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Property Tax Resources



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 June 2018

Assessment Appeal Filing Season Opens in California

The season for filing assessment appeal applications on 2018 property tax assessments opens on July 2. In most of California’s 58 counties, taxpayers have until November 30 to file their appeals. In ten counties, however, appeals must be filed by September 17. Those counties include San Francisco, Alameda, Santa Clara, San Luis Obispo and Ventura, as well as five smaller and less populous counties. Applications must be postmarked by these due dates in order to be valid. Assessment appeal applications are available on the websites for the county assessment appeals board or, for smaller counties, the county board of supervisors’ website. The appeal applications can be filled-in on-line and, in some cases, the applications can even be submitted electronically. Note also that many counties now require that a filing fee be paid when an assessment appeal application is submitted.

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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 june 2018

Court Holds that Miami-Dade County Must Repay Interest to Taxpayers

For tax years 2011 through 2016 the Miami-Dade County Tax Collector was required to pay interest on certain refunds issued to taxpayers as a result of Value Adjustment Board appeals.  During this time period, the tax collector reversed course and took the position that if a taxpayer settled their case they were not entitled to interest on their refund. Based on this position, the tax collector stopped issuing interest to taxpayers who were entitled to it, and demanded repayment of interest that had already been paid.  Our firm recently prevailed in the appellate court on behalf of a representative group of taxpayers challenging the tax collector’s position.  The Court agreed with our interpretation of the statute, that interest must be paid by the county on an overpayment whether the assessment is reduced by agreement or at a hearing.  Our firm will now return to the trial court to certify the class of affected taxpayers and seek recovery of the interest payments due to them.


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

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Georgia Property Tax Updates

UPDATED june 2018

Taxable Estate for Years on Non-Taxable Usufruct?

In The City of College Park et. al. v. Paradies-Atlanta, LLC et al.,  2018 Ga. App LEXIS 318,  2018 WL 2454708, (Case No. A18A0162, decided on June 1, 2018), the Georgia Court of Appeals affirmed the trial court’s grant of the retail operators’ motion for summary judgment in an ad valorem real property tax refund suit based on the ruling that their interests in the premises at issue constituted non-taxable usufructs. The Court noted the evidence which showed: the City of Atlanta, which owns Hartsfield-Jackson International Airport, entered into seven-year agreements with the retail operators in the airport; the agreements specifically provided that the rights thereunder constituted a usufruct which is not subject to levy or sale and that no estate passed out of the City; the City of Atlanta retained dominion and control over the parcels by prohibiting the operators from subletting, assigning, transferring or encumbering any of their rights under the agreements without the City’s consent; the agreements restricted the hours during which deliveries may be made and by whom, the type of services offered, the prices that may be charged for good and services, the hours during which the businesses must be open at the airport, contained detailed customer-service requirements, business record retention and immediate access by the City, numerous City policy compliance rules on equal employment, non-discrimination, ethics, conflicts of interest, maintenance and upkeep requirements of the premises, as well as maintenance of certain types of insurance coverage. Although the agreements provided that the retail operators were liable for all taxes levied and assessed against their interests, they did not specifically address ad valorem real property taxes. The Court characterized the retail operators use of the premises as having “numerous pervasive restrictions governing nearly all aspects of the retail operators’ rights” and affirmed the trial court’s ruling that their interests in the parcels constituted non-taxable usufructs.

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

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Idaho Property Tax Updates

Updated June 2018

New Capital Investments Exemption Clarification and 2018 Tax Estimates

Effective July 1, the Idaho legislature has clarified that the property tax exemption for new capital investments applies not only to locally assessed real and personal property, but also to “operating property.” “Operating property” includes property owned by regulated telecommunications companies, power companies, the petroleum and gas industry, and other centrally assessed taxpayers. As before, the exemption applies to new capital investments of at least $1 billion by limiting the property tax revenue of local taxing districts to the property taxes payable on $400 million in assessed value.

