UPDATED March 2018

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

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

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

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

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

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

Aaron D. Vansant, Esq.
DonovanFingar, LLC
American Property Tax Counsel (APTC)

UPDATED July 2017

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

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

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

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

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

UPDATED september 2019

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

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

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Greenberg Traurig, LLP 
American Property Tax Counsel (APTC)

Updated July 2017

New Rules in Ontario

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

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

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

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

Updated March 2015

Colorado Begins Its 2015 Reassessment

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

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

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

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

UPDATED September 2017

Delaware Court Unlocks Opportunities to Reduce Property Tax Burden

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

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

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

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

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

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

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

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

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

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

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

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

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

UPDATED december 2019

The Final Word on Tax Exemptions

A recent appellant case addressed the issue of whether administrative finality attaches to Value Adjustment Board (“VAB”) hearings. The case involved the denial of an educational exemption to a taxpayer. The taxpayer appealed the denial to the VAB, which ultimately granted the exemption in 2008. The Property Appraiser (“PA”) did not appeal the VAB decision and taxpayer received the exemption for the next five years. In 2014, the PA denied the exemption even though there was no change in the law or factual circumstances. Taxpayer argued the 2008 VAB decision was binding based on the doctrine of administrative finality, which bars re-litigation of an issue absent changed circumstances. On re-hearing en banc, the appeals court held that administrative finality does not attach to VAB decisions. The court reasoned that circuit courts have exclusive original jurisdiction in all tax cases, and the VAB only acts as an informal taxation dispute mechanism. Administrative finality requires either (i) going directly to circuit court or (ii) filing suit in circuit court for de novo review of an issue previously presented to the VAB.

Crapo v. Acad. for Five Element Acupuncture, Inc., 278 So. 3d 113 (Fla. 1st DCA 2019)

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

UPDATED December 2019

Taxpayers Win Two Year Assessment Freeze Issue

In DeKalb County Board of Tax Assessors v. CWS SGARR Brookhaven, LLC (A19A1541), and DeKalb County Board of Tax Assessors v. WRH Aztec LLC (A19A1618), 2019 Ga. App. LEXIS 639 (October 30, 2019),  the Georgia Court of Appeals held that neither a significant increase in the sales prices of similar comparable properties in the same taxing neighborhood nor a general rise in the value of real estate in a particular neighborhood are statutory exceptions to the two-year assessment freeze provided for in O.C.G.A. § 48-5-299(c). The Court reiterated the permitted statutory exceptions to the assessment freeze which consist of: 1) a taxpayer’s failure to attend the appeal hearing or provide written evidence supporting its opinion of value; 2) the taxpayer filed a return at a different value during the next two years after an appeal; 3) the taxpayer files an appeal during the next two years after an appeal, and 4) if after a visual on-site inspection, it is found that there have been substantial additions, deletions or improvements to the property or that there are errors in the tax assessors’ records in the description or characterization of the property, or the tax assessors find an occurrence of other material factors that substantially affect the fair market value of the property. The Court specifically held that “other material factors” must be factors that an on-site inspection of the property would reveal and that they must be factors that are specific to the particular piece of property at issue.

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

Updated december 2019

Get Started Now to Avert a Harried Property Tax Dispute in Idaho

Idaho’s annual appeal process moves fast: counties mail will value notices by June 1, 2020, and local boards will decide all appeals by July 13, 2020. Start now, during the assessors’ slower season, to avoid this harried process all together. Sharing with assessing officials early in the year the facts and analysis that indicate a lower value might result in an acceptable 2020 assessment.

Even if not successful, early efforts can at least help confirm whether an appeal will be necessary and the issues in dispute. Preparing early for the appeal effort is also helpful. For example, the State Board of Tax Appeals limits taxpayer representatives to attorneys admitted to practice in Idaho or certain limited authorized individuals (which vary based on the taxpayer’s type of entity). Local boards are increasingly adopting the same limitations, which can come as an unpleasant last-minute surprise for unwary: forewarned is forearmed!

Michelle DeLappe
Foster Garvey
American Property Tax Counsel (APTC)

Updated March 2015

The Story of Real Estate Taxes - 2015

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

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

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

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

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

A PERFECT TAX STORM!

