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ARIZONA Property Tax Update
Updated June 2008

Arizona Court of Appeals Upholds Non-Profit Charitable Organization's Exemption from Real Property Taxes

In Arizona, the property of musical, dramatic, dance, and community arts groups, botanical gardens, museums, and zoos, qualified as non-profit charitable organizations, is exempt from real property taxes if the property is "used for those purposes and not used or held for profit." In Tucson Botanical Gardens, Inc. v. Pima County, ___ P.3d ___, 2008 WL 2109843, the Arizona Court of Appeals addressed the issue of whether a qualified non-profit charitable organization, was entitled to this exemption on the portion of its property it used to operate a gift shop, exhibit art for sale, and rent to third parties for various activities, such as weddings, private meetings, or parties. The court held the exemption applied to taxpayer's property. The court reasoned that as long as the taxpayer's principal or primary use of the property is for the designated exempt purpose, the taxpayer is entitled to the exemption notwithstanding its occasional or incidental use of its property for other purposes.

The reassessment cycle in Ontario calls for an updated assessment for taxation year 2009 based upon a current value determined to a base January 1, 2008. The assessment authority is in the field updating assessments to reflect that value.

The determination of the current value of the property forms the basis of its assessment. Current value is a statutorily defined term that requires the establishment of that value based upon a determination of the fee simple, if unencumbered estate, in the real estate. The result of that specific definition is to establish values that may well be at variance with values determined either by the sale of the property as a going concern or for investment purposes, or for financing.

Although the assessment is established in that manner, the recent legislative change to the Assessment Act allows the taxpayer the protection of equity of assessment as well as the correct determination of the current value of the property.

A property is fairly assessed either if it is assessed at its current value or if it is assessed equitably with respect to other properties in the municipality. The equity argument cannot be used by the assessment authority to defend an assessment which exceeds the current value of the property. The equity argument can be used by the taxpayer to obtain a reduction in assessment even if the property is valued at less than its current value if by achieving such reduction it is equitably assessed with other purportedly underassessed properties.

The legislative amendment was triggered by activities of certain of the local municipalities within the Province that initiated appeals against assessments based upon sales transactions of those properties higher than the assessments as established by the assessment authority. Provided those properties are equitably assessed, those appeals by those local municipalities will no longer expose taxpayers to increased taxation.

Clearly the amendments do not create a uniformity scheme of assessment but rather a shield for the taxpayer against targeting by other stakeholders in the property tax regime. The amendments further protect the right of appeal and limit potential abuse by the assessment authority.

Guidelines for Handling Confidential Taxpayer Information Issued

In June 2008, the California State Board of Equalization issued “Guidelines on the Proper Handling of Confidential Information.” Although they are only advisory, the guidelines will provide direction to assessors and taxpayers for the handing of confidential taxpayer information in the local property tax context. The guidelines bring together a variety of disparate information, including applicable legal authorities, on the issue of whether and when taxpayer-provided information held by a county assessor’s office must be kept confidential. They also address the proper handling of confidential taxpayer information during equalization hearings before county assessment appeals boards. The State Board of Equalization issued the guidelines after receiving input from county assessors and taxpayer representatives. They can be found on the property tax page of the California State Board of Equalization’s website at www.boe.ca.gov.

Have taxes in the Denver metropolitan area increased or decreased over the last decade. While several people complain that prices for goods and taxes have been increasing, taxes in the City and County of Denver have actually declined since 2000. Taxes for real estate in Colorado are based not only upon the market value of the property but the mil levy of a particular taxing jurisdiction. In the City and County of Denver, the mil levy has decreased since the year 2000. In 2000, the levy was 67.321 mils. In the year 2008, the current mil levy for the City and County of Denver is 66.897. While close, the current mil levy is one-half of one percent lower than it was eight years ago. These are the rates of the past eight years: 67.321 (2000), 58.745 (2001), 59.855 (2002), 64.162 (2003), 64.402 (2004), 66.202 (2005), 66.948 (2006).

With no authoritative legal decisions to guide taxpayers, it has been unclear whether personal property declarations, which are to be filed every year with local assessors by owners owning assessable personable property, must be submitted to the assessor’s office on November 1 or whether mailing, faxing or an email PDF is sufficient. While the applicable statute imposes a penalty for failure to file the personal property rendition by November 1 each year, many assessor’s offices accept facsimiles and original renditions in envelopes postmarked by November 1, whenever received.