In other recent news, taxpayers can now estimate their 2018 property taxes for 17 Idaho counties on the State Tax Commission’s website, at https://tax.idaho.gov/i-1072.cfm?qp=y. The estimator does not include special voter-approved levies or fees that may appear on the tax bill, and the property tax component is subject to possible adjustments as each local district finalizes its budget.
 
Michelle DeLappe and Norm Bruns
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 june 2018

Indiana Tax Court reduces assessed value of Industrial Facility, holding that Assessor failed to relate property’s sale price to the contested assessment dates

In Nova Tube Indiana II LLC v. Clark County Assessor, Cause No. 49T10-1708-TA-00013 (Ind. Tax Court, May 18, 2018), the Indiana Tax Court reduced the 2011, 2012, and 2013 assessed values of a 100,000+ square foot industrial building in Southeastern Indiana to values concluded to by taxpayer’s USPAP-compliant appraisal.  This was a reversal of the Indiana Board of Tax Review’s final determination, which had upheld Nova Tube’s real property assessments for all years at issue.With respect to the 2011 appeal, the Assessor bore the burden of proving that her assessment increase over five-percent was correct under Indiana Code § 6-1.1-15-17.2, commonly known as the “burden-shifting rule.”  The Assessor argued that the May 2014 transaction of the subject property was a “market value” transaction, and she provided evidence the market was relatively stable during the years at issue.  Nova Tube asserted that the May 2014 sale was not a market value transaction due to the buyer, the Port of Indiana, being atypically motivated.  The Port of Indiana is a governmental entity that owned nearly 1,000 acres in the immediate area of the subject property and had a business objective to control all of the land in the area.  The Indiana Board weighed the evidence and determined the Assessor met her burden and that Nova Tube did not persuasively rebut the Assessor’s prima facie case.On appeal, Nova Tube contended that the Board erred in upholding the assessments.  Regarding the sale of the subject property being a market value transaction, the Tax Court found that the Indiana Board decision was supported by substantial evidence.  However, the Tax Court held that the Indiana Board abused its discretion by finding that the May 2014 transaction price was sufficiently related to each of the preceding March 1 valuation dates.  Therefore, the Assessor did not meet her initial burden of proving the assessment increases were valid.The Board also found that the appraisals offered by Nova Tube had probative value.  The Assessor did not challenge the Board’s finding as to the overall probative value of Nova Tube’s appraisals.  Consequently, the Tax Court concluded that the property should be assessed at the values concluded to in the appraisals.  The Court’s decision can be viewed here -- https://www.in.gov/judiciary/opinions/pdf/05181801mbw.pdf.

Brent A. Auberry
Faegre Baker Daniels
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 june 2018

Kentucky Constitutional Exemptions Are Limited to Property Taxes

Kentucky has, in recent years, seen an increasing number of disputes regarding the application of constitutional tax exemptions.   In Commonwealth v. Interstate Gas Supply, 2016-SC-000281-DG, 2018 WL 1419444 (Mar. 22, 2018), the Kentucky Supreme Court clarified that the tax exemption accorded to a “purely public charity” by Section 170 of the Kentucky Constitution is limited to an exemption from property taxes, and not from other kinds of taxes.  In so doing, the Court overruled two prior decisions that had ostensibly extended the Section 170 exemption to non-property taxes.

The tax at issue in the Interstate Gas Supply case was the Kentucky use tax that was imposed on natural gas purchases by a charitable hospital.  The hospital relied on a 1918 decision, Corbin Young Men’s Ass’n v. Commonwealth, 205 S.W. 388, which held that Section 170 exempted “institutions of public charity” from all taxes, not just property taxes.  While several other decisions had questioned the validity of the 1918 ruling, the Court expressly rejected the earlier opinion and found that Section 170’s exemption is limited to property taxes.

The Court also overruled a 1966 case finding that Kentucky’s use tax was more akin to a property tax than to an excise tax.  Thomas v. City of Elizabethtown, 403 S.W.2d 269 (Ky. 1966).  The Interstate Gas Supply court noted that a number of other cases, both in Kentucky and in other jurisdictions, had found that use taxes are properly classified as excise taxes, not property taxes.  Accordingly, the Court found that the natural gas purchases were subject to use tax, and were not exempt under Section 170.