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

UPDATED december 2019

Indiana Tax Court: Under The Income Approach, Fee Simple Interest Must Be Valued Based On Market Rents

Name:  Southlake Indiana LLC v. Lake County Assessor (the decision can be viewed here -- https://www.in.gov/judiciary/opinions/pdf/11251901mbw.pdf)

Date Issued:  November 25, 2019

Property Type:  Retail store

Assessment Years:  2007-2014  

Synopsis:  Taxpayer owns a 90,000 SF two-story, freestanding retail building in Northwestern Indiana, which it leased to a retailer doing business nationwide.  The property was encumbered by a build-to-suit lease, originally executed in 1992 and renewed in 2012. At the administrative hearing before the Indiana Board of Tax Review, the parties’ appraisals developed all three approaches to value but relied primarily on the income approach.  The Indiana Board’s final determination assigned no weight to the appraisers’ sales comparison and cost approaches.  The Tax Court explained, “To determine which appraiser’s estimate of market rent [under the income approach] was best supported, the Indiana Board used its own unique evaluation method.”  The Indiana Board examined 16 leases from the parties’ appraisers, made certain adjustments, and ultimately concluded that the market rents and income approach values offered by the Assessor’s appraiser were more credible.

Observing that Indiana assesses the value of real property – not business value, investment value, or the value of contractual rights – the Tax Court observed: “when valuing a property under the income approach, the fee simple interest in property must be valued based on an estimate of market rent, not contract rent.”  Comparable rental data, the Court further noted, must “represent freely negotiated, arm’s length transactions.” 

Assessor’s appraiser failed to adjust the rental data from the build-to-suit leases upon which his income approach relied.  Accordingly, those leases were not probative evidence of the market value of the subject property’s real property alone.  In contrast, the record evidence showed that Taxpayer’s appraiser exercised caution in using any build-to-suit rental data.  That the build-to-suit rental data “relied heavily on” by Assessor’s appraiser and the Indiana Board  “was neither adjusted nor explained as reflecting market rent” was contrary to law, the Court held. 

Finally, the Court explained that “no reasonable person reviewing the administrative record would find enough relevant evidence to support the Indiana Board’s reconstruction of [the Taxpayer’s Appraiser’s] percentage of gross sales analysis or its resulting conclusions.”  Therefore, the Indiana Board’s final determination also was unsupported by substantial or reliable evidence. 

The Tax Court reversed the final determination and ordered the Indiana Board to determine assessed values based, in part, on market rents derived by the analysis offered by the Appraiser for the Taxpayer. 

- The above facts and summary of the holding are based solely on the information presented in the published opinion issued by the Indiana Tax Court. 

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Faegre Baker Daniels LLP
American Property Tax Counsel (APTC)

Declining To Reweigh The Evidence, Indiana Tax Court Affirms Assessments Of CVS Store Based On Cost Approach

Name: CVS Corporation v. Elkhart County Assessor (can be accessed at
https://www.in.gov/judiciary/opinions/pdf/12091901mbw.pdf)

Date Issued: December 9, 2019

Property Type: Retail pharmacy

Assessment Years: 2012 – 2015

Point of Interest: Indiana Tax Court would not reweigh the record evidence, which supported the Indiana Board of Tax Review’s conclusion of value based solely on the cost approach without adjustment for external obsolescence.

Synopsis: CVS challenged the assessments of its nearly 11,000 SF retail pharmacy, built in 2004 and situated on 1.26 acres of land. The County Assessor had valued the property at a range of approximately $1 Million to $1.1 Million for the four contested assessment dates. At the consolidated administrative hearing before the Indiana Board of Tax Review, both parties presented USPAP-compliant appraisals; both appraisers applied all three approaches to value but assigned weight to them differently. For CVS, its appraiser gave most weight to the sales and income approaches, concluding to a range of $800,000 to $890,000. For the Assessor, her appraiser assigned equal weight to each of the three approaches, opining on a value for each year of about $1.8 Million.

The Indiana Board applied the cost approach, without obsolescence. The Indiana Board concluded that the cost approach – absent any adjustment for economic obsolescence – was the most persuasive indication of value for this eight- to eleven-year-old store. The Indiana Board disregarded both appraisers’ sales and income approaches completely, finding them too flawed, and concluded to values of more than $1.2 Million for each year.