A Bridgeport taxpayer mailed its rendition on October 31; it arrived in the Bridgeport Assessor’s office on November 3. The Assessor imposed the statutory 25 percent penalty.

SBC Internet Services, Inc. v. City of Bridgeport (and companion cases); Superior Court judicial district of Fairfield at Bridgeport (February 15, 2008).

DISTRICT OF COLUMBIA / WASHINGTON D.C. Property Tax Update
Updated December 14th, 2007

Federal prosecutors have charged two D.C. real property tax employees, together with others outside the government, with multiple counts of fraud and conspiracy relating to the issuance of false real property tax refund checks over a seven-year period. The government alleges that one of the employees masterminded the scheme and used her family, friends and some fellow employees to assist in the massive fraud estimated to have reached at least $20 million.

The bogus refund checks were made payable to fictitious companies that the conspirators controlled. The conspirators often used slight variations of the names of legitimate businesses and individuals to further their scheme. The government is now attempting to sort out how this fraud, the largest in D.C. history, went unnoticed for such a long period of time.

FLORIDA Property Tax Update
Updated June 2008

New Property Tax Bill Passes in Florida

IThe Florida legislature recently passed a property tax bill with a number of provisions related to ad valorem taxation and the appeals process. A few of these are described below.

The bill modifies the highest and best use language in the statutes to require that county property appraisers consider “any zoning change, concurrency requirements and permits necessary to achieve the highest and best use”. This should help to keep properties assessed based on their current use rather than a speculative future use.

The bill requires the Department of Revenue to develop uniform procedures for Value Adjustment Boards and special magistrates throughout the state. The DOR will also conduct annual training sessions for special magistrates.

The configuration of the VAB is changed by adding two citizen members in place of one commissioner and one school board member. Once citizen member must own homestead property within the county and one must own a business occupying commercial space in the school district.

In mid-April, Fulton County Tax Assessors sent out assessment notices from the first complete revaluation of 24,000 commercial properties in more than fifteen years, with a median increase of 44%. Other Georgia counties also mailed out assessment notices or will be very soon. Property owners must timely file appeals of their assessment notices or will have no right to contest their tax bills. Because Fulton County completed a county-wide revaluation, its assessors have no deadline for determining whether a change is merited as a result of a taxpayer’s appeal. If an assessors’ office changes the assessment in response to an appeal, a new assessment notice is sent to the taxpayer which also must be timely appealed, or the change is final. Taxpayers should watch carefully for a supplemental change notice because the filing deadline is much shorter than the initial filing deadline. Simple errors in the appeal process can be costly.

The 2008 Idaho Legislature resisted pressure for any major changes to the state’s property tax system. Rather than to eliminate the personal property tax, as had been urged by some, the 2008 Legislature chose to eliminate the tax on the first $100,000 of business equipment value – with restrictions. This exemption takes effect only if and when General Fund revenues exceed the prior year’s revenues by five percent. Another bill gives county commissioners the authority to offer property tax exemptions for a maximum of five years to a taxpayer who spends a minimum of $3 million for new manufacturing facilities in rural areas. And the big winner was the French company Areva Inc. It received an enormous property tax exemption in the multi-state competition for a $2 billion uranium enrichment plant to be built near Idaho Falls. The portion of the investment that exceeds $400 million is exempt from property taxation.

All Townships in the South and Southwest suburbs of Cook County will be re-assessed in 2008 in part of the County’s triennial reassessment process.

For re-assessment purposes, Cook County has been divided into three assessment districts: the City of Chicago; the North and the Northwest suburbs of Cook County and the South and Southwest suburbs of Cook County. Each district is assessed in successive years. To date 2008 Re-assessment Notices have been published for the following Townships:

Over the Summer and Fall of 2008, the following Townships will receive 2008 Re-Assessment Notices:

The publication of the Assessment Notices is the result of a mass appraisal process. That process cannot take into account the specific idiosyncrasies of an individual property. The only way to make certain that an individual property is equitably assessed is for a property owner to avail himself/herself of the Appeal Process that has been established by the State of Illinois. Valuation Complaints can be initially filed with the Cook County Assessor and/or the Cook County Board of Review.

