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ARIZONA Property Tax Update
Updated September 2008

Arizona Court of Appeals Holds That Depreciation Tables Used for Valuation of Electric Generation Facilities are Guidelines, Not Rule.

In Duke Energy Arlington Valley, LLC v. Ariz. Dept of Rev., 534 Ariz. Adv. Rep. 31 (Ariz. App. 2008), the taxpayer filed a complaint for declaratory judgment, seeking a declaration that the depreciation tables adopted by the Department of Revenue for the valuation of electric generation facilities were a rule required to comply with the rulemaking requirements of the Arizona Administrative Procedure Act. The taxpayer sought to have the tables were utilized in preparing the taxpayers’ property valuations declared invalid because the Department did not comply with the requirements of the Arizona Administrative Procedure Act in adopting and promulgating the tables. The Court of Appeals determined that the plain language of the statute made clear that the legislature intended the tables to operate as guidelines rather than rules, and second, the tables operate more as guidelines than rules.

The updated assessment cycle is bringing to bear new principles for the valuation of properties in the Province of Ontario. The statutory definition has not changed but the assessment practices, policies and procedures may have.

There is an attempt at least conceptually for the Municipal Property Assessment Corporation ("MPAC") to look more closely to values in exchange as opposed to the traditional direction based upon the present use of property being assessed. This has positive and negative effect.

Such an approach allows MPAC to have regard to the highest and best use substituting a highest and best use approach to the assessment based on present activity on site. One can easily imagine how speculative the analysis of an assessment authority might become as it targets properties which it believes are underutilized.

For certain industrial sectors, however, those particularly improved with older industrial facilities, the concept of alternative highest and best use can be of significant benefit. Traditionally, using a replacement cost approach, MPAC has argued strenuously against appropriate functional and economic obsolescence being accorded. The new approach may open negotiation for a more realistic recognition of those adjustments without the need, as in the past, to move forward in litigation. In many respects, only time will tell.

Notices of Assessment for the 2009 assessment cycle are being mailed between September 15 th and November 17 th, depending on the area of the province in which the properties are situated. It is important to closely monitor receipt of the Notices of Assessment as they will reflect the reassessment to the 2008 base year value.

Given the predisposition now of MPAC as it claims to look more closely to "true value", substantial changes from the 2005 base assessment can be anticipated.

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 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 September 2008

Property Tax Reform Approved by Voters

We previously wrote about a recent change in Florida law which for the first time caps increases in assessed values of real property for ad valorem tax purposes. We are writing now with updates to our prior article based on changes that have been made in implementation of this law.

Beginning in 2009 the new law will limit assessment increases to no more than 10% over the prior year’s assessment, regardless of the increase in market value. Properties may be reassessed at market value upon a change of ownership or control, including a change of ownership of the legal entity that owns the property. Changes, additions, reductions or improvements to property will not be subject to this cap.

When first enacted, the law required property owners to apply for the cap on increases. This has now changed and no application is required. The cap will be automatically applied to all properties.

Property owners must, however, notify the county property appraiser of any change in ownership or control of a property, including a change in control of the entity that holds title to the property, even if a deed is not recorded.

Once a County Board of Equalization has rendered a decision on an administrative appeal, that value is used for the computation of tax liability during the pendency of a subsequent judicial appeal. Any overage is to be paid from November 15 th of the tax year in question or the date that the final installment of the tax is due, plus interest at one percent per month, subject to a $150.00 limit O.C.G.A. § 48-5-311 (g)(4)(B)(iii).

Effective May 14, 2008, the statute was amended to provide that refunds shall be paid to the taxpayer within 60 days of the last date upon which an appeal may be filed or the date the final determination of value is established on appeal, whichever is later. Refunds paid after the sixtieth day accrue interest at the rate of one percent per month until paid. The prior statutory provision that provided that interest shall accrue for a period of no more than 180 days was deleted. O.C.G.A. § 48-5-311(m).