The Court will not reweigh the evidence. The Tax Court noted that the Indiana Board is “required to adopt a value based exclusively on evidence in the administrative record,” but it is not obligated to “adopt the same weight afforded to the evidence” that the appraisers applied in their respective reports. The Court further explained that the record evidence supported the Indiana Board’s rejection of external obsolescence. The appraiser for CVS had testified in “vague generalities” about the subject property’s “softer market.” The Assessor’s appraiser, however, presented evidence regarding growth in population, employment and gross domestic product in the local area during the years at issue. CVS was asking the Court to reweigh the record evidence in its favor, something the Court cannot do “absent a showing that the Indiana Board has abused its discretion.” Concluding that the Indiana Board had acted within its statutory authority, the Court affirmed the final determination.

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

Indiana Tax Court Affirms Assessment of Vacant Lot Based on Appraisal and Testimony of the Appraiser

Name:  Sheerin v. LaPorte County Assessor (which can be viewed at https://www.in.gov/judiciary/opinions/pdf/12111901tgf.pdf)

Date Issued:  December 11, 2019

Property Type:   Vacant lot

Assessment Year:  2015

Point of Interest:  Appraisal offered by Assessor had minor flaws but sufficiently established a prima facie case supporting the assessed value of a vacant lot. Relying on the appraisal and the appraiser’s testimony, the Indiana Board of Tax review did not abuse its discretion in affirming the assessed value.

Synopsis:  A 6,000 SF rectangular vacant lot, which was zoned residential, was “buildable,” but several issues would make any construction more costly than normal, i.e. it had a “severe slope,” a lack of rear access, the need for septic installation, and a proximity to overhead power lines. Though the County Board had reduced the assessment from $220,000 to $132,000, Owner appealed to the Indiana Board of Tax Review.

Before the Indiana Board, Assessor had the burden of proof. Assessor engaged an appraiser who, relying on sales of three vacant lots, estimated the property’s vale at $160,000 as of January 1, 2015. Owner challenged the comparability of the three sales and claimed the appraiser made other errors. The Indiana Board affirmed the $132,000 assessment despite “minor flaws” in the appraisal, ruling the Assessor had made a prima facie case supporting the property’s assessment, which Owner failed to rebut with probative, market evidence. Assessor had not asked for an increase in the lot’s value.

Before the Tax Court, Owner repeated his arguments from the administrative appeal and asserted that the Indiana Board improperly deferred to the “perfidious” appraisal offered by the Assessor. The Tax Court observed, “When, as here, the Indiana Board determines the evidence presented at the administrative level has probative value, the Court will not reverse its determination that a litigant made a prima facie case absent an abuse of discretion.” Here, the Indiana Board concluded that the appraisal, despite its problems, and the appraiser’s testimony “provided a sufficient explanation of the methods and information used to derive the estimate of value.” Owner did not establish that the Indiana Board had abused its discretion because its final determination “comports with the law and is supported by substantial evidence.” The Tax Court affirmed the Indiana Board’s ruling.

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Faegre Baker Daniels LLP
American Property Tax Counsel (APTC)

UPDATED March 2019

The Time to Negotiate Iowa Property Tax Assessments is Now

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

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

Here is a brief overview of the Iowa appeal deadlines:

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

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

Updated september 2019

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

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

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

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

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

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

UPDATED september 2019

School Board's Ark Park Appeal Won't Float

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

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

The case is currently under appeal.

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

Updated september 2019

But It's A Nice Round Number...

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

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

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

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

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

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

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

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

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

Property Tax Exemption

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

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

Updated December 2014

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

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

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

UPDATED September 2019

Upcoming 2020 Reassessment and Mid-Cycle Appeal Deadline

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

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

UPDATED december 2019

Massachusetts Fiscal Year 2020 Property Tax Bill are to be issued

Most jurisdictions in Massachusetts sent out there Actual Fiscal Year 2020 Property Tax Bills in December of 2019.  The actual property tax bill is the first tax bill of the Fiscal Year that contains an assessed value and a tax rate. It is from this actual property tax bill that rights of appeal accrue. In most cases the Fiscal Year 2020 filing deadline is February 1, 2020. It is important to review your actual property tax bill as many communities in the Commonwealth are revaluing. In most cases the timely payment of property taxes is jurisdictional prerequisite to a valid property tax appeal. Timely payment means that payment must be mailed to the Tax Collector by the due date. It is incumbent on the taxpayer to prove the date of mailing. Taxpayers need to be vigilant as the taxing authority has the advantage at every turn.