Further information on the Appeal Process can be obtained by contacting Fisk Kart Katz & Regan.

Property Assessments Being Issued Statewide

The March 1, 2007 assessments throughout the State of Indiana are now being issued by the various township assessing officials. Once these assessments are issued, Taxpayers have a window of only 45 days within which to file an appeal petition contesting the new assessment.

Indiana adopted an approach called "trending" a few years ago in which property assessments will be updated annually based on real property sales activity to supplement the traditional reassessments in the past. For the 2007 assessments, a trending factor will be placed on the 2006 assessment to reflect the increase or decrease in value between January 1, 2005 and January 1, 2006. Taxpayers should review the trended assessments closely.

Indianapolis Area
Last year the Indiana Department of Local Government Finance ordered a reassessment of all real property in Indianapolis (Marion County) after taxpayers protested the significant increases in both assessed values and tax dollars. The new assessments have been determined and should be available shortly. The final 2006 assessments will be shown on the 2006 reconciliation tax bill which is due June 27, 2008. Taxpayers will have a window of only 45 days from issuance of that tax bill within which to file an appeal contesting the new assessment. Taxpayers should closely review the new assessments.

As property tax lawyers we are occasionally asked to assist in matters related to governmental incentives to the purchase and development of residential, commercial and industrial real estate projects. In Iowa, two of the more common incentives involve differing approaches that each can result in considerable decrease in real estate taxes attributable to the property and improvements to the property. The two approaches are property tax exemptions and tax incremental financing (“TIF”).

The property tax exemption program generally focuses on an exemption from taxation for the actual value added by the improvements made by the developer. The exemption period, and amount, vary, but a 100% exemption for a relatively short period, two or three years, is a common exemption incentive. The exclusion from taxation is generally tied to the value added to real estate during the process of construction for development or redevelopment.

TIF is available to municipalities pursuant to Iowa Code section 403.19 (2007). It is normally employed in approved tax increment financing districts. A typical City description of TIF benefits it will grant is:

Both property tax exemption and TIF are widely available and should be considered by developers for their projects in Iowa.

2007 PAYMENT UNDER PROTEST DATE SOON . Levies are being set and 2007 tax bills will be sent out around November 1, 2007. For those taxpayers that did not file a 2007 appeal in the Spring, a tax protest may be filed on or before December 20 th. The requirements to file include completion of a protest form and payment of at least one-half of the taxes due. Forms can be obtained from the offices of the county treasurer where the property is located or by visiting the web site for the Kansas Board of Tax Appeals: www.Kansas.gov/bota. As always, it is recommended that one consult local tax counsel because strict compliance with the statutes is a jurisdictional requirement.

BIG BOX CASE VICTORY FOR TAXPAYERS: The Kansas Board of Tax Appeals in Docket No. 2004-3806-EQ, Prieb Properties, LLC, Shawnee County , Kansas, held that “build to suit” rent rates and “sale-leaseback” rent rates are not market rents.

Most Kentucky counties will be mailing out their 2008 assessment notices in April. Kentucky law requires that a taxpayer be notified in writing of any increase in its real property tax assessment. Taxpayers wishing to challenge their tax assessments must do so during the statutory appeal period, generally the first two weeks of May. Taxpayers whose assessments do not increase may still challenge their assessments; however, they must also do so within the appeal period, and they generally will not receive written notice of the dates for appeal.

Appeal dates may differ from county to county, so taxpayers must check with the local assessing authority for the correct appeal dates. Failure to request an assessment conference with the county property valuation administrator during this period will generally preclude the taxpayer from any further challenge to the assessment or the tax bill for that year.