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Morgan and Pottinger
American Property Tax Counsel (APTC)

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Louisiana Property Tax Updates

Updated june 2018

Taxpayer's Novel Refund Argument Rejected

The City of New Orleans issued a property tax bill for the 2012 tax year to the New Orleans Riverwalk Marketplace, LLC (“Riverwalk.”) Riverwalk initially challenged the Assessor’s valuation of the property with the Orleans Parish Board of Review, but subsequently withdrew the appeal and accepted the valuation.  Riverwalk and the Assessor eventually determined that the property was actually owned by the Port of New Orleans, a political subdivision not liable for property taxes.  Approximately two (2)  years later, Riverwalk filed a claim for refund of taxes paid in error with the Louisiana Tax Commission (“Tax Commission”) pursuant to La. R.S. 47:2132, which allows any person who has a claim for ad valorem taxes erroneously paid three (3) years from the date of the payment to present the claim. The Tax Commission agreed that the request for refund was filed timely, but found that Riverwalk’s earlier withdrawal of its appeal to the Board of Review (and acceptance of value) was binding. Thus, the Tax Commission denied the refund claim. 

Riverwalk appealed the Tax Commission’s decision. The district court reversed the ruling of the Tax Commission, finding that it erred by not considering the underlying legality of the tax payment.  On further review, the court of appeal reversed the district court.  The court of appeal found that Riverwalk’s claim was not actually a claim for erroneous payment, but rather a challenge as to the legality of the tax assessment. While a claim for taxes erroneously paid is subject to a three (3) year prescriptive period, a challenge to the legality of an ad valorem tax is subject to La. R.S. 47:2134(C), which provides that a person must pay the tax under protest and then file suit for refund within thirty (30) days of the date of the payment.  Since Riverwalk did not file the refund suit within thirty (30) days of payment, its claim was not timely.  New Orleans Riverwalk Marketplace, LLC v. Louisiana Tax Commission, Dkt. No. 2017-CA-0968 (La. App. 4th Cir. 04/30/2018).

Angela W. Adolph, Partner
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 june 2018

Beware of Personal Property Taxes in Massachusetts

The Massachusetts Fiscal Year 2019 commences on July 1, 2018 and runs until June 30, 2019. The assessing or valuation date for Fiscal Year 2019 is January 1, 2018. In most cases the actual tax bills to which appeal rights accrue will be sent out at the end of 2018. In general, all property whether real or personal is alleged to be assessed at 100% of fair market value. Massachusetts has a labyrinth of laws concerning the taxability of personal property. There are many scenarios where certain types of personal property are exempt from local taxation. This is particularly true when the owner of the personal property is a corporation. If you receive a personal property tax bill it is advisable to consult a property tax attorney regarding the taxability of your property. The local assessors have been known to tax personal property that is clearly exempt from local taxation.

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

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Michigan Property Tax Updates

UPDATED june 2018

Two New Taxable Value Uncapping Cases

Michigan’s taxable value cap does not apply the year following a transfer of ownership.   Under the controlling statute, a transfer of ownership does not include transfers where the grantor and grantee qualify as entities under common control.   The Michigan State Tax Commission (STC) had adopted a definition of “common control” that set a high threshold of control, and included a requirement that the entities involved be engaged in a business activity.   Two recent Court of Appeals decisions involve this issue:

TRJ & E Properties, LLC v City of Lansing, is an April 17, 2018 published decision of Michigan Court of Appeals. The court found that the STC definition of common control conflicted with the plain meaning of the statute and ruled that common control must be determined on a case-by case basis depending on the structure of the entities involved.  

In James E. Scott et al v City of South Haven, an April 19, 2018 unpublished decision of the Michigan Court of Appeals, the same panel of judges ruled that except in the case of a sole proprietorship, an individual cannot be considered to be a legal entity under common control.