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

UPDATED september 2019

Michigan Property Taxation Traps Another Taxpayer

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

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

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

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

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

Updated December 2017

Minnesota Property Tax Update

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

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

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

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

Updated June 2016

Personal Property Statute

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

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

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

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

Updated december 2019

Challenging a property’s valuation is an increasingly complicated decision

County assessors in Nevada mailed their tax year 2020-21 notices of value in early December of 2019. 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, 2020. However, an appeal is only worthwhile if it results in tax savings and the determination of whether a reduction in a property’s valuation will result in tax savings has become more complicated by the tax cap.

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 portion of the tax which would have been assessed in the absence of the tax cap is treated as an abatement from tax.

For example, last year we handled a hotel property in Clark County which was assigned a taxable value of $22,769,877. Before determining if a valuation appeal was warranted we evaluated the effect of the tax cap. Tax in the amount of $221,048.83 would be assessed on a taxable value of $22,769,877, but in this instance the tax cap would limit the tax actually assessed to $128,659.75. The difference, an amount of $92,389.07, would be abated by the application of the tax cap.

For a valuation appeal to result in tax savings, the value of the hotel property would need to be reduced below the value which would result in a tax of $128,659.75. Here, a taxable value of $13,253,030 would result in a tax of $128,659.75. This is often referred to as the “tax cap value.” For the hotel property, we would need to reduce the taxable value below the tax cap value of $13.2 million in order to generate tax savings in excess of the savings resulting from the tax cap abatement.

For many properties a low tax cap value obviates the need for a valuation appeal, but in this instance we believed the facts would support a market value for the hotel property which would be significantly lower than the tax cap value. After a contested hearing, the county board of equalization agreed; it reduced the taxable value of the property to $8 million for tax year 2019-20.

Tax in the amount of $70,605.50 was ultimately assessed on the reduced taxable value. As a result of our appeal the property owner realized a tax savings of $58,054.25. In addition, the tax assessed on this reduced valuation will become the tax base for applying the tax cap in subsequent tax years. Consequently, even if the assessor’s office increases the taxable value of the property in the following tax year, any increase in the tax actually assessed will be limited by the tax cap.

The advent of the tax cap in Nevada has complicated the question of whether or not a valuation appeal is warranted. While the tax cap often obviates the need for an appeal, it is important to critically examine the tax treatment of property annually to ensure the property owner is paying no more than their fair share of taxes. 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, LP
American Property Tax Counsel (APTC)

Updated december 2019

New Hampshire Property Tax Bills are soon to issue

Most communities in New Hampshire have sent out their 2019 property tax bills. These tax bills have an assessing date of April 1, 2019. The property tax assessment of taxable real estate should be the fee simple market value of the property as of April 1, 2019, multiplied by the jurisdiction's median assessment ratio. If your property is assessed in excess of that amount you may have grounds for a tax appeal. In general, Abatement Applications must be filed with the local assessors by March 1, 2020. If you are aggrieved by the action or inaction of the local assessors, you may file a petition with the State Board of Tax and Appeals or the Superior Court in the County where the property is located. The deadline for filing the petitions is generally September 1, 2020. There you will be afforded a full hearing on the merits where the rules of evidence will apply.

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 December 2019

Assisted-Living Facility Valuation - Apartment Comparables vs. Lease-Coverage Analysis

To properly value an assisted-living facility for property tax purposes, an appraiser must separate the facility’s business value from the value of the real estate.  To isolate the value of the real estate, Ohio appraisers have relied on the use of conventional apartment comparables in their approaches to value.  Ohio case law supports this approach but does not require it.

In November of 2018, the Supreme Court of Ohio (SCO) addressed the tax year 2014 valuation of an 89-unit assisted-living facility in HCP EMOH, L.L.C. v. Washington BOR.[1]

Competing appraisals were presented at the Board of Tax Appeals (BTA).  The taxpayer appraiser used apartment comparables in his sales comparison approach.  The county appraiser used an income approach with assisted-living-facility comparables.  The county appraiser’s approach relied on a lease coverage analysis that allocated a portion of each business’ net operating income to the going concern attributed to the real estate.  The BTA rejected the taxpayer appraisal, finding its adjustments inadequate.  The BTA found the county appraiser’s comparables superior to the taxpayer’s apartment comparables because they more closely resembled the living units found in a skilled nursing facility.  It adopted the value concluded by the appraiser for the county.

On appeal, the Court held the BTA erred in adopting the county appraisal value because the leases in the report’s income approach (which relied on a lease-coverage ratio) were all based on the net operating income of the business of each comparable.  Citing Higbee,[2] the Court noted “[i]f it is the real property that is being valued, its valuation cannot be made to vary depending on the success or lack thereof of the business located on the property.” 