Political subdivisions in Louisiana are authorized to impose ad valorem property taxes on both tangible personal property and real estate, referred to as corporeal movable property and immovable property under Louisiana law. Property tax renditions are generally due by April 1 st of each year. La. R.S. 47:2324. Taxpayers who fail to filde required renditions lose the right to contest the valuation placed upon the property by the Assessor. La. R.S. 47:2329. Generally, the assessment lists are open for public inspection in each parish for a fifteen day period between August 15 and September 15 of each year. La. R.S. 47:1992(F). Local parish governing authorities sitting as Boards of Review consider valuation and uniformity protests shortly after the end of the public inspection periods. La. R.S. 47:1992. Taxpayer appeals from the assessment determinations of the Assessors must be filed with the Boards of Review at least seven days prior to the Board of Review hearing. La. R.S. 47:1992(C). Taxpayer’s dissatisfied with the determination of the Board of Review may appeal to the Louisiana Tax Commission within ten days of the Board of Review decision. Appeal forms and rules concerning the conduct of hearings can be found on the Louisiana Tax Commission web site: http://www.latax.state.la.us/home.asp. Taxpayers may appeal the decision of the Louisiana Tax Commission to an appropriate district court; however, any such appeal is based on the record created before the Louisiana Tax Commission. Generally, no additional evidence is allowed in the district court proceeding. La. R.S. 47:1998; La. R.S. 49:964.

Most assessing jurisdictions in Maine are in the process of sending out their fiscal year 2009 property tax bills. A taxpayer can file an Application for Abatement with the assessor. As a practical matter it is at this level that the taxpayer has the best opportunity to show that the property is over assessed. After the assessor denies the Application the taxpayer must appeal to the next level. At that point the chances of obtaining a just assessment diminish precipitously. At an appeal level a taxpayer must prove either of the following:

The Massachusetts fiscal year 2009 commences on July 1, 2008. The fiscal year 2009 property tax bills have an assessing date of January 1, 2008. Most but not all communities send out there fiscal year 2009 property tax bills on a quarterly basis. The tax bills are generally due on August 1, 2008, November 1, 2008, February 1, 2009 and May 1, 2009. It is the tax bill that is due on February 1, 2009 that Applications for Abatements are filed upon. These applications must be filed with the assessors by February 1, 2009. In most cases the taxes must be paid in a timely manner in order to effectuate a valid appeal. If an Application for Abatement is denied the taxpayer may file a petition with the State Appellate Tax Board. The Appellate Tax Board is a quasi-judicial board. At that level the taxpayer will be afforded a hearing.

MARYLAND Property Tax Update
Updated October 5th, 2007

2007 Decisions and Second Level Appeals

2007 Levy Year Appeal: Initial appeals of the 2007 Levy Year assessments were brought before the State Department of Assessments and Taxation (SDAT) for the first level of administrative review in Maryland. The assessor’s determination is not the final word however. Property owners dissatisfied with the SDAT decision have thirty (30) days from the issuance of the final notice to file for a second level appeal at the Property Tax Assessment Appeals Board (PTAAB). These 3-member independent Board hearings allow for another opportunity to present the merits justifying a reduced assessment. The 2006 second level appeals will conclude by the end of the year, while the 2007 second level appeals will continue throughout the 2008 calendar year.

Buyers of Michigan real property are generally aware of the potential adverse tax consequences on the purchase of real property due to real property transfer taxes and the “pop up” property tax (uncapping of taxable value) which is triggered when property is purchased. However, sellers may now also be subject to significantly adverse tax consequences on the sale of their real property.

I Under the recently enacted Michigan Business Tax (“MBT”), taxpayers pay both a business income tax (“BIT”) and a gross receipts tax (“GRT”). The base on which the MBT is levied starts with federal taxable income and therefore captures any gain reported for federal income tax purposes. The GRT base is defined as all gross receipts from the taxpayer’s business.

The MBT, unlike the Internal Revenue Code, makes no distinction between capital gain and ordinary income. Therefore, sellers of Michigan real property will find themselves subject to the MBT on both the gain on the sale (BIT) and the gross receipts of the sale (GRT). A limited GRT exclusion is provided for property used in a trade or business.

Example: Assume Seller sells property for $6 million with a basis of $3 million. For federal income tax purposes, Seller will receive capital gain treatment. The MBT liability would be $239,710, calculated as follows:

Recapture of investment tax credit taken for Single Business Tax purposes may also increase Seller’s MBT liability. Many sellers of Michigan real property have already been surprised by this tax bite. However, with careful planning, sellers of real property may be able to lessen the impact of the MBT .

Although Minnesota’s legislative session made some minor changes to the laws relating to appeals of income-producing property, a change to the “death penalty” provision was not passed. Information must be provided to the assessor within 60 days of the filing deadline or the petition is dismissed. There is no opportunity to cure this failure, so the taxpayer must wait and challenge the next year’s assessment.

