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 MARCH 2019

Court Upholds Tax Exemption for Airport Concessionaire’s Exclusive Use

In late January, the California Court of Appeal upheld the tax exemption for property owners who have exclusive use of government-owned property. In DFS Group, LP v. County of San Mateo (No. A150162), the appellate court ruled that a duty-free retailing concessionaire’s exclusive right to operate at San Francisco International Airport was not subject to property taxation. The court’s decision was based on California laws that exempt intangible assets and rights from property taxation. The statute relied upon by the court provides that the exclusive nature of a concession, franchise, or similar agreement is an intangible asset that must not be considered in valuing taxable real property. The Court of Appeal also held that, after the taxpayer makes a prima facie showing that the value of an intangible asset/right has been subsumed in the assessment, the burden falls on the taxing authority (assessor) to determine the value of the intangible asset/right and remove that value from the assessment. A petition for review has been filed and is currently pending before the California Supreme Court.

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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 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)

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 2018

In Property Tax Assessment, Every Year Stands on its Own – Except When it Doesn’t

A recent appellate case held that the doctrine of “decisional finality” applies to tax exemption matters and that there must be a terminal point in proceedings at which the parties may rely on a decision as being final and dispositive of the rights and issues involved.  In the case, the property appraiser (“PA”) denied an educational exemption and the taxpayer appealed to the Value Adjustment Board (“VAB”), which granted it.  The PA did not appeal the 2008 VAB decision and the school received exemption for the next five years. In 2014, however, with no change in the law or factual circumstances, the PA sought to revisit the matter, denying the exemption. The taxpayer argued the doctrine of administrative finality bars re-litigation of the exemption issue absent changed circumstances.  The court agreed and wrote that expanding the already broad authority of property appraisers by authorizing administrative challenges to previously granted tax exemptions serves no cognizable purpose where factual and legal underpinnings of an exemption remain the same.

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

UPDATED MARCH 2019

Watch Your Appeal Deadlines in Georgia

It’s almost that time of year again in Georgia – time to start thinking about ad valorem property tax appeal filing deadlines. County tax assessors mail out assessment notices to all real property owners in Georgia in the April/May/June time frame. Be on the lookout for assessment notices for each parcel owned. Appeals must be filed within 45 days of the date of the assessment notice. If you fail to meet this deadline, it will be too late to appeal when you get your tax bill and are dissatisfied with the amount of taxes you owe.

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

Updated MARCH 2019

The Wheels of Justice Turn Slowly: Sewer Fee Litigation Drags On

Idaho has frequent litigation over city-imposed fees that may be illegal taxes in disguise. In March 2015 we reported on a case involving a “sewer capitalization fee” charged by the city of Hayden. The trial court upheld the fee, but the Supreme Court reversed and remanded for further proceedings. The two opinions from the Supreme Court (a 3-justice majority opinion and a 2-justice concurrence) produced confusion on remand. The confusion was compounded by a 2017 case from the opposite corner of the state involving wastewater charges by the city of Blackfoot. The Supreme Court’s Blackfoot opinion discussed its Hayden decision in a way that, in hindsight, was misleading. Meanwhile, the Hayden case was reprocessed by the trial court with the city losing this time. The case then took a second trip to the Supreme Court and in late December was reversed and remanded for still more proceedings. The city of Hayden lives to fight another day!

Norm Bruns and Michelle DeLappe
Garvey Schubert Barer
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 MARCH 2019

Indiana Tax Court Denies Motion To Dismiss Assessor’s Property Tax Appeal On Procedural Grounds

In Marion County Assessor v. Stutz Business Center, LLC (January 11, 2019), Owner fell short in its effort to cut short an appeal by a County Assessor challenging the Owner’s voluntary withdrawal of its 2012 to 2014 real property tax appeals. Owner withdrew its appeals five days before the scheduled administrative hearing before the Indiana Board of Tax Review. Assessor objected, but the Indiana Board allowed the withdrawals, explaining that decisions precluding voluntary withdrawals are “rare” and “are meant for extraordinary, rather than routine, circumstances and apply where precluding voluntary withdrawal is necessary to prevent manifest unfairness.” The Assessor had failed to show “the existence of those extreme circumstances.”

Assessor timely filed his petition to the Tax Court. But the Assessor served a summons on the clerk a day after the window for filing a petition closed. In addition, Assessor served a copy of the petition on Owner’s counsel, not the Owner. Owner claimed these were procedural errors that warranted dismissal of the Assessor’s appeal for lack of subject matter jurisdiction.

To timely initiate an original tax appeal, the Tax Court’s rules – unlike the trial rules governing other civil actions – do not require submission of the appropriate process papers with the clerk.

Assessor claimed that the trial rules permitted him to serve his petition on Owner’s counsel, as agents for the Owner. The Court, however, noted that Assessor’s failure to serve Owner was a “technical failure to comply with the trial rules.” Nevertheless, the Court concluded that Owner was not harmed or prejudiced by Assessor’s service of the petition, which was reasonably calculated to inform Owner of the appeal. Here, Owner’s counsel had represented it for more than two years at the administrative level, and there was no reason for Assessor to think they would not continue to do so on appeal to the Tax Court. There was no indication that counsel did not accept service, and there was no indication that Owner was not, in fact, informed of the appeal. Assessor “substantially complied with the rules for establishing effective service.”