The Idaho State Tax Commission went under the microscope on May 28 th when one of its own auditors filed a 17-page whistleblower report claiming that the Commissioners routinely allow out-of-state corporations to pay a fraction of the income taxes they really owe. The auditor also complained that settlements are kept secret under a “loophole” in the state’s public records law. Copies of the whistleblower report were delivered to the Governor, the Attorney General, and every member of the Legislature. The Governor appointed a retired CPA from Deloitte & Touche to investigate the matter. His report was delivered on August 18 th and, while it exonerated the Tax Commission, it also made suggestions for improvements. The Governor directed the Commission to implement the suggestions by September 30 th and, beginning in January 2009, make an annual report to the Legislature that details all settlements to the extent allowed by state and federal law.

On September 17, 2008, the Cook County Board approved the Cook County Assessor’s proposal to change the Property Tax Classification Ordinance from six assessment levels to two – 10% for residential property (from 16%) and 25% for commercial and industrial property (from 38% and 36% respectively). The Assessor said the measure must be adopted now so the new assessment levels can be incorporated in the City of Chicago 2009 triennial reassessment (taxes paid in 2010 to 2012).

While it may sound like a good idea that will lower taxes, with business groups, we opposed this measure because experts predict it will result in a shift of property taxes from residential to commercial taxpayers. We argued for more study as to the impact of the change. Instead, the County Board chose to accept the Assessor’s argument that this change will not increase taxes on businesses and homeowners alike.

The basis for business group concerns is that the Illinois Department of Revenue sales studies indicate that the de facto assessment level for residential property in Cook County is 10% (ratio of sale price to assessed value), so this proposal is unlikely to change residential taxes. However, studies on commercial and industrial property indicate a de facto assessment level closer to 20%. Therefore, changing the ordinance level to 25% could result in a tax increase for commercial and industrial property. In addition, we believe the lower assessment levels may further increase the state multiplier (which equalizes all property taxes statewide at 33-1/3% of market value), resulting in higher taxes for all taxpayers.

The Assessor maintains that reducing the assessment levels and adjusting the estimated property value to more truly reflect the actual market value will not change a property’s taxes bill. Given the actual, or de facto, levels of assessment for commercial and industrial property, we believe that an increase in commercial and industrial taxes is likely to occur.

Indiana Property Taxes In The News

Much chaos remains as a result of the tax reform in Indiana. Annual tax bills are delayed, new assessment notices are delayed, and uncertainty amongst the 92 counties throughout the State continues. For most counties throughout the State, 2007 (pay 2008) tax bills are being mailed with due dates in October or November. These bills are normally issued in April and due May 10. Since there are so many irregularities and uncertainties, it is imperative that the Taxpayers monitor due dates for their properties. The first installment 2007(pay 2008) tax bill also commences the deadline to file an appeal contesting the March 1, 2007 assessment, so the issuance of the bills is critical.

November Ballot Referendum
Pursuant to the 2008 legislative action, there is a referendum on the November ballot this year for Taxpayers to determine whether the local township assessing officials should be removed and all assessing duties transferred to the county level. There are only 42 township assessors remaining in the State. Taxpayers should be aware of the referendum on the ballot and vote accordingly.

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.

The Kentucky Court of Appeals recently clarified the law regarding the timing of real property tax appeals, holding that a taxpayer wishing to challenge an assessment must do so within the statutory appeal period for the tax year in question. The taxpayer in Jefferson County Property Valuation Administrator v. Cromwell Louisville Associates, No. 2007-CA-001128-MR (Ky. Ct. App., Aug. 8, 2008) had received an increase in the assessment on its parking garage property for tax year 2001, but failed to appeal that increase during the 2001 assessment conference period. The taxpayer subsequently attempted to challenge both the 2001 and 2002 assessments during the 2002 conference period. The Court of Appeals reversed the ruling of the Jefferson Circuit Court, which had held in favor of the taxpayer. The court reviewed the relevant statutes and found that KRS 133.120 and 133.045, when read together, did not authorize a taxpayer to challenge any assessment beyond that set for the current year.

This decision does not represent a marked change from existing law, since it has long been understood that real property tax appeals are limited to the tax year in question. The decision does, however, underscore the importance of observing the deadlines established by KRS 133.120, since a failure to follow those administrative appeal requirements in a timely fashion will prohibit a taxpayer from challenging its assessment for that particular year.