The lease-coverage ratio in the county appraiser’s income approach was created using only comparables with net leases based on a percentage of the net operating income of the business operating at the property.  By doing so, the appraiser failed to separate the business value from the realty value.  The Court found, because the ratio was created from flawed inputs (the comparable leases with rents based on income generated by the businesses), any calculations using the ratio were likewise flawed.  Having rejected this analysis, the Court found it did not need to address the use of a lease-coverage analysis to value real property, generally.  The BTA retained the original value on remand, finding no evidence with which to determine value. 

The taxpayer also filed a complaint for the same property for a subsequent tax year.[3]  This time, the taxpayer appraiser broadened his comparables to include assisted-living properties while also adding a cost approach.  The county appraiser’s approach was identical to his analysis in the prior case.  The taxpayer’s appraisal was found to be competent and probative, was noted to be the best indication of value in the record and was adopted.  The BTA remarked that the Court appeared to disfavor the lease-coverage analysis. 

Using apartment comparables to properly value an assisted-living facility is recommended.  The use of such comparables isolates the value of real estate and has been relied upon by taxing authorities in Ohio for decades.  While it may be possible to perform a lease-coverage analysis that successfully separates the business value of a property from its real estate value, no caselaw could be located that assigned value under this approach. 

[1] HCP EMOH, L.L.C. v. Washington Cty. Bd. of Revision, 155 Ohio St.3d 378, 2018-Ohio-4750.

[2] Higbee Co. v. Cuyahoga Cty. Bd. of Revision, 107 Ohio St.3d 325, 2006-Ohio-2

[3] HCP EMOH LLC v. Wash. Cty. Bd. of Revision, 2019 Ohio Tax LEXIS 2437

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

UPDATED December 2019

Avoid Deadline Disaster

Taxpayers should be aware that the deadlines to file tax appeals in Oklahoma have been changed, effective November 1, 2019.  Under the Oklahoma Ad Valorem Tax Code, as amended, a taxpayer now 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 April.  This change is particularly important because it is thirty (30) days earlier than the previous deadline which was the first Monday in May.  The taxpayer now has fifteen (15) calendar days from the date the assessor’s informal hearing decision is mailed to file a formal appeal with the county board of equalization.  Once a formal appeal decision has been rendered by the county board of equalization, a taxpayer has thirty (30) calendar days from the date the formal decision was mailed or delivered to file a petition in district court.  Prior law required appeals to be filed in district court within ten (10) days of final adjournment of the Board.  Under Oklahoma law, failure to comply with deadlines will bar an appeal.

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

UPDATED december 2019

Oregon Supreme Court Upholds Market Value Standard

The Oregon Supreme Court affirmed the Oregon Tax Court and long standing law in Oregon that property tax is assessed on the fee simple interest in the property, not the leased fee, and that an individual property’s vacancy is a factual issue that may be taken into consideration in the valuation. Powell Street LLC v. Multnomah County Assessor, 365 Or 245 (2019). A “fee simple valuation” may deviate from the ordinary concept of real market value if the property is leased at nonmarket rates. In Powell Street, the Tax Court found that on the assessment date, the shopping mall was 51% vacant due to a grocer leaving and that the contractual provisions in the remaining leases applied a discount for the loss of the anchor tenant. The primary dispute at trial was whether the shopping center should be valued as if it had a stabilized occupancy on the date of value. The Tax Court found that the missing anchor tenant and the property’s overall occupancy rate of less than 50 percent represented a major deviation from market vacancy rates. Taxpayer’s appraiser testified that because the property lacked an anchor tenant, and was “non-stabilized”, the only potential buyer for the property would be “value add” buyers: buyers who are willing to incur risk and effort to bring the property back to stabilized lease rates. These buyers expect a higher return on their investment and will pay substantially less for the property due to the time, money and risk of the investment. The Department of Revenue’s appraiser testified that the property was stabilized and tenant turn-over was normal market behavior and the property must be assumed to have a stabilized vacancy for valuation purposes.   