Owner’s motion to dismiss was denied.

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Faegre Baker Daniels LLP
American Property Tax Counsel (APTC)

Indiana Tax Court denies petition to enjoin the collection of property tax, where Taxpayer failed to show former school building and athletic facility had zero value

Name:  Wigwam Holdings LLC v. Madison County Assessor

Date Issued: December 14, 2018

Property Type: 220,000 SF building, including a natatorium, auditorium and 8,996 seat basketball facility

Assessment Date: March 1, 2015

Point of Interest: Wigwam Holdings LLC (“Holdings”) claimed that an appraisal and purchase price of $0 supported a zero assessment for its improvements, a former school property with an iconic basketball arena.  Holdings was denied an injunction for the collection of tax, because it failed to show that it has a reasonable opportunity to prevail on the merits.

Synopsis: Holdings acquired four parcels by Quitclaim Deed from the City of Anderson Department of Redevelopment. The only parcel at issue contained, among other things, an 8,996-seat basketball facility. The Madison County Property Tax Assessment Board of Appeals had reduced the assessment from $11,415,000 down to $2,115,200. Holdings filed its appeal to the Indiana Board and claimed its assessment should be reduced to $68,500 ($68,500 for land and $0 for improvements). In support of its appeal, Holdings presented a USPAP-compliant appraisal, testimony of an appraiser, and documents related to the purchase.

The appraisal provided that the Wigwam’s highest and best use was as vacant land, because the building contained asbestos and had other issues.  The appraisal concluded that the property had a negative value.  Holdings further asserted that the building — acquired for $0 in September 2014 — had no value.  The appraiser also testified that the property’s assessment failed to account for abnormal obsolescence.  The Indiana Board concluded that Holdings did not make a prima facie case for reducing the assessment because the “appraisal did not credibly value the Wigwam and the September 2014 sale was not a probative, market transaction.”

On appeal to the Indiana Tax Court, Holdings sought to enjoin the collection of tax.  To do so, Holdings had to show the following three factors exist: “(1) it has a reasonable opportunity to prevail in the appeal; (2) the issues raised by its appeal are substantial; and (3) the equitable considerations favor the enjoining of the collection of the tax outweigh the state’s interest in collecting the tax pending the appeal.” A reasonable opportunity to prevail is a “tolerable, moderate, rational, honest, or equitable chance of success on the merits of the appeal.”

Holdings argued that it was likely to prevail on the merits because of its appraisal and the testimony of its expert witness. The Court noted that there is no per se rule that a USPAP-compliant appraisal automatically establishes a prima facie case for reducing an assessment.  The Assessor’s expert witness testified that the property was a special purpose property.  Therefore, according to the witness, the cost approach was the appropriate valuation method.  The Indiana Board, the Court reasoned, properly exercised its discretion and weighed the competing evidence.

In addition, Holdings claimed that it had a chance of success on the merits based on the September 2014 acquisition price.  Assessor’s witness claimed that the seller was atypically motivated, as shown by the buyer having paid zero dollars and received access to substantial funds for site restoration.  Holdings was unable to point to anything in the administrative record indicating the Indiana Board abused its discretion.

Finally, Holdings asserted that it “presented uncontroverted evidence of the Wigwam’s significant functional and economic obsolescence.” But Holdings failed to provide any evidence to quantify the alleged obsolescence and its impact on the value of the property.

For these reasons, the Court found that Holdings did not have a reasonable opportunity to prevail on the issues raised, so there was no need to address the remaining two factors to enjoin the tax.  Consequently, the Court denied Holdings’ Petition to Enjoin the Collection of Tax.

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

Indiana Tax Court Affirms Removal Of Obsolescence Adjustment To Residential Property, As Homeowners Fail To Show Comparable Subdivision Sales Were Similar 

Case Name: Marinov and Marinova v. Tippecanoe County Assessor

Date Issued: February 20, 2019

Property Type: Single-family residence

Assessment Year(s): 2014

Point of Interest: Assessor removed an obsolescence adjustment, causing a 26% assessment increase for a home over its 2013 value. Assessor offered a sales comparison analysis to support his value. Homeowners’ list of comparable assessments failed to support a reduction under a “Section 18” analysis, and they failed to identify the cause of or quantify the impact of obsolescence.

Synopsis: For the January 1, 2014, assessment, Assessor removed an obsolescence adjustment for Homeowners’ single-family residence. The adjustment was first applied to the home for the 2007 assessment based on an appraisal presented in connection with the 2006 appeal of the property. Removing the adjustment caused a 26% increase over the property’s 2013 value.

Due to this massive increase, Assessor under Indiana Code § 6-1.1-15-17.2 (which shifts the burden of proof when certain assessments increase by more than 5% year-over-year) had the burden of proof on appeal. To meet his burden, Assessor presented a sales comparison analysis based on sales of seven, two-story homes in 2013 within a 1,400 foot radius of the subject home. To account for differences between the subject home and the comparable sales, Assessor presented a linear regression model based on 101 property sales from within the subdivision. He relied on information from these sales to develop a time trend analysis. Based on this information and analysis, the Assessor reasoned that removing the obsolescence adjustment brought the subject home’s value in line with those of comparable properties in the neighborhood.