The first decision is a good one for taxpayers. It reduces the threshold of control required for entities to be considered commonly controlled and arguably removes the business activity requirement.   However, the second decision is likely to cause problems for individuals seeking to transfer properties between themselves and entities, even where the transfer involves an individual and their wholly owned limited liability company. Efforts to enact taxpayer friendly legislative clarification are already underway.

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 june 2018

Ohio’s high court affirms taxing authorities must consider not just the sale price of real property, but any other evidence presented relevant to the value of the unencumbered fee-simple estate

Important Ohio Supreme Court Property Tax decision announced recently in Bronx Park III Lancaster[1] case argued by Victor Anselmo of APTC member firm Siegel Jennings on behalf of Walgreens.  The Supreme Court made it clear that the Ohio Board of Tax Appeals and Ohio courts cannot simply rely upon a sale price to set value for a property tax assessment. Ohio courts and tax tribunals must consider any evidence the parties present relevant to the value of the unencumbered fee simple estate, including evidence of above market lease rates, above market credit worthy tenants, and a longer remaining lease period. 

[1] Bronx Park S. III Lancaster, LLC v. Fairfield Cty. Bd. of Revision, Slip Opinion No. 2018-Ohio-1589.

Ohio 2018 Tax Year Informal Assessment Review Period Approaching for many counties including Cuyahoga (Cleveland), Lake, Lorain, and Lucas (Toledo) Counties

Cuyahoga, Lake, Lorain, and Lucas counties, among others, will be conducting their sexennial reappraisal of real property assessments for tax year 2018 (payable 2019).  Many of these counties will have an informal review period, prior to certifying the values for the tax bills, where taxpayers can provide input. Taxpayers should be on the lookout for proposed value notices in August – September.  Participating in an informal review should be made on case by case basis, and the window for the informal review process is typically short.  Early analysis with a professional familiar with local assessors, opposing counsel, and procedures will optimize your chances of obtaining appropriate relief. 

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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 june 2018

PHILADELPHIA COUNTY, PA’S BACK-TO-BACK-BACK REASSESSMENTS MEAN INCREASES FOR COMMERCIAL TAXPAYERS

After three decades without countywide reassessments, Philadelphia County is now planning to do a reassessment on every property in the county every year.  This is a huge change in typical Pennsylvania practice where counties often go decades between county-wide reassessments.  (The counties are allowed to assess annually, but this is the first county to do so).  Starting in 2014, Philadelphia had a countywide reassessment for all properties – its first countywide reassessment in thirty years.  Then in 2016, Philadelphia reassessed residential only, in 2017 vacant land only, and in 2018 commercial properties only. 

The increases on 2019 assessments for commercial properties vary widely.  County-wide the 2018 reassessments for commercial properties increased the aggregate assessment of commercial properties by 50%, so the 2019 notices are increases on just-issued-last-year gigantic increases.

Notices with 2019 assessments are now out.  Even if you have a pending appeal from a prior tax year, we are advising property owners to file new appeals from these 2019 notices to avoid waiving any rights.  The deadline to appeal for tax year 2019 is the first Monday in October 2018.

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 june 2018

In Rhode Island the dates for proving value have changed

The general rule in Rhode Island is that when appealing a property tax based upon overvaluation the iss is the market value of the property as of the revaluation or updated assessing date. This is the case even if the revaluation or updated assessing date was years in the past. The recent Rhode Island Supreme Court case of Michael A. Balmuth et al v. Tax Assessor for the Town of Portsmouth 2018 R.I. Lexis 43 has changed that rule. The court held that taxing statutes must be interpreted in the light most favorable to the taxpayer. The result is that the taxpayer has the opportunity to appeal for a lower value in years subsequent to the revaluation or updated assessing date without proving value in the year of the revaluation or updated assessing date. This is helpful to taxpayers in years when real estate values have decreased after the revaluation or updated assessing date.

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 June 2018

What is a Newspaper Printing Press Worth in the Internet Age?