The question before the Supreme Court was if the Tax Court erroneously valued the property based on taxpayer’s individualized ownership of the property – a valuation constrained by the high vacancy rate – rather than determining the market rent and stabilized vacancy of the property itself. The Department contended that the valuations of leased property must always use market rents and market vacancy rates, even when a property’s actual rent or vacancy rates are substantially different. The taxpayer’s appraiser used both market rents and market vacancy rates and then deducted stabilization costs from the value to reflect the risk and value a market participant would pay for the property. The Court recited that the statutory market test is a hypothetical seller and buyer – what a typical seller would accept for the property. Because the record was devoid of any evidence that the vacancy was due to the taxpayer’s management and there were substantial facts that the property would require time and funds for upgrades to secure a new tenant, the vacancy was not due to lack of the owners skill level, but it was a characteristic of the property. The law does not require the court to disregard the actual vacancy of the property to determine market value.

Cynthia M. Fraser
Foster Garvey PC
American Property Tax Counsel (APTC)

UPDATED december 2019

Pennsylvania Appellate Court Issues Conflicting Back-to-Back Decisions Holding Government to a Lower Standard than Taxpayers

In two unreported decisions issued in October 2019, the Pennsylvania Commonwealth Court (Pennsylvania’s intermediate appellate court) held that taxing districts may use sale price as evidence of market value for the purpose of identifying properties on which to file increase assessment appeals, but that taxpayers cannot rely on sale price as evidence of properties that the government should have, but did not appeal, to demonstrate that a district’s selection scheme is not uniformly applied.  

In East Stroudsburg Area School District v. Dallan Acquisitions LLC, 529 CD 2018 (Pa. Commw. 2019), the school district used a consultant to analyze property sale prices to target assessment appeals against properties which would result in additional taxes of at least $10,000.  Taxpayer was one of only 46 properties who the school district cherry picked by the district.  At trial, the taxpayer adduced evidence that neither the district nor Keystone performed any calculations to ensure that the properties it selected met its threshold.  In support of its case, the taxpayer proffered expert testimony analyzing recent sale prices within the district to demonstrate that fully half of properties which would meet the purported threshold were not appealed. In fact, taxpayer’s evidence demonstrated that the district did not appeal a single residential property, despite 12 residences meeting the district’s threshold.  Thus, taxpayer argued, the district’s selection scheme targeted only commercial properties in violation of the Pennsylvania Supreme Court’s 2017 Valley Forge Towers decision.  The trial court ruled against the taxpayer, finding the school’s methodology to be constitutional, and the Commonwealth Court affirmed.  In rejecting the taxpayer’s evidence, the Commonwealth Court observed, “On cross-examination, [taxpayer’s expert] acknowledged he did not investigate the actual market value of any of the properties he identified; he merely used each property's sale price as ‘a stand-in’ for market value.”  Left unsaid was what kind of evidence the taxpayer could have possibly introduced – short of securing separate appraisals on the 30-40 properties – that would have demonstrated that the school did not uniformly implement its own policy.

Twelve days later, a different panel of the Commonwealth Court also ruled in favor of the government in Punxsutawney Area School District vs. Broadwing Timber, LLC, 1209 CD 2018 (Pa. Commw. 2019).  There, the school district appealed the assessment of a recently purchased property based on its recent sale price.  As summarized by the Commonwealth Court, “After comparing the sale price to the Property’s assessed value, [the district] believed the Property was underassessed.”  In its defense, taxpayer adduced evidence that the school district had only appealed the assessments of commercial properties and challenged the district’s selection scheme as violative of the Pennsylvania Supreme Court’s 2017 decision in Valley Forge.  The trial court ruled for the school district, and the Commonwealth Court affirmed.  In affirming the increase, the Commonwealth Court approved of the school district’s reliance on sale price as a substitute for a property that was under-assessed, characterizing its methodology as “financial analysis” and even “expertise.” 

While the two opinions rely on evidentiary burdens and credibility determinations, two unwritten rules emerge.  First, a sale price is a sufficient basis on which a district may pursue an assessment appeal, yet is insufficient for the property owner to use as evidence to defeat such appeal. Second, school districts in Pennsylvania are free to appeal only commercial properties as long as they take an official stance that they consider all property types, including residential, and do not intend to exclude residential.  

Ironically, the Punxsutawney panel included a summary of taxpayer’s argument in its opinion as follows: “Recognizing that there has been no direction that appeals only be filed for commercial properties, Broadwing maintains the de facto effect of the practice results in the District appealing only a sub-classification of properties.  If this practice is allowed to continue, Broadwing argues, Valley Forge would be rendered meaningless.”  Indeed, as 2019 draws to a close roughly eighteen months after the Pennsylvania Supreme Court issued Valley Forge, it would appear the Commonwealth Court has rendered that seminal decision meaningless.