Homeowners responded with a list of property assessments in the subdivision showing increases of only 0%-2% between 2013 and 2014.

The Indiana Board of Tax Review upheld the assessment. On appeal to the Tax Court, Homeowners raised three issues, which the Court rejected in turn:

1. Assessor failed to physically inspect the home. This was not necessary, the Court held, because 2014 was not a general reassessment year and assessing officials annually apply a trending process to determine adjustment factors.
2. Reduce the subject home’s 2014 value to its 2012 level, because the property had not changed since that assessment date. The Court noted that each assessment year stands alone, and “property values can fluctuate each year for a variety of reasons, including factors extrinsic to the property.”
3. The increase of the subject home’s assessment was far above that of comparable properties in the subdivision. Under Indiana Code 6-1.1-15-18, Homeowners were permitted to introduce evidence of the assessments of comparable properties to challenge the subject home’s value. But, under the statute, the “determination of whether properties are comparable shall be made using generally accepted appraisal and assessment practices.” Homeowners offered no credible evidence that the purportedly comparable neighborhood properties were, in fact, comparable to the subject home.

Finally, the Court concluded that Homeowners “did not properly rebut the Assessor’s removal of the obsolescence adjustment because they failed to both identify causes of the purported obsolescence and to quantify the amount of obsolescence they claim should be applied.” Conclusory statements about “serious defects” in the property were not probative and did not rebut the Assessor’s decision to remove the obsolescence adjustment. 

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

Indiana Tax Court Affirms Assessment For Contaminated Foundry Land, Where Owner Failed To Provide Evidence Showing The Land Had A $0 Value 

Name:  Garrett LLC v. Noble County Assessor

Date Issued:  September 24, 2018

Property Type:  Former foundry with environmental contamination

Assessment Date:  Jan. 1, 2016

Point of Interest:  Taxpayer claimed that contaminated industrial land purchased for $1 had $0 value, but it offered no probative evidence that the sale was a reliable indication of value.  The administrative record lacked facts showing (i) the property had been exposed to the market, (ii) the property had no value due to the contamination, or (iii) how the 2014 sale price related to the 2016 valuation date.

Synopsis:  Taxpayer was in the business of acquiring, remediating, and reselling contaminated properties. In June 2014, it purchased a former foundry with soil and ground water contamination for $1.  After entering into a Voluntary Remediation Program with the State of Indiana, Taxpayer sold a ten-acre portion of the property at a discount to a local school corporation for purposes of building a new middle school. The 2015 assessment of $200,000 was appealed; the parties agreed to keep the total value at that level but re-allocated the spilt between land improvements and land, reducing the land value to $68,900.  The Assessor and Taxpayer signed a Form 134 Joint Report to memorialize this agreement.  In 2015, Taxpayer transferred nearly five acres to another entity and demolished all buildings on the retained portion. For the 2016 assessment, Taxpayer protested the $131,700 assessment — $121,700 for land and $10,000 for improvements.  The County Board reduced the land to $95,400, and Taxpayer appealed to the Indiana Board of Tax Review. 

Before the Indiana Board, Taxpayer argued the land had $0 value but indicated it would accept the stipulated 2015 value of $68,900.  To support its claim, Taxpayer relied on the $1 purchase price, a list of “comparable” properties with their tax records, and the 2015 Form 134.  The Indiana Board ruled that the improvements had $0 value, where the evidence showed no building remained on the property as of the January 1, 2016 assessment date, but the evidence did not support a reduction in the property’s land value. 

The 2014 $1 purchase.  To represent a “market value” transaction, a sold property must have had “reasonable exposure in a competitive market under all conditions requisite to a fair sale.”  Here, Taxpayer failed to show that the property had been exposed to the market for a reasonable time before the $1 purchase.  The sale also appeared to be influenced by undue duress, according to the Indiana Board. Taxpayer’s conclusory statements to the contrary were not probative of the property’s value.

No evidence of $0 value.  Contamination can impact a property’s value, but the fact of contamination “does not by itself necessitate a finding that a property is valueless.” (emphasis in original).  The Tax Court observed that the “record is devoid of any objective factual basis that would support Garrett’s claim that its property has no value simply because its contaminated.”  Evidence suggested the contaminated property did have some value, e.g. Taxpayer’s sale of a portion of the land to a local school corporation. 

Failure to relate 2014 purchase to 2016 assessment date.  Even if the 2014 sale price was probative, Taxpayer offered no evidence to relate that price to the January 1, 2016 assessment date. The Court rejected Taxpayer’s “bald assertion” that the 18-month gap was insignificant. 