Property Owners with Gustav Damage Entitled to Reduced Property Tax Assessments

Property taxes in Louisiana are based on the fair market value of taxable property. The assessors make the fair market value determination based upon the status and condition of property as of January 1 of each tax year. Certain types of real estate are generally revalued every four years; however if market conditions suggest changes in fair market value, adjustments can be made during the four year cycle. Most equipment and personal property is valued annually. La. R.S. 47:1978 and La. R.S. 47:1978.1 provide relief provisions for property owners that sustain damage after January 1 due to flooding or a natural disaster. La. R.S. 47:1978.1, which was enacted after Hurricanes Katrina and Rita, provides that if buildings, structures or personal property are damaged, destroyed, non-operational or uninhabitable due to an emergency declared by the Governor then the assessment of such property should take into account all damage to the property even if the assessment rolls are complete.
Different procedures apply depending upon the point in the assessment cycle that the natural disaster occurs. Business property and homes that were damaged in Gustav are due a reduction in assessment even though the January 1, 2008 assessment date has already passed. Gustav hit during a critical time in the assessment cycle; therefore, the implementation of La. R. S. 47:1978 and 47:1978.1 will vary by parish. Owners of Gustav damaged property should contact the parish assessor to determine how the revaluations provisions will be implemented. Kean Miller can help with disputes related to the assessment of damaged property.

Most communities have sent out their fiscal year 2009 property tax bills. The fiscal year 2009 has an assessing date of April 1, 2008. If a taxpayer wishes to appeal the assessment he must file an Abatement Application with the assessor within 185 days from the commitment date. The commitment date is usually several days before the tax bills are actually sent out. When computing the filing deadline, the taxpayer must pay particular attention as to when the commitment date occurred. Once the Abatement Application is filed the assessor has 60 days to act upon the application. This 60-day period provides a very good opportunity for the taxpayer to present its case to the assessor. After the 60-day period the taxpayer has the right of further appeal. As a practical matter in most cases it is before the assessor that most meaningful results are attained.

The Massachusetts Appeals Court recently held that in the case of Stanley P. Roketenetz, Jr. v. Board of Assessors of Lynnfield 72 Mass. App. Ct. 907 (2008) that the taxpayer must allow the assessors to physically inspect a property under an appeal for abatement of property tax. Failure to allow such access gives the Appellate Tax Board the authority to dismiss the taxpayer’s appeal. The taxpayer argued that this inspection violated the Fourth Amendment to the United States Constitution, which prohibits unreasonable searches. The Court held that the Fourth Amendment did not apply to the discovery process of a property tax appeal unless there was evidence that the tax assessment was a subterfuge to gain access to the property. The lesson here is that if the assessors request it, you must provide access to the property under appeal. If you refuse to allow the assessors to inspect the property, your appeal will probably be dismissed.

MARYLAND Property Tax Update
Updated October, 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.

Thus far it has been a relatively quiet year in terms of Michigan property tax decisions and legislation. This has occurred primarily because of relatively few new Tax Tribunal decisions, attributable to the high number of Tribunal Member vacancies, as well as a tax legislation stalemate. Michigan taxpayers should not be surprised by significant changes on both of these fronts before the end of the year.

The governor recently appointed Victoria Enyart, Kimbal Smith III and Stuart Trager to the Michigan Tax Tribunal. Victoria Enyart has worked both as an assessor and property tax consultant; she is a past president of the Michigan Assessor's Association and has the State’s highest level CMAE IV designation from the State Assessor's Board. Kimbal Smith III has been in the legal profession for almost forty years and his experiences include serving as a Deputy State Treasurer of Michigan and representing taxpayers in the Tax Tribunal. Stuart Trager is also an attorney and he had been involved in property tax litigation and legislative matters while serving as Supervising Assistant Corporation Counsel for the City of Detroit Law Department. Both Tribunal Members Enyart and Smith have previously served as Tax Tribunal Members. The addition of these Members is expected to result in new Tribunal decisions before the end of the year.