This email address is being protected from spambots. You need JavaScript enabled to view it.
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 december 2019

Tax Relief for Damaged Property

Taxpayers should be aware of relief provided for damaged property under Tennessee law.  Tennessee assessors value property in its condition as of January 1st, regardless of its condition during the rest of the year.

An exception to this general rule exists if, before September 1st, an improvement is demolished, destroyed, or substantially damaged.  If it is not restored and nothing else is constructed before September 1st, then the assessor must value the property in its damaged condition from the date of damage until December 31st.  The value is then prorated between the January 1st value and the date of damage value.

It is important to note that if damaged improvements are repaired or rebuilt before September 1st, then there is no relief.  The January 1st value will remain on the property all year, though the property may not have been in service for several months.

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Evans Petree PC
American Property Tax Counsel (APTC)

Updated december 2019

Coming Up on a New Year

The property tax calendar always seems to have something going on in Texas. In January of each new year, there are two important dates related to property tax. They are January 1st and January 31st.

January 1st is an important property tax date in Texas, primarily, because it is the lien date. The lien date is the date of valuation in Texas and it is the date when an automatic tax lien attaches to all the property in Texas. When an owner protests the market value of their property, they use January 1 as the date of valuation. The fact that the lien attaches automatically means if the taxes are not paid, the government doesn’t have to establish a lien, they enforce the lien automatically in place. This relates to the other important January deadline.

January 31st is an important day on the property tax calendar for a few reasons. It is the last day to pay property taxes for the previous year. Even if the owner has file a lawsuit, they must pay, at least, the uncontested amount of property taxes by this date. If they fail to do so, penalties and interest will start to accrue on the taxes owed and if the owner filed a lawsuit, the court will cease to have jurisdiction said lawsuit. Another reason this day is important, is because it is the last day to file a late protest.

There are a few enumerated reasons that allow a taxpayer to file a late protest. They include “clerical error,” “multiple appraisals,” “incorrect ownership,” “does not exist in the form and location stated on the roll,” or “the property is valued at 1/3 or more over market value.” If the property qualifies under one of these late protest categories, and has not gone through the regular property tax protest, the protest will be heard late.    

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

Updated June 2018

Tax Commission Holds that Debt Rate Must Match Capital Structure

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

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

UPDATED september 2019

Virginia Year-End Deadlines Approaching

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

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

Updated december 2019

Washington’s Tax on Transfers of Real Estate Is Changing

A rush to close large real estate transactions in Washington occurred at the end of 2019 due in part to a legislative amendment to the state’s real estate excise tax starting January 1, 2020. The real estate excise tax applies to sales of real estate or a controlling interest in an entity owning real estate in Washington. Through 2019, the tax was typically 1.78 percent of the real estate value, based on a state component (1.28 percent) and local component (typically 0.5 percent). The state component will change to a graduated rate structure resulting in a top combined rate of 3.5 percent:

Value -- State Component Tax Rate

• up to $500,000: 1.1%
• $500,000 to $1.5 million: 1.28%
• $1.5 million to $3 million: 2.75%
• above $3 million: 3%

Property valued at $1.8 million or more will see an overall increase in real estate excise tax under the new rate structure.

Michelle DeLappe
Foster Garvey
American Property Tax Counsel (APTC)

Updated december 2019

Capitalization Rates for Low Income Housing Tax Credit Properties

Beginning this past year, the District of Columbia’s Office of Tax & Revenue began adding 15 basis points to the capitalization rates for Low-Income Housing Tax Credit (“LIHTC”) apartment buildings. Although we view the 15 basis point increase as insufficient, we have argued for years that the District should make an adjustment to its base capitalization rates, which are used on market-rate apartment buildings, when valuing LIHTC properties. LIHTC properties are unique because of the restrictions imposed on the rents, the administrative oversight and regulation of the properties, and the fact that they tend to have higher operating expenses than market rate apartments.  Additionally, LIHTC properties have rarely sold in the District and deriving a capitalization rate for LIHTC properties based on the sale of market-rate apartment is improper because it fails to account for the risk associated with operating a LIHTC property.  We plan to continue to press the District’s assessors to correctly value LIHTC properties instead of treating them like market rate apartment buildings.

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

Updated March 2018

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

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

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

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

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

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

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