The legislature was asked to change the penalty to something less automatic, requiring a motion by the county and a decision by the Tax Court. This might have resulted in fewer dismissals, as the Minnesota Tax Court is currently taking a very mechanical approach and dismissing a number of petitions each year. However, opposition from the assessors helped stop this change.

Taxpayers must be careful to comply with the statutory requirements if a property is subject to a lease, even if the lease is between related parties and regardless of the relation between the actual rent and market rent.

Missouri is in the next year of its two year assessment cycle. If a real property tax appeal was filed for a particular property for the year 2007 the value for 2008 will be determined by that appeal. As a cautionary measure, it is recommended that even if a 2007 appeal is filed and pending an appeal for 2008 should be filed. If no appeal was filed for the 2007 assessed valuation, an appeal should be filed for 2008. The filing deadlines in Missouri are: First Class Counties: Must file before the 3 rd Monday in June (unless extended by the BOE). City of St. Louis: Must file on or before the 2 nd Monday in May. All other Counties: Set up appointment with BOE while board is in session. If a final result for appeals directed against the 2007 valuation has been rendered, such resolution establishes the value for both 2007 and 2008.

It is common in Nevada for developers to provide certain concessions to cities and counties in exchange for governmental approval of property development. The most common concession requires schools and parks to be constructed by the developers and then donated to some governmental entity. Recently the State Board of Equalization addressed the proper full cash value of such dedicated parcels. Due to the legal restrictions on the parcels, the Board concluded that the parcels should be valued at no more than a nominal amount, which the Board determined to be $1,000 per acre. Even though no construction had yet begun on the school or park, the Board determined sufficient legally enforceable restrictions were in place to require such a diminished value.

New Hampshire 2007 Equalization Ratios To Be Announced

The New Hampshire Department of Revenue Administration will soon be establishing its tax year 2007 equalization ratios. These are the equalization as of April 1, 2007. The Department conducts both weighted mean equalization ratio study and a median equalization ratio study. In New Hampshire equalization ratios are essential to proving that tax abatement is warranted. Taxpayers must prove by a preponderance of the evidence that it is paying more than its proportioned share of taxes. The finder of fact must determine what is the appropriate equalization ratio as well as what is the market value of the subject property. The local assessor may claim that their equalization ratio is different from what the Department of Revenue Administration has determined. The median equalization ratio as determined by the Department of Revenue Administration generally preferred over the weighted mean equalization ratio or an equalization ratio claimed by the local assessor.

According to a recent article in the New York Times, the number of hotel deals in the United States during the first quarter of this year plummeted by more than 40%. There appears to be a significant spread between what sellers are asking for hotels and what buyers are willing to pay. At the same time, lenders are writing much smaller mortgages at higher interest rates than they were a year ago.

At the same time, buyers are starting to demand a higher return on their investment. Capitalization rates for hotels, like all other types of commercial property, are rising as well as investors demand a greater return on their investment.

All of this means that current tax assessments on hotels are probably inflated as a result of a general economic downturn throughout the country. Savvy owners should examine current market data to determine if these current market conditions have affected their property assessments.

The Department of Finance has just published its Final Assessment Roll from which the 2008/09 tax bills will be based on. However we have learned that due to expected delays in adopting New York City’s new budget tax rates will be set at last year’s rates and then will be adjusted mid year when the final budget is agreed to and adopted. Tax bills are expected to be mailed out to property owners on June 15 th. As in the past most larger property owners will have to make payments of the first half taxes through electronic bank transfers. Any taxes not paid by July 1 st will carry an 18 1/2 % daily compounded interest rate.

The December 2007 North Carolina Property Tax Update reported on a recent decision by the North Carolina Court of Appeals that reinforced the framework for the shifting burden of proof at the Property Tax Commission. The North Carolina Supreme Court has affirmed the decision of the Court of Appeals without comment. In Re Appeal of IBM Credit Corp ., 362 N.C. 228, 657 S.E.2d 355 (Mar. 7, 2008). The holding affirms that the taxpayer only has the burden to produce competent, material and substantial evidence that tends to show that the assessment is incorrect in order to shift the burden to the county to persuade the Commission that its methods would produce true values. Thereafter, the Commission weighs the evidence and issues its decision.

