policy was facially neutral. The school district appealed to the Commonwealth Court.  The case is tentatively scheduled for argument on December 9, 2019.

• CF PA Owner LLC. v. North Allegheny School District, (632 CD 2019(Pa. Commw. Ct.)(aka “Sherbrook Apartments”). Here, the school district filed based on a recent sale price.  Taxpayer filed a separate action asking the court to declare a selection scheme based on sale price alone to be unconstitutional.  Following briefing and argument, the trial court ruled against the taxpayer in a one-sentence decision without any reasoning.  Taxpayer appealed to the Commonwealth Court where the case remains pending; argument has not yet been scheduled.  Siegel Jennings Co., L.P.A. represents the taxpayer.

To discuss the specifics of these pending appeals and how they might affect the assessment on your property, please contact Siegel Jennings at:

Sharon F. DiPaolo, Esquire
Siegel Jennings, Co., L.P.A.
American Property Tax Counsel (APTC)
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Updated december 2018

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 2019 by filing an Account with the local assessor. In most jurisdictions the Tax Year 2019 tax bill will be sent out during the summer of 2019. The Tax Year 2019 tax bill has an assessing date of December 31, 2018. In most cases the filing of a Valid Account by January 31, 2019 is a prerequisite to a valid appeal. The Account must describe the property, both personal and real, 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)

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)

UPDATED september 2019

Truth in Taxation Explained

There is often confusion among taxpayers surrounding Tennessee’s “truth in taxation” statutes.  The statutes require assessors to certify the “total assessed value” of taxable property, new construction and improvements not on the previous tax roll and deletions from the tax roll within the jurisdiction to the governing body of the jurisdiction.  The governing body must then certify a tax rate “which will provide the same ad valorem revenue for that jurisdiction as was levied during the previous year.”  In other words, if total assessments go up, the tax rate must come down. 

This provision leads many taxpayers to mistakenly believe that overall property taxes cannot increase.  Unfortunately for taxpayers, these statutes do not prevent a taxing jurisdiction’s ability to increase both the tax rate and assessments in the same year.  The statutory exception that makes this “double-dip” possible provides that any governing body may levy a greater tax rate so long as it (1) advertises its intent to exceed the certified rate in a newspaper for 30 days, and (2) adopts a resolution levying a tax rate in excess of the certified tax rate. 

This exception swallows the rule.  Taxing jurisdictions may merely give lip service to maintaining the status quo while being free to raise tax rates and assessments in the same year.  This is authorized by law despite the potential windfall to the government and hardship on the taxpayers.  A taxpayer’s only real protection is to challenge the value of their property if they believe it is overvalued.

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Evans Petree PC
American Property Tax Counsel (APTC)

Updated September 2019

Tax Payment Requirements & Late Tax Challenges

Taxing units throughout Texas are adopting tax rates and sending tax bills. Taxpayers should consider tax payment requirements and potential last opportunities to contest their taxes. Taxpayers must be vigilant to avoid missing payment of a tax bill. All taxpayers receive a school and county bill and, if located within such, a city or special district bill. Tax bills are sent to the “most recent address in possession” of the appraisal district whether current or not. Failure to send or receive a bill does not affect a taxpayer’s liability. It is the taxpayer’s responsibility to pay all taxes with or without a bill. Taxes must be paid by January 31, 2020 and will, if delinquent, incur 1% per month interest, and up to a 12% penalty and a 15% attorney collection fee. Payment is recommended by postmarked, certified mail, return receipt. Some taxpayers are questioning why they did not contest their valuations last spring. There may still be an avenue of protest. A taxpayer under certain limited circumstances may still protest, prior to the delinquency date, their valuation if their value exceeds the correct value of the property by more than one-third.

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

Updated June 2018

Tax Commission Holds that Debt Rate Must Match Capital Structure

The concluding step in deriving a weighted average cost of capital cost is to determine the proper capital structure.  In Appeal No. 15-958 (May 2018), the Tax Commission stated that the capital structure is related to a company’s credit rating and held that “[c]ombining a debt rate from “A” rated companies with a capital structure from mostly “B” rated guidelines companies . . . [was] a mismatch.”  The Commission corrected this error by utilizing an “A” credit rating and a capital structure of “A” rated debt.  Thus, it is important to understand the relationship between a company’s debt rating and its capital structure when determining a weighted average cost of capital.

David J. Crapo, John T. Deeds
Crapo Deeds PLLC
American Property Tax Counsel (APTC)

UPDATED september 2019

Virginia Year-End Deadlines Approaching

In Virginia, taxpayers typically have three years from the last day of the tax year for which an assessment is made to appeal the assessment to the appropriate Circuit Court.  In most of the large jurisdictions in Virginia, the tax year corresponds with the calendar year.  As a result, most taxpayers have until December 31, 2019 to appeal their 2016 assessments to Circuit Court.  The majority of Virginia locales do not require an administrative appeal before filing to court (the City of Alexandria being a notable exception); however, if you believe your 2016 assessments overstated the value of your properties or otherwise did not fully account for the impact of market conditions, please contact us to review the case and determine whether an appeal can or should be filed before the end of the year.

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Wilkes Artis, Chtd.
American Property Tax Counsel (APTC)

Updated september 2019

Is Seattle Gaining Ground in Its Quest for an Income Tax?

Washington has multiple longstanding case law precedents holding that income taxes violate the property tax uniformity clause of the state constitution. The state’s voters have repeatedly refused to amend the uniformity clause so as to allow an income tax. Despite these formidable legal and political barriers, the City of Seattle recently adopted a local income tax. This move was challenged by several groups of would-be taxpayers and eventually struck down by a King County trial court judge. The city appealed, hoping for immediate review by the state supreme court, but the high court required review by the intermediate appellate court as the next step. That review recently resulted in another loss for the city, but the court’s surprising rationale raises new concerns. Among other things, the court said the city’s existing property tax could be – perhaps must be -- imposed on income. The case is expected to move on to the state supreme court.
 

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

Updated september 2019

New Real Estate Tax Billing System

The District of Columbia’s Office of Tax & Revenue is in the process of developing a new real estate tax billing system. The District has stated that the new billing system will lead to greater efficiency and accuracy in its billing for real estate taxes. This should lead to a decrease in the number of billing related errors (e.g., improper penalty and interest charges) taxpayers face each year. The District plans to roll out the new system by 2021, in time for the Tax Year 2021 bills.

Jonathan L. Cloar
Wilkes Artis,Chartered
American Property Tax Counsel (APTC)

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)