Besides the likelihood of new Tribunal decisions as the year end approaches, the legislature is considering a number of important new tax measures that could be passed before the end of the year. Few expect these pending bills to move before the election. However, it is quite possible that the leadership of the Democratic controlled House and Republican controlled Senate could agree on a large legislative package that results in significant Michigan tax changes. This is likely to be one holiday season where Michigan taxpayers should stay in touch with their Michigan tax advisors and legislators.

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.

Property owners in Missouri should be receiving their tax bills, within the next several weeks. Some will suffer sticker shock at the amount of the bill. Others may have appeals pending or have already sought relief through the appeal process. If an appeal is currently pending before the State Tax Commission it is required that taxes paid (due December 31, 2008) be accompanied by a protest letter. The letter should be attached to the check. For property owners who do not have appeals pending, nothing can be done about the 2008 bill. However, 2009 will be a reassessment year in Missouri setting the value of the property for tax purposes for the two year cycle. Missouri counties may have different appeal dates. Property owners should be reviewing their property values to determine if an appeal is warranted. Owners should be alert for possible notices of increase in valuation by the Assessor for 2009.

Nevada Supreme Court Requires That the Methods Used for Assessing Taxes Throughout the State Must Be Uniform

In State ex rel. State Bd. of Equalization v. Barta, 124 Nev. 58, 188 P.3d 1092 (2008), the Nevada Supreme Court once again reiterated that the methods used by county assessors to assess taxes must be uniform. Many of participants in Barta were involved in State ex rel. Bd. of Equalization v. Bakst, 122 Nev. 1403, 148 P. 3d 717, 723 (2006). In that case, the Court found that the methodologies the assessor used to determine land values at Lake Tahoe were invalid and violated the Nevada Constitution. Rather than reappraise the properties, the assessor developed a factor based on an analysis of general market trends. This factor was applied to the previous year’s values to calculate taxable values for the current tax year. But here, the previous year’s values were found to be unconstitutional in Bakst. Simply applying a factor to adjust a value which was not constitutional did not cure the underlying problem. However, that did not end the case.

The standard for valuing home sites at Lake Tahoe is full cash value. The plaintiffs in Barta admitted that the taxable value of their properties did not exceed their full cash value. The State and County appellants raised the issue that the assessment should not be vacated unless it exceeded full cash value. The appellants argued that a taxpayer is only harmed, and therefore entitled to appeal, if the taxable value assigned to his property is higher than full cash value. The Nevada Supreme Court, however, did not agree. The Court held that deviation from the approved methodologies deprives taxpayers of their right to a uniform and equal rate of assessment and taxation. A taxpayer has a remedy to challenge the methodology employed to determine value, regardless of whether that value is greater than or less than full cash value.

You Must Allow the Assessors Access to Your Property

In the case of Appeal of Patrick Walsh & a. 156 NH 347 (2007) the New Hampshire Supreme Court ruled that the taxpayers failed to allow the assessors access to inspect the subject property would lose their right of appeal in a tax abatement case. In this case the taxpayer never actually refused to allow the assessors to inspect the subject property. The taxpayers were merely “unresponsive” to the assessors’ requests for access to the subject property. The Supreme Court ruled that the unresponsiveness was tantamount to a refusal to grant consent to an inspection. This refusal was fatal to the taxpayers’ appeal. In New Hampshire if requested you must allow the assessors access to the property under appeal for the purpose of an inspection. This means that you cannot simply ignore their request to inspect the subject property. If you do, your appeal will probably not survive.

New Jersey taxpayers need to understand the revaluation process and take steps to make certain that the valuation of their property is done according to law. The first step in this process is meeting with representatives of the revaluation firm and examining the underlying data relied upon in setting market value. Just as importantly, taxpayers need to examine whether the revaluation was performed properly under New Jersey law, yielding a uniform valuation for the entire taxing jurisdiction.

In order to accomplish the due diligence necessary in this analysis, any taxpayer may make an “Open Public Records Act” (OPRA) request to obtain underlying data for a revaluation. These documents should include the municipality’s revaluation contract and relevant correspondence from the county tax board and the State of New Jersey Division of Taxation. Often there will be correspondence critiquing the revaluation for various errors.

