Board of Equalization Workshop 2015

Maureen Monaghan, Chief Counsel

Residen-tial

53.33%

Ag1.79%

Comm.21.85%

Centrally Assessed

4.46%

Motor Vehicles11.97%

Other Personal Property6..60%

ASSESSED VALUATIONSTotal Assessed Value $95,282,567,457

Residen-tial

51.36%

Surtax3.68

Com-mercial21.04%

Centrally Assessed

4.3%

Motor Vehicles11.53%

Other Personal Property6.37%

Estimated Taxes Paid $6,646,530,193

Relative Property Tax Burden

1980s Litigation – Supreme Court Decision and Legislation to Equalize State

1985 – Statewide reassessment completed Establishment of fractional assessments

◦ Residential – 19%◦ Ag -12%◦ Commercial – 32%◦ Personal Property – 33 1/3%

Evolution of Property Assessments

Property has a market value of $100,000 Classified as residential Assessed value is $19,000 6%

$1,140

Examples of Fractional Assmt

Residential

Property has a market value of $100,000 Classified as agricultural 10 acres Productivity value is $850 per acre $8,500 x 12% = $1,020 assessed value 6% $61.20

Examples of Fractional Assmt

Agriculture

Property has a market value of $100,000 Classified as commercial - $32,000 AV 6%

$1,920

Examples of Fractional Assmt

Commercial

Assessor creates the Assessment Book for submission to the Clerk on July 1.

Clerk accepts the Assessment Book which is now referred to as the Tax Book. The Clerk will adjust values in accordance with BOE decisions, adds the levies and extends the taxes. The Clerk delivers the book to the Collector by October 31.

Collector accepts the Tax Book and initiates collection.

Overview of the County Process

1/1 Date of Value 3/1 Declarations

due 6/15 Impact Notice 3rd Mon in June – 1st

Class Co, appeals due

7/1 Assmt Book due 1st Mon in July – 1st

class co BOE meet

2nd Mon in July – BOE appeals due

3rd Mon in July – BOE meet

7/31 BOE end (unless Charter -4th Sat in Aug.)

General Timeline

Assessor

January 1 – valuation date Odd year vs even year March 1 – Personal property declaration Impact notices July 1 – turn over their books

Timeline

Appraised Value Fair market value True value in money

Value

Agriculture Business Personal Property Automobiles Residential and Commercial Real Property

Valuing Property

Grade 2015 Pre 20151 $1,035 $9852 $850 $8103 $645 $6154 $405 $3855 $205 $1956 $158 $1507 $79 $758 $31 $30

AG VALUES

Business Personal Property The original cost paid by the current owner, less

freight, installation, and sales or use taxes and date of purchase is reported by the owner.

The Class Life and Recovery period is determined by using IRS Publication 946 – Accelerated Depreciation

The assessor applies the proper depreciation schedule found in §137.122.3, RSMo, by applying the years since acquisition and the appropriate recovery period to determine the appraised value.

The appraised value is multiplied by the statutory assessment level for personal property, 33 1/3% to establish the assessed value.

 Cost approach with straight line depreciation

Statutorily required method. 137.115(9) Use the trade-in value published in the

October issue of the National Automobile Dealers' Association Official Used Car Guide.

The average trade-in value For vehicles two years old or newer from a

vehicle's model year, the assessor may use a value other than average without performing a physical inspection of the motor vehicle.

Automobiles

Land Buildings, structures, improvements and

fixtures Rights and privileges belonging to the land

Real Property

Cost Sales Comparison Approach Income Approach

Approaches to Value

Cost ApproachA buyer will not pay more for one property than the

cost of acquiring an equally desirable substitute property, assuming no undue cost or delay.

Reproduction Cost of producing

an exact replica using the same materials, design and workmanship

Replacement Cost of producing a

building with the same utility using modern materials, design and workmanship

Costs

Land value based upon comparable sales of unimproved land;

Explanation as to why replacement or reproduction cost was used

Estimate of the cost new, including the method used and sources of information

Amount and type of depreciation Final opinion of value

Cost Approach

Marshall and Swift Boeckh

Publications Dodge Cost

Systems

Source books

Physical Functional External

Depreciation

Curable items – worn flooring, paint, etc Incurable items – cracked foundation

Physical Depreciation

Curable: inadequate hot water heater Incurable: poor layout, ceiling height (too

high, too low)

Functional Obsolescence

Outside factor impacting the property

Zoning, busy roads, economy, environmental

External

Sales Comparison Approach

Uses property sales to estimate the value of an unsold property.

Sales information should include the location, date of sale, conditions of sale, sq ft of land and building, sale price, source information

Explain why those properties selected How the sales were verified Listing of the adjustments Explanation and market data on

adjustments Final opinion of value

Sales Comparison Approach

Thorough inspection of the properties Verification of sale and conditions Close comparability with subject Superior and inferior comparables Market support for adjustments Sales grid

Reliability of the Approach

Income ApproachConverting income into a value estimate.The value of a property is equivalent to the present worth of the net income expected to be generated by the property

Market income and expenses Income and expense statements

◦ Gross income◦ Vacancy and collection loss◦ Miscellaneous income◦ Net Operating Income

Capitalization Method and Rate Tax Levy Rate Indication of Value

What to look for

$1000 income $300 expenses $700 net income OAR 8% $700 / 8% = $8,750 indicated value

General Formula

Boards of Equalization

Who is on the BOE

City of St. Louis First Class Counties

Assessor – President of the Board

4 property owning citizens appointed by the mayor

3 persons appointed by the County Commission

BOE Members

2nd, 3rd, 4th Counties

County commissioners Assessor (non-voting) Surveyor Two Citizens appointed by the Commission Auditor (in 2nd class counties) Clerk (as secretary, non-voting)