No evidence of comparability.  Taxpayer listed three properties it claimed were comparable and supported a reduction, submitting property tax records for two of them.  Evidence indicated the purported comparable properties had been transferred by Commissioner’s Tax Deed, or either sold or failed to sale at tax sale.  The Indiana Board concluded that the evidence was not probative because Taxpayer “did not provide evidence, explanation, or analysis comparing these properties to the subject property and did not explain how any differences may affect determining the subject property’s market value-in-use.”  The Court observed that Taxpayer “provided so little information about these three properties that the Indiana Board had to infer the reason [each property] was presented.”  Taxpayer failed to analyze and compare the impact of contamination, if any, on the values of the three comparable properties.  Parties must walk the Indiana Board and the Court “through every element of their analyses.” Taxpayer failed to do so. 

2015 land stipulation.  Taxpayer argued that the 2016 land value could not be higher than the 2015 stipulated value because the land was still contaminated and the property in 2016 was smaller after selling off almost five acres.  But the Court declined to “follow Garrett down the rabbit hole and hold that just because fewer acres were assessed in 2016 than 2015, the 2016 assessed value can be no greater than that in 2015.”  Each tax year stands alone, and “a prior year’s assessed value is not necessarily probative evidence of a subsequent year’s assessed value in other contexts.”  In addition, the 2015 stipulation on its face addressed only that year.

The Court rejected Taxpayer’s “thinly veiled request that the Court reweigh the evidence” presented to the Indiana Board.  The Indiana Board’s final determination was affirmed.

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Faegre Baker Daniels LLP
American Property Tax Counsel (APTC)

 Indiana Assessment Notices - and Appeal Opportunities -- are Coming Soon!

Indiana is in a transitional phase regarding appeal deadlines.  The deadline to appeal property tax assessments will be different depending on whether the assessment date at issue is January 1, 2018 (or earlier) or January 1, 2019. 

For counties (like Marion County, where Indianapolis is located) that use tax bills as assessment notices, the Spring 2018-pay-2019 tax bills will give taxpayers forty-five (45) days after the tax bill is mailed to appeal.  If an assessor issues an assessment notice for January 1, 2018 or any earlier assessment date, a taxpayer’s deadline to appeal is forty-five days after the notice is mailed.

Indiana Code 6-1.1-15-1.1 changed the timeline in which a taxpayer may appeal an assessment of tangible property for assessments after December 31, 2018.  The new code provision provides two specific dates as a deadline to appeal January 1, 2019 or later assessments, both of which are June 15.  If the county mails the notice of assessment before May 1 of the assessment year, then the deadline to appeal the assessment is June 15 of the assessment year.  If the county mails the notice of assessment on or after May 1 of the assessment year, then the deadline to appeal the assessment is June 15 of the year in which the tax statement is mailed by the county treasurer. 

A taxpayer still initiates an appeal by filing a notice in writing with the county assessor (or, in the rare instance there is one, the township assessor).  The taxpayer must file a written notice on the form designated by the Department of Local Government Finance. 

Take care in reviewing all tax bills and assessment notices for appeal opportunities. 

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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 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)

UPDATED MARCH 2019

It's Almost That Time Again.....

Kentucky Assessment Notices to Be Mailed Soon

Most Kentucky counties will be mailing out their 2019 assessment notices in April.  Kentucky law requires that a taxpayer be notified in writing of any increase in its real property tax assessment.  Taxpayers wishing to challenge their tax assessments must do so during the statutory appeal period.  This year, the appeal period will generally run from May 6 - 20.  Taxpayers whose assessments do not increase may still challenge their assessments; however, they must also do so within the appeal period, and they generally will not receive written notice of the dates for appeal.

Appeal dates may differ from county to county, so taxpayers must check with the local assessing authority for the correct appeal dates.

Failure to request an assessment conference with the county property valuation administrator during this period will generally preclude the taxpayer from any further challenge to the assessment or the tax bill for that year.

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Morgan Pottinger McGarvey
American Property Tax Counsel (APTC)

Updated september 2018

Proving Economic Obsolescence is All In the Timing

TBM-WC Sabine, LLC (“TBM”) owns natural gas pipeline and surface equipment in Sabine Parish, Louisiana. In support of its claim of economic obsolescence, TBM provided information with its annual property tax rendition demonstrating the condition of the pipeline and establishing that the surface facilities were idle during the tax year in question. TBM also provided an unaudited, consolidated financial statement that did not specifically attribute income and expenses to TBM.  Finally, TBM provided a short statement regarding the utilization percentage of its pipeline.   Based on this information, the assessor recognized considerable obsolescence in the surface equipment, but only about 12% in the pipeline.  TBM appealed the pipeline valuation to the Louisiana Tax Commission (“LTC”).

At the hearing before the LTC, TBM introduced additional evidence of obsolescence that had not been provided to the assessor, which apparently had been available to TBM. The LTC ruled in TBM’s favor, but did not issue factual findings or any conclusion that the assessor had abused her discretion in denying additional obsolescence.  The assessor appealed to district court in Sabine Parish, which promptly reinstated the assessor’s determination.  TBM appealed to Louisiana’s Third Circuit Court of Appeal.

The Court of Appeal affirmed on all counts. First, the Court reiterated that the LTC was only to review property tax assessments, not make them.  It then held that it was incumbent on TBM to provide all data and information regarding obsolescence to the assessor.  Providing information, even compelling information, to the LTC on appeal was insufficient.  Importantly, the Court never questioned whether the information was too little, just that it was too late.