The decision reinforces that the taxpayer's initial burden is one of production, not persuasion, and is an important win for taxpayers.

In Ohio, as in many other states, the taxing districts are sensitive to the current drop in real estate values. Because the county assessors review many thousands of parcels, they tend to rely on mass appraisal practices. In a declining market this can, (or should), lead to assessment stagnation. School districts, however, are looking to increase revenues. As a result, your taxes are typically also reviewed by the local school districts where your property is located. Every year, thousands of taxpayers are faced with assessment challenges brought by school districts. These districts will hire attorneys and appraisers to review the county assessments and, where the schools or their attorneys feel there is room for an increase in the assessment they will file an appeal.

Taxpayers are understandably frustrated to find that an appeal has been initiated by the local school board. The first question they have is, can the schools file such an appeal? Unfortunately, even without a triggering event such as a sale, the schools can file a complaint. The second question is more important - what can I do to protect myself? Although each situation is different, getting representation immediately is important. Once an assessment is set in the tax rolls it is difficult to bring it back down. Do not wait for a local hearing as some options available at the local level are not available on appeal. Whether based on your initial assessment, or any subsequent appeal, you should always seek to be assessed based on current market conditions.

In Oklahoma, taxpayers are entitled to appeal Board of Equalization values to District Court for trial de novo on all issues of law and fact. Trial de novo means that the district court is to try the case anew, without regard to the Board proceedings. New evidence may be submitted, and there is no presumption that the assessor's value is correct.

Recently, in Cimmarron Transportation LLC v. Heavner, 2008 OK 44, the Oklahoma Supreme Court reversed the trial court and remanded the case for new trial because the trial judge erroneously gave presumptive effect to the assessor's method of valuation. In that case, the trial judge erroneously ruled that he could not change the value if the assessor' s valuation method (cost approach) was lawful.

This is the second time in recent years that district courts have been reversed for ignoring a taxpayer's right to trial de novo. Know your legal rights!

While April 15 th is “tax day” for federal and state income taxpayers, April 1 st is equally important to property taxpayers who wish to avoid paying property taxes for the upcoming year. Below is a list of exemptions for selected types of properties for which applications or statements must be filed with the local county assessor or the Oregon Department of Revenue on or before April 1 st to qualify for exemption from property taxes.

Cancellation of assessment for commercial facilities under construction. New buildings or additions to existing buildings are exempt from property tax assessment for up to two years while under construction. The building or structure must be under construction on January 1, 2007, not have been used or occupied before that time, constructed in the furtherance of the production of income (e.g. an industrial or commercial building or condo), and in the case of nonmanufacturing facilities, the building or structure must first be used or occupied not less than one year from the time construction commences. For manufacturing facilities, any machinery and equipment located at the construction site which is or will be installed in or affixed to the building or structure under construction may also be exempt.

Cancellation of assessment of pollution control facilities. A pollution control facility constructed in accordance with specific Oregon statutes and that has been certified by the Environmental Quality Commission may be exempt to the extent of the highest percentage figure certified by the Commission as the portion of the actual cost properly allocable to the prevention, control or reduction of pollution.

Exemption of nonprofit student housing . Student housing that is rented exclusively to students of any educational institution that offers at least a two-year program acceptable for full credit towards a baccalaureate degree may be exempt from certain ad valorem assessment. The exemption applies to student housing of an educational institution that is either public or private.

Exemption of low income housing. Property owned or being purchased by a nonprofit corporation that is occupied by low income persons or held for future development as low income housing, or a portion thereof, may qualify for tax exemption.

Exemption of ethanol production facilities. The real and personal property of an ethanol production facility may qualify for exemption of fifty percent of the assessed value of its property for up to five assessment years.

Exemption of rural health care facilities. The real and personal property of a health care facility with an average travel time of more than thirty minutes from a population center of 30,000 or more may be exempt from property taxation if the property constitutes new construction, new additions, new modifications or new installations of property as of January 1 st. Additionally, the exemption must be authorized by the county governing body in which the facility is located. The exemption can be for up to three years.

Exemption of long term care facilities. The real and personal property of a nursing facility, assisted living facility, residential care facility or adult foster home may qualify for exemption if the facility has been certified for the tax year as an essential community long term care facility. The Legislature specifically declared that a property tax exemption would enable essential long term care facilities to increase the quality of care provided to the residents because the full value of the exemption is applied to increasing the direct caregiver wages and physical plant improvements that directly benefit the facility residents and staff.