Hear complaints and appeals Equalize assessments – adjust, correct, and

equalize Add Omitted Property

Role of the Board of Equalization

3rd Monday in June, appeals due

7/1 May meet in reassmt years

1st Monday – Start 7/31 End

Charter 3rd Monday in June,

appeals are due 7/1 may start 1st Mon in July –

Start 4th Sat in Aug - End

Timeline – 1st Class

2nd Monday in July – Appeals Due 7/1 May start meeting in reassessment

year 3rd Monday in July – must start 7/31 End

Timeline

Exempt Overvaluation Misclassification Misgraded Ag Discrimination/Ratio

Appeal Categories

(1) Lands and other property belonging to this state; (2) Lands and other property belonging to any city,

county or other political subdivision in this state; (5) Property used for religious worship, for schools

and colleges, or for purposes purely charitable; (7) Motor vehicles leased for a period of at least one

year to this state or to any city, county, or political subdivision or to any religious, educational, or charitable organization which has obtained an exemption from the payment of federal income taxes, provided the motor vehicles are used exclusively for religious, educational, or charitable purposes;

(10) Solar energy systems not held for resale; POW + 100% disabled from military service - Home

Exempt Section 137.100 & Const.

Owned and operated on a not-for profit basis;

Dedicated unconditionally to charitable activities;

Dominant use of the property must be for the benefit of an indefinite number of people and there must be a direct or indirect benefit to society.

Charitable

Using the approaches (cost, sales comparison and/or income) to determine market value of a property

Most common appeal It is not the amount of the increase in the

assessment

Overvaluation

Improved properties transitioning Vacant Land Based upon the actual use of the property

Misclassification

(1) Immediate prior use, if any, of such property; (2) Location of such property; (3) Zoning classification of such property; except that, such

zoning classification shall not be considered conclusive if, upon consideration of all factors, it is determined that such zoning classification does not reflect the immediate most suitable economic use of the property;

(4) Other legal restrictions on the use of such property; (5) Availability of water, electricity, gas, sewers, street

lighting, and other public services for such property; (6) Size of such property; (7) Access of such property to public thoroughfares; and (8) Any other factors relevant to a determination of the

immediate most suitable economic use of such property

137.016 RSMo provides guidance

Taxpayer believes their property is assessed higher than others

Extremely hard to prove Must show the median assessment of the

subclassification of property

Discrimination

Hearings

Prior to Hearings Important Issues

◦ Publicize the appeal process

◦ Deadline to appeal◦ Dates and times of

hearings◦ Establish schedule◦ Allow adequate time◦ Comply with the

Sunshine law – Notices, Open meetings, etc

◦ May appeal in writing◦ Appeal does not mean

appear◦ Written decisions are

issued◦ Property owner, attorney

or agent may file and appear

◦ Opinion – owner, appraiser or attorney

HearingsClerk announces the case – provide names, property address, parcel number, etc.Property identification – confirm address, classification, value of assessor, general description of the propertyAllow property owner to present informationAllow Assessor’s officer to present informationAllow property owner to respond

Establish a procedure/process and follow it. All parties would like to be heard.

Hearings

Conducting Hearings

Assessor should have all information regarding the assessment

Have materials for each appeal prepared

Make copies of the taxpayers information

Listen to all information provided

Emphasis on market value

Information should be reviewed after presentations

Let taxpayer know what you will be doing

Information at Hearings Purchase price of

subject – determine if arm’s length transaction and date of sale

Newspaper articles – may provide info on trends but not market value of a specific property

Photos – might be worth a 1000 words, but doesn’t tell us what it would sell for

Graphs of tax increases

Negotiate a settlement Adjust based on hardships or individual’s

circumstances Grant exemptions without a legal basis Allow unproductive arguments

DO NOT!:

Post Hearings

Additional Information

Assessor may want to review something presented by property owner.

Provide a listing of all decisions to the clerk and assessor

Provide the assessor with any information you received

Decision Notify taxpayer if any

delay in the decision Written decision in

mail whether you change the value or not

SAMPLE BOE DECISION LETTER

BOARD OF EQUALIZATIONCOUNTY OF XYZ

Date of Mailing

Agent123 Simple Assessment, Missouri

RE: Name: U R TaxpayerParcel : 02-2.4-002-005.12Address: 456 SimpleClassification: ResidentialAssessor’s Appraised and Assessed: $100,000/$19,000BOE”s Appraisers and Assessed:

$100,000/$19,000

The Board of Equalization of XYZ County, after full consideration of the information presented at the hearing, voted to sustain the Assessor’s value.

You have a right to file an appeal with the State Tax Commission. If you chose to appeal, you may download forms from their website at www.stc.mo.gov. You may contact the State Tax Commission at 573 751 2414

The appeal to the STC must be postmarked no later than September 30 of this year or 30 days after the above date, whichever is later.

SincerelyCounty Clerk

Proper Decision Format

Date of Decision Date of Mailing Taxpayer’s name Parcel/locator/account # Classification Assessed value EVERY APPEAL GETS A DECISION MAINTAIN COPIES OF DECISIONS,

DOCUMENT DATE MAILED

Contents

Member Maintains the records Adjusts the books according to the decisions

or orders of the BOE

Clerk’s Duties

September 30 or 30 days after the final action of the BOE, whichever is later

Exemption cases may go directly to Circuit Court

Appeals to the State Tax Commission

Years # of Appeals

2003-2004 5009

2005-2006 7,540

2007-2008 8,684

2009-2010 7,595

2011-2012 8,345

2013-2014 8,276

Appeals Filed

www.stc.mo.gov Legal decisions Information on

valuation Information on

appeals

Department of Revenue◦ Property tax

assistance programs

Resources