Next, the Court stated that, in reviewing the LTC’s decision, it must determine whether the LTC manifestly erred when it held that the assessor abused her discretion in rejecting TBM’s evidence of economic obsolescence. It concluded that the LTC had indeed erred.  The Court noted that the assessor's determinations were based on data provided by TBM, and that TBM had no complaint with assessor's exercise of discretion in accepting the depreciated value of surface equipment, but only complained about her exercise of discretion when she denied the requested obsolescence on the pipeline.  Essentially, the Court found that, because TBM agreed that the assessor’s valuation was correct as to surface equipment, it could not challenge her valuation of other property. 

Notably, the LTC revised its regulations this summer, at least partly in response to this case. The regulations now require any information to be introduced before the LTC must first have been provided to the assessor.  The LTC recognized that it may be impractical for taxpayers to provide full-blown appraisals, but any documentation that would be used by an appraiser in conducting an appraisal, such as audited financial statements, purchase/sale agreements, substantiated utilization reports, etc., should be provided to the assessor. 

TBM-WC Sabine, LLC v. Sabine Parish Board of Review, 2017-1189 (La. App. 3rd Cir. 7/18/18), ___ So.3d ___. 

Angela W. Adolph, Partner
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 2018

Assessment Appeal Quirks and Deadlines

Maryland continues to see various counties and incorporated cities attempt new avenues to raise tax revenue through issuing or challenging assessments.

County and City Finance Departments have begun to challenge assessments for properties that trade at values higher than their subsequent reassessments. Montgomery County and Baltimore City have exercised this right continuously throughout the most recent reassessment. Taxpayers should be aware that Maryland Law allows counties and cities to challenge tax assessments. Always be on the lookout for a notice of such an appeal once the property you recently purchased is reassessed.

Montgomery County has begun to issue new construction assessments for tenant build-outs that cost $100,000 or more. Taxpayers should be monitoring for quarterly assessments once a new lease is signed and the tenants complete their build-out.

Out of Cycle Cases for properties not reassesed as of January 1, 2019 are due December 31, 2018. Taxpayers should begin to evaluate the performance of their properties for potential assessment appeals for properties that have experienced a significant negative change in performance in 2018.

Emily Betsill, Esquire
Wilkes Artis, Chartered
American Property Tax Counsel (APTC)

UPDATED december 2018

Beware Property Taxes Must be Paid on Time

In Massachusetts the timely payment of tax bills is jurisdictional prerequisite to a valid real estate tax appeal to the Appellate Tax Board. There are some very limited exceptions to this rule. Most taxing jurisdictions send out quarterly property tax bills. In those jurisdictions the taxpayer must make each of the four tax payments on time. With limited exceptions, being just one day late or just one dollar short on any payment can deprive a taxpayer of his opportunity to be heard. This draconian rule is unique to Massachusetts and only applies to real estate tax appeals and not appeals related to any other type of tax. This is just one of the very many ways to lose a property tax appeal. Many think that the taxpayers' right of appeal should not be so fragile as a tax appeal is a fundamental right of redress against one of the government's most powerful actions.

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

UPDATED MARCH 2019

Beware of Michigan E-Filing Pitfalls

The Michigan Court of Appeals recently issued a decision that should cause all tax attorneys and consultants to sit up and take notice.   In the lead case of Centerpoint Owner LLC v City of Grand Rapids, the Court upheld the Tax Tribunal’s dismissal of 81 cases that were determined to be untimely filed.    All of the cases were filed by a single consulting firm shortly after the 11:59 pm, May 31, 2017 filing deadline.   Personnel from the consulting firm attempted to e-file 189 petitions on May 31, but ran into a number of problems, including not having the correct type of credit card, the length of time required to process each e-filing, etc.   As a result they had to file many of the petitions the following day.   The Tribunal dismissed all petitions filed after May 31, and Centerpoint appealed.

The Court of Appeals rejected Centerpoint’s claim that it was denied due process, citing that the consultant’s choices were what caused the untimely filing (they could have filed by mail or by hand).  The Court also found that the Tax Tribunal did not have an obligation to notify practitioners of the alleged e-filing “glitch” because there was no widespread problem and no one other filers complained.   Finally, the Court rejected the argument that the Tribunal had the authority to accept late filings.   The lesson here is if you plan to e-file a pleading with the Michigan Tax Tribunal you should review the requirements and allow adequate time to complete the filing.

Centerpoint has filed an application for leave to appeal to the Michigan Supreme Court.

Stewart Mandell
Honigman LLP

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 MARCH 2019

Valuation Testimony before the Boards of Equalization

Property tax is based on the principle that equality is achieved by applying a uniform tax rate to the taxable value of each parcel. As a result, the higher the taxable value the greater the tax. Consequently, in most appeals to the boards of equalization the dispute is over the value of the property. The testimony regarding value is critical and, in preparing for the appeal, thought must be given to who will provide that testimony.