Special assessment of nonexclusive fare use zone farmland. Any land that is not within an EFU zone but that is being used, and has been used for the preceding two years, exclusively for farm use may qualify for farm use special assessment if the gross income derived from the farming operation meets a certain amount that depends upon the size of the farmland.

Special assessment of designated forestland in Western and Eastern Oregon. Forestland being held or used for the predominant purpose of growing and harvesting trees of a marketable species and that has been designated as forestland, or land in either Western or Eastern Oregon, the highest and best use of which is the growing and harvesting of trees, may qualify for special assessment if certain other requirements are met and a timely application filed.

Taxpayers who believe they qualify for cancellations of assessments, exemptions or special assessment should contact the office of the county assessor in which the property is located, or contact the Oregon Department of Revenue, to request application forms and instructions. The fact that a cancellation, exemption or special assessment is granted for one year does not mean the property automatically qualifies for exemption in subsequent tax years. A number of these cancellations, exemptions and special assessments require that applications be filed with the county assessor or the Department of Revenue each year. That is, an exemption or special assessment may be lost if an application is not filed in each successive year.

April 1 is the last day to file for the above-mentioned cancellations, exemptions and special assessments and assessing authorities do not have discretion to accept a late filing.

At present a case in Allegheny County is challenging the long held Pennsylvania standard of using contract rather than market rents to value property. The current system creates an unintended uniformity problem. Currently two theoretical properties can be assessed at drastically different values. The first property is occupied by a net lease tenant enjoying a long-term below market lease. Under present law that tenant should be taxed based on the value attributed to the lease payments.

The second property is owned by a competitor however the competing company owns the property rather than leasing. The current law provides that the owner of real estate be assessed based fair market value. And therefore market rents and market sales of like property would be used to establish value.

This system would have then two competing companies taxed at different amounts interestingly enough the company that enjoys the below market rents would also be taxed at a lower amount. As developments in this matter progresses APTC member firms can help you to plan or fight excessive taxation.

In Rhode Island The Time To Appeal May Be Now

In Rhode Island most communities are in the process of sending out their 2008 property tax bills. These tax bills pertain to the assessing or valuation date of December 31, 2007. An Application for Abatement may be filed with the assessor within 90 days of the due date of the first installment of the tax. The assessor has 45 days to make a decision upon the application. If he fails to make a decision within 45 days the Application is deemed to be denied. The taxpayer must then file an Application for Abatement with the local Board of Assessment Review. The Board of Assessment Review must afford the taxpayer a hearing. The taxpayer may appeal a decision of The Board of Assessment Review to the Superior Court in the County where the property is located that appeal must be made within 30 days of the date of the decision.

Tennessee taxpayers are entitled to equalization relief even though Tennessee is a market value state. The equalization is based on a sales ratio determined for each county by the Tennessee State Board of Equalization. The purpose of the sales ratio study is to establish the median level of valuation.

The State Board has recently completed the sales ratio study for 2008 and determined the proper ratio for each county. The ratios in selected counties are:

Shelby 93.30%
Hamilton 92.73%
Madison 92.15%
Knox 90.94%
Davidson 87.80%
Williamson 86.83%

Taxpayers in each county have the right to be valued at that county’s ratio. For example, a taxpayer’s property in Shelby County (Memphis) should be valued at no more than 93.30% of its fair market value. If the actual fair market value of a property in Shelby County, for example, is $10,000,000, then its value for property tax purposes should be no more than $9,330,000.

Taxpayers should be aware equalization relief is available in Tennessee and should understand how it works.

Taxpayer protests are currently underway throughout Texas with a target completion date of July 26. For taxpayers dissatisfied with the result of the administrative hearing at the appraisal review board (ARB), the only recourse is to file a lawsuit in district court. Since most lawsuits result in settlement, taxpayers should consider this as another potential avenue for tax reductions.

There are several prerequisites to the filing of a lawsuit. The taxpayer must file a protest and appear and offer evidence at the ARB. In addition, the taxpayer must not agree to a value either implicitly at the ARB hearing or explicitly with a written sign-off agreement.