In an interesting recent decision, a Tennessee chancellor took on the issue of how to value a newspaper printing press in the age of the internet. In Memphis Publishing Co. v. Tenn. State Bd. of Equalization, No. 15-1073-III(I) (Ch. Ct. Dist. 20, April 25, 2018), the taxpayer was the operator of The Commercial Appeal, the primary print newspaper in Memphis. They owned a large amount of personal property in their newspaper printing plant, including a printing press. The original cost of this property was around $24 million. The Shelby County Assessor argued that the property should be valued using “standard valuation,” which would apply statutory depreciation factors to the original cost, resulting in values around $11, $10 and $9 million over the three tax years at issue. The taxpayer argued that the property should valued using a “non-standard valuation,” which would break away from the statutorily-prescribed depreciation factors. The taxpayer further argued that the property should be valued at its “value-in-exchange,” i.e. the value that the taxpayer could get for the property on the open market. The chancellor agreed with the taxpayer and reduced the value of the property by nearly 99% to $134,000, $124,000, and $113,000 over the three tax years at issue. This case illustrates that taxpayers must be aware of the potential for property tax savings that could result from technological advances and shifting economies.


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Evans Petree PC
American Property Tax Counsel (APTC)

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Texas Property Tax Updates

Updated june 2018

Don’t Let Assumption from the Business World Increase Your Property Tax Burden

Real estate business assumptions do not necessarily apply to property taxes. Market value for property taxes is different from market value in the business world. It is important to remember that the purchase price or construction costs of a property are rarely equal to market value for property tax purposes.

Financial considerations are different in the business world than the property tax world. Financing or purchase appraisals are rarely based on a market value standard for property tax purposes. In addition, the business value component of real estate is excluded for property taxes as it is intangible and therefore, not taxable.

Appraisal districts give great weight to actual cash flow and actual operating statements. However, market value determinations for property taxes should consider market-based cash flows and that operating statements might not reflect market conditions as of the January 1 valuation date.

Finally, an owner may challenge if a property’s tax value is unequal in comparison to the tax value of comparable properties


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

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Utah Property Tax Updates

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)

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Virginia Property Tax Updates

UPDATED june 2018

Northern Virginia Tax Rates Adopted for 2018

The four large Northern Virginia jurisdictions finalized their 2018 real estate tax rates in April and May.  Fairfax County increased its base rate from 1.13% to 1.15%.  After two years of fairly significant increases, the City of Alexandria kept rates flat for 2018 at 1.13%.  Arlington County also left their base rate unchanged for 2018 at .993%.  For the second consecutive year, Loudoun County is the only large jurisdiction in the region to lower rates (from 1.125% in 2017 to 1.085% for 2018). 

For many owners, additional tax burdens are layered upon these base rates which include: transportation taxes of .125% in both Fairfax and Arlington Counties, and special district taxes throughout the region including Potomac Yard in Alexandria, Tysons Corner and Reston in Fairfax County, various Business Improvement Districts in Arlington and Route 28 in Loudoun County.

For specific guidance on how your properties are affected by the new rates, please contact us.

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

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Washington Property Tax Updates

Updated june 2018

Who’s Picking Up the Tab for Seattle’s Waterfront Redevelopment Project?

Seattle’s downtown waterfront is dominated by a double-decked elevated highway known as “the viaduct.” A 2001 earthquake started a debate about what to do with this aging piece of transportation infrastructure. The final decision was to replace the viaduct with a tunnel that is now nearing completion. Once the viaduct is demolished, the City plans to redevelop the waterfront. The City proposes to pay for up to $200 million of the cost through special assessments against properties that will increase in value due to the project. The local improvement district (LID) is surprisingly large. Details can be found at: https://waterfrontseattle.org/lid. This includes an “LID property search tool” that can be used to look up projected assessments against specific properties. Property owners have the right to protest and possibly stop the LID. If that occurs, the City will have to find another source of funds or scale back the project. If the LID goes forward, one unresolved question is whether landlords can pass the assessments through to their tenants. Property owners and tenants in the affected area of downtown Seattle should be paying attention to this now.
 
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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American Property Tax Counsel

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