In Nevada the appraisal of real property is regulated by the Division of Real Estate pursuant to NRS Chapter 645C. Pursuant to this chapter an “analysis, opinion or conclusion… relating to the nature, quality, value or use of… real estate for or with the expectation of receiving compensation” constitutes an appraisal. NRS 645C.260. And, only appraisers who hold the appropriate certificate, license or permit issued by the Division may testify regarding an appraisal. Id. One who testifies without the appropriate authorization from the Division is potentially guilty of a misdemeanor (NRS 645C.260) and subject to a fine of not less than $5,000 (NRS 645C.215).

In addition to appraisers, property owners have traditionally been allowed to testify about the value of their own property. Nevada follows the general rule that the owner of a property is presumed to have special knowledge of the property and, therefore, may testify to its value without qualifying as an expert witness.  City of Elko v. Zillich, 683 P.2d 5, 8 (Nev. 1984). This principle also allows officers of corporate entities to testify regarding the value of property held by the corporate entity. Dep’t of Highways v. Wells Cargo, Inc., 82 Nev. 82, 411 P.2d 120 (1966). In either instance the limitations of NRS Chapter 645C should not apply because the property owner is not offering the valuation analysis “for or with the expectation of receiving compensation.”

An appraiser and the owner of the property can testify before the boards of equalization regarding value, but it is also important to understand who cannot testify regarding value. An appeal to a county board can be filed by an authorized representative of the property owner (NRS 361.362), but that representative or agent cannot testify regarding the value of the property. There is no exception to Chapter 645C for an agent or representative of the property owner. The boards of equalization admonish agents who start to testify regarding value and regularly notify the Division of Real Estate regarding conduct they perceive as appraising property without the appropriate authorization. See NAC 361.729.

In short, the best practice is to retain a qualified appraiser. However, retaining an appraiser is not always cost effective or practical due to the short time frame allowed for administrative appeals. In these instances the owner of the property should be prepared to testify.   And, since a corporation can only speak through its employees and officers, the appropriate corporate representative, one with actual personal knowledge about the property, should be prepared to testify.

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 MARCH 2019

BTA extends "special purpose" property value-in-use exception to big box retail

In a recent decision, the Ohio Board of Tax Appeals (BTA) found a 135,000 square foot, big box retail property, owner occupied by Lowe’s and 16 years old as of the valuation date to be a special purpose property, allowing the tax valuation to represent value-in-use instead of the typically mandated value-in-exchange. Lowe’s Home Centers, LLC v. Cuyahoga Cty. Bd. of Revision (Feb. 16, 2019), BTA No. 2017-39.

Ohio case law recognizes an exception to the requirement of valuation-in-exchange for real property tax purposes for “special purpose” properties which have a limited market because of unique characteristics limiting their functional utility to the uses for which they were originally built.[i]  For these properties, the tax valuation can be based on the value of its present use to its current user.

The BTA has mistakenly extended this exception to a big box retail property by adopting the school district appraiser’s report, valuing the property at almost $90 per square foot, an increase from the original assessment of $70 per square foot. 

The school district’s appraiser did the following:

• Defined the property’s highest and best use to be “for continued use by current occupant for its ongoing business.” The BTA bases its finding that the special purpose exception applies largely on this determination.
• Relied on lease renewals that were almost exclusively renewals with no exposure to market.
• Relied on leased fee comparable sales without appropriate property rights adjustments.
• Concentrated on Lowe’s continued occupancy of the property since its construction.
• Concluded to the lowest of her three approaches to value in the value developed by the cost approach

Throughout its discussion, the BTA debates the merits of using “first” generation” or “second” generation leases or sales as more comparable to the subject.  While it is understandable that such terms became shorthand, the “first” or “second” generation description can be misleading.  The BTA references definitions of both from prior case law: “A ‘second-generation space’ is a ‘building or space used by a tenant other than the original tenant.’ Appraisal Institute, The Dictionary of Real Estate Appraisal 210 (6th Ed.2015), whereas a ‘first-generation’ space is a ‘building or space designed to be functionally and economically efficient for the original tenant or a similar class of tenants over a period of time, during which the space retains its original utility and desirability.’ id at 92”[ii]

As the definitions used by the BTA itself demonstrate, whether a comparable is “first” or “second” generation cannot be the end of the inquiry. Neither is a description of whether it reflects market conditions.  Whether the lease of the property is to its first user or to a subsequent user, whether the property sells occupied by that first user, or a subsequent user; neither is a measure of market conditions.  The important consideration is whether or not that lease or sale had sufficient market exposure to be considered a market transaction.  In light of this decision, it is even more imperative to properly define the highest and best use, and to use appropriate market data to measure the value-in-exchange that is required by Ohio real property taxation law.

[i] Appraisal Institute, The Appraisal of Real Estate 28 (13th Ed.2008).

[ii] Lowe’s Home Centers, Inc. v. Washington Cty. Bd. of Revision, 154 Ohio St.3d 463, 2018-Ohio-1974.

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Siegel Jennings Co, LPA
American Property Tax Counsel (APTC)

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)

UPDATED MARCH 2019

DISH Network Corp. v. Dept. of Revenue, 364 Or 254 (2019)

The Oregon Supreme Court held that, for purposes of Article XI, section 11, of the Oregon Constitution (Measure 50), the Department of Revenue had properly treated property used by DISH Network Corporation in its communication business as "new property or new improvements" when, for the first time, it added that property as a unit to the central assessment roll. In so holding, the Court reversed the Oregon Tax Court.