The most common grounds for litigation are: 1) the taxable value of the property exceeds the fee simple market value of the property excluding any business value, or 2) the taxable value of the property is unequal in comparison to the taxable value of comparable properties.

The deadline to file a lawsuit is 45 days after receipt of the appraisal review board order determining the taxpayer’s protest. This order will be mailed by certified mail to the owner’s last address of record or to the owner’s tax representative.

Challenging property taxes through litigation has proven successful for many Texas taxpayers.

Utah State Tax Commission Equates “Value in Use” with “Fair Market Value”

The Utah State Tax Commission recently conducted an Initial Hearing involving the valuation of a mid-size retail box leased by a well-known national retailer. Property taxes in Utah are supposed to be assessed on the fee simple estate. The taxpayer’s appraiser testified there was little demand for a building of that size with its particular built-to-suit characteristics, and the low demand would drive the purchase price down significantly in a transaction between a willing buyer and a willing seller. The County argued a buyer would pay a higher price because the property was subject to a long-term lease with a strong tenant. The Commission chose to consider the effects the lease had on value, and adopted the County’s higher valuation. We believe this decision improperly taxes value in use and constitutes a potentially harmful precedent for other taxpayers. We understand this matter will be appealed to a Formal Hearing.

Owners of commercial property (multi-family residential excluded) in Fairfax and Arlington Counties are being assessed for the first time with a new tax. This tax is commonly referred to as the transportation tax. The proceeds of the tax are to be used to reduce congestion. Like all Virginia real estate taxes, the tax rate is adopted by the jurisdiction in which it is imposed. In Fairfax County the additional rate is eleven cents per hundred dollars of assessed value; in Arlington it is twelve and one-half cents per one hundred dollars of assessed value.

This new tax results in significant increases over last year’s base tax rates of 12% in Fairfax and 15% in Arlington. Other jurisdictions will likely follow the lead of Arlington and Fairfax in 2009. Watch for additional taxes in the Cities of Alexandria and Fairfax.

There is no doubt that the residential real estate bubble has burst, but now the question is how property tax assessors will respond to that fact. In King County – Seattle and its suburbs – a somewhat surprising answer is emerging. Assessment notices have been mailed in several residential areas and a few commercial areas. In general, values appear to be increasing by 10% to 15% percent over last year. How can that be? Part of the explanation appears to be that the Assessor’s office is trying to recover from several years of failing to keep up with the rapidly rising market. By 2007 King County’s real property assessment ratio had fallen to a dismal 83% of market value. For the King County Assessor, who was re-elected just last fall, this may be as good a time as any to play catch up. Other assessors’ calculations – both appraisal and political – will vary.

True Means of LIHTC - low income housing tax credit

In its 2008 regular session, the West Virginia Legislature addressed the appropriate means of valuing a low income housing tax credit (LIHTC) property. Historically, county assessors, supported by the state tax commissioner, have placed primary reliance upon the cost approach to value these properties, but not given any consideration to the functional obsolescence resulting from the restriction on rent increases. The Legislature, by overwhelming votes of both houses, directed that the property should be valued by capitalizing the property's actual income stream and not including the value of the federal tax credits associated with the project. Also to be taken into consideration were the impact of restrictions on transfer of title and other restraints on alienation of the property. Unfortunately, the governor vetoed Senate Bill 696, noting that the statute did not provide assessors with sufficient guidance to properly value LIHTC properties.

In two recent decisions which generated judgments against the City of Milwaukee totaling over one million dollars, two Wisconsin circuit court judges rejected theories espoused by the Milwaukee assessor to value commercial property.

In Allright Properties, Inc. v. City of Milwaukee, the assessor valued an off-airport parking lot based on the income that was generated by the retail parking business conducted on the site. The court found that the assessor’s position was not credible, since comparable land on the same thoroughfare was assessed at between $2.50 and $4.00 per square foot while the land owned by the parking operator was assessed at $25.00 per square foot. The court reduced the assessment by approximately $7 million.

In U.S. Bank v. City of Milwaukee, the assessor placed a separate value on safe deposit boxes and other special bank fixtures at branch banks in the city, above the value of the real estate. At trial, the bank presented expert testimony that the boxes and fixtures added no market value to the real estate, while the assessor offered no market evidence to support her position. The court rejected the assessor’s theory and valued the boxes and fixtures at zero.