Prior to 2009, the property that DISH owned in Oregon was assessed by various local assessors in the counties in which the property was located. In 2009, however, the department concluded that DISH was a "communication" business and that, under ORS 308.515(1)(h), its property must be centrally assessed under the procedures set out in ORS 308.505 to ORS 308.565. The department notified DISH of its intention to add all property DISH used in its business to the 2009-2010 central assessment roll as a new unit of property. In Oregon, intangible property is not taxable under local assessment but is allowed under central assessment which substantially increased DISH’s taxable property. 

Using the unitary valuation method, as is permitted under Oregon’s central assessment regime, the department allocated the unit value of DISH’s real market value of its Oregon property as $34.9 million dollars. The Department then turned to Article XI, section 11, of the Oregon Constitution (Measure 50), which generally limits yearly increases in the assessed value of property to three percent, and its implementing statutes, which set out specific formulas for determining assessed value and maximum assessed for ordinary property and property that falls within specified exceptions. After concluding that DISH's property fell within an exception for "new property or new improvements" because it had been newly added as a unit to the central assessment roll, the Department applied the "new property" formula set out at ORS 308.153 for determining the assessed value of DISH's property, and concluded that the property's assessed value for the 2009-2010 tax year was $34.9 million. That amount exceeded the total assessed value of DISH's Oregon property by nearly one hundred percent.

DISH argued that the "new property" exception that the department had employed did not apply to its property, that, instead, its property was subject to Article XI, section 11's general limitation on increases in assessed value (to three percent), and that the two-fold increase in assessed value that the department had calculated violated Article XI, section 11. The Tax Court ultimately agreed with DISH and issued a limited judgment in its favor. The department appealed, arguing that the unit of property that it had added to the central assessment roll fell within the "new property" exception recognized in Article XI, section 11, and its implementing statutes.

The Court concluded that, for purposes of Article XI, section 11's implementing statutes, "new property" includes all property that is lawfully added by the assessor to a taxpayer's account on an assessment roll -- although the Court acknowledged that property that previously has been assessed under a different account must be valued as though the change in accounts had not occurred.

Although acknowledging that DISH's tangible property had previously been subjected to local assessment, the Court concluded that the unit of property that the department had added to the central assessment roll, which looked at DISH's business as a going concern, was categorically different from that tangible property. Accordingly, the Court concluded, the entire unit of property that the department had added to the central assessment roll was "new property or new improvements" within the meaning of Article XI, section 11, and therefore was subject to a special formula set out at ORS 308.153 for determining assessed value, rather than the general formula limiting yearly increases in assessed value to three percent.

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

UPDATED december 2018

PA APPELLATE COURT RULES BILLBOARD GROUND LEASES (BUT NOT STRUCTURES) TAXABLE

In one of its last decisions of 2018, the Pennsylvania Commonwealth Court overturned a trial court in a decision issued December 27, 2018 concerning the taxability of billboards for property tax purposes.  See Consolidated Appeals of Chester-Upland School District, 633 C.D. 2017 (Pa. Commw. Ct. 12-27-2018).

In 2011, Pennsylvania legislators passed a statute excluding billboard structures from the definition of “real estate” for purposes of property taxation.  The Chester-Upland School District case is the first case to reach Pennsylvania’s appellate courts regarding the interpretation of the statute.

For tax year 2015, two school districts in Delaware County collectively filed 26 real estate assessment appeals; each of the 26 appeals were of properties containing an outdoor advertising sign.  The school districts sought to value the properties based on revenue the property owners realized through ground leases or grants of easements to outdoor advertising companies.  The trial court consolidated all 26 appeals on the legal issue of “whether a taxing authority can use the presence of an outdoor advertising sign to increase the real property tax basis of the property.”  Citing the statute, the trial court ruled in favor of the taxpayers, concluding that the statutory exclusion of outdoor advertising signs from real estate taxation, “prevented the existence of an outdoor advertising sign on a property from being considered in any manner to raise that property’s real estate tax basis.” 

The school districts appealed to the Commonwealth Court.  The school districts argued that the sign-and-structure exclusion does not preclude the assessment of the land on which a billboard sits.  Taxpayers responded that “the amount of rent paid here by billboard operators to the property owners pursuant to leases or easements necessarily ‘reflect consideration’ of the billboards and that taxing the rent that is paid by the operators will operate as a ‘subtle-but no less real – assessment.” The Commonwealth Court ruled that the trial court erroneously interpreted the statute to foreclose any consideration of any potential income that a property owner may receive from the placement of a billboard on its property.  The Commonwealth Court interpreted prior decisions of the Pennsylvania Supreme Court in its Marple and Tech One decisions to support its holding that the appraiser must considered the “economic reality” of a long-term lease on a property that provides revenue to the property owner.  The Commonwealth Court limited its ruling to the effect of the outdoor advertising structure on the land value.  With respect to the advertising revenue itself, the Commonwealth Court held “We agree that an appraiser must not indirectly value an existing billboard on a property by, for example, considering the revenue generated from the number of advertisements that are placed on that billboard in a given year.”

To discuss the specifics of your property, please contact Siegel Jennings at:

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

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 MARCH 2019

Missed Deadlines

There are many deadlines in the property tax appeal process.  While it is natural to assume that missing one of these deadlines would extinguish the ability to challenge an assessment, this is not always the case.    

For example, when taxpayers miss the deadline for appealing a county board of equalization decision to the state board of equalization, there may be a statutory remedy.  Tennessee law provides that, in certain circumstances, taxpayers can still file a state board appeal, despite missing the appeal deadline, if they can show “reasonable cause” for their failure to file an appeal.

Taxpayers should contact counsel when seeking a property tax reduction even if they believe that a deadline may have been missed.  There are many nuances in the appeal process, and engaging proper counsel is the only way to maximize the chances of achieving tax savings.

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Evans Petree PC
American Property Tax Counsel (APTC)

Updated MARCH 2019

Texas Legislature

The 86th Texas Legislature convened on January 8th for its biennial session that will run through May 27th. The primary and reoccurring focus of the legislature will be on the intertwined issue of Property Tax Reform and School Finance Reform.

Property tax reform consists of attempts to reduce the property tax burden. Texas ranks 13th in property tax per capita. It ranks 46th in overall tax burden per capita. This contrast is due to the absence of a state income tax.

HB 2 and SB 2 attempt to reduce tax levy growth by capping increase in total taxing unit property tax revenue growth at 2.5% per year. Any increase in tax levy above that amount would require voter approval. Currently the overall growth in property tax is about 5.5% per year. Each of these bills made it out of their respective committees but will face strong opposition from local governments on the floor of both the House and the Senate.

The desire for property tax reductions is in conflict with the desire to expend more for public school finance. Currently public schools receive 58% of their financing from local property tax. This is an increase from 52% just 10 years ago.

Property tax as always is a topic of interest. Over 400 property tax related bills have been filed in this legislative session.

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 March 2019

2019 Appeal Deadlines Approaching

The 2019 assessments have been released in all Northern Virginia jurisdictions, and now is the time for property owners to focus on potential appeals.  In Arlington County, the assessed values of commercial office properties are up 4.3%.  In the City of Alexandria, commercial assessments are up approximately 2.70%.  Fairfax County has increased non-residential assessments by 5.19%, and Loudoun County commercial assessments are up 7.66%.  Arlington County has proposed an increase in the real estate tax rate for the current tax year, while Fairfax County and the City of Alexandria are expected to remain flat.  Those rates will be reviewed and potentially adopted over the next several weeks.

Because market conditions have not drastically changed, the changes in assessed value may not adequately reflect the current value of a particular property.  Assessment appeal deadlines are coming up in Arlington County (April 15), and in Fairfax County, Alexandria and Loudoun County (June 3).  To discuss the merits of an appeal of your assessment, please contact us at the numbers listed below.

Mark Rogers
202-457-7804

Ilene Boorman
202-457-7806

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

Updated MARCH 2019

Recently Purchased Property in Washington? You May Have Another Chance to Appeal Last Year’s Value

As the real estate market starts to lag in some sectors, some buyers are preparing to pay taxes on values that exceed the price they recently paid for the property. In Washington’s two-year system, 2019 taxes are based on the 2018 assessed values. Recent buyers may believe that they have no recourse to challenge 2018 assessments because normal administrative appeal deadlines have passed. However, several avenues may still be available. One is to petition the county board of equalization to reconvene to review the 2018 assessment of property that sold between July 1 and December 31, 2018. This avenue is only available if the sale price was less than 90% of the assessed value. The petition must be filed by April 30, 2019. Other possibilities exist for reconvening county boards under other circumstances. Paying taxes under protest is also available to preserve the option of taking the challenge to court.

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

Updated MARCH 2019

Tax Rate Rollercoaster

In the summer of 2018 the District, for the first time in over a decade, changed the real property tax rates for commercial properties. For Tax Year 2019 (October 1, 2018 through September 30, 2019) the District implemented tired commercial tax rates. Those rates are as follows:

New Rates - Tax Year 2019

Assessment                             Rate

$1 - $5,000,000                        1.65%

$5,000,001 - $10,000,000        1.77%

$10,000,001 +                          1.89%

The top rate of 1.89% constitutes a 2% increase over the prior top rate of 1.85%. However, in December 2018 the District enacted legislation that reduced the top back to 1.85% for Tax Year 2020 (October 1, 2019 through September 30, 2020). This reduction in the top rate was made possible by revenue associated with a newly created internet sales tax.

In March 2019 Mayor Muriel Bowser released her budget for Tax Year 2020. The proposed budget proposed increasing the top commercial rate back to 1.89%. Mayor Bower’s budget also called for an increase in transfer and recordation taxes (payable upon the sale of a property) from 2.90% to 5.00%. The DC Council will soon start debate on the Mayor’s tax proposals, but it can be safely said that the volatility of the commercial tax rates is on the rise and that the District is looking to commercial property owners to compensate up for slowing tax revenue growth.

Scott B. Cryder, Esquire
Wilkes Artis, Chtd.
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)