Taxpayers should also request a sales ratio report from the assessor or county board of taxation. This report will demonstrate if the overall level of assessment is at 100% of market value for all classes of property. In order for a revaluation to be proper, both market value and uniformity must be properly addressed.

The events of the last several weeks which included the demise of Lehman Brother, the acquisition of vast turns by JP Morgan, the merger of Merrill Lynchwith Bank of America and the catastrophe at AIG all which are headquarted in NYC have changed the city’s economic climate. The City of New York is heavily dependant on tax revenue generated by the financial services industry. These non real estate tax revenues will fall far short of budget estimates. As a result the Mayor and City Council are in the process of considering raising the tax rate by 7% to be billed on the second half tax installment due on January 1, 2009. The tax rate for 2009/10 is also expected to reflect a 7% increase as well. The full impact of losses to City and State revenues from lower income tax transfer and recording tax revenues is not known but could be substantial

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.

Taxing authorities in Ohio are responding to the credit crisis and the housing meltdown in a way that may not benefit taxpayers. Several counties have approached the state tax director seeking approval to not increase assessments due to the housing crisis. The State has responded that the counties are required to show that in whole the assessments of the county are supported by the market place. Some County auditors are trying to hold on to values and spin the reassessment into benevolently not raising assessments.

As taxpayers we must be diligent in our pursuit of fair assessments and make certain that although values may not change during reassessment, that our properties are actually fairly assessed. The fall marks the period of certification of tax rolls in Ohio. The period in which taxpayers can file claims begins in January. Watch out for assessments that do not fall with the market.

Under Oklahoma law, a taxpayer protesting a tax assessment must timely file an informal appeal with the assessor, then a formal appeal with the county board of equalization, and finally a petition in district court. Typically, district court tax appeals have not been resolved prior to the December 31 deadline for payment of property taxes. 68 O.S. § 2884 mandates that all protested taxes must be timely paid in full, accompanied by a written notice of payment under protest and a copy of the district court petition. Payment of taxes under notice of protest obligates the county treasurer to hold the protested taxes in escrow pending final adjudication of the tax appeal. This allows for immediate refunds upon settlement or final adjudication. However, failure to timely pay the taxes in full under written notice of protest will result in dismissal of the appeal.

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.

Pittsburgh, Pa played host to the Pennsylvania Supreme Court this September. The issue brought to the Court by Clifton et al, and Pierce v. Allegheny County was whether the state law that permits a county to establish a base tax year is unconstitutional. Currently state law permits the County to establish a base tax year. In 2005 Allegheny County decided to ignore the reassessment and use 2002, the date of the last reassessment as a base year. A great number of the counties in Pennsylvania use base years. The result of the base year is that counties do not have regular reassessments; and they rely on a sales ratio study to create perceived uniformity.

A ruling against the use of base years will likely create some short term drastic changes to the tax system in Pennsylvania and a flood of reassessments.

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.

Taxpayers in Tennessee may challenge their property tax assessments by filing an appeal to the county board of equalization. If taxpayers are not satisfied with the county board’s decision, they may file an appeal to the Tennessee State Board of Equalization. The appeal to the State Board must be filed before August 1 st of the tax year, or within forty-five days of the date notice of the county board decision was sent, whichever is later.

The State Board of Equalization generally does not have jurisdiction if the taxpayer did not file an appeal to the county board. Tennessee law provides an exception to the requirement that an appeal must first be filed to the county board, known as “reasonable cause”. The taxpayer has the right to a hearing to show reasonable cause for the failure to file an appeal with the county board.

There is a time limit in which to base an appeal on reasonable cause. The taxpayer must file the appeal on or before March 1 st of the year subsequent to the tax year.

Taxing units throughout Texas will soon be adopting tax rates and sending tax bills. Taxpayers should consider tax payment requirements and potential last opportunities to contest the taxes.

Tax payments: Taxpayers must be vigilant to avoid missing payment of a tax bill. All taxpayers receive a school and county bill and, if located within such, a city or special district bill. Tax bills are sent to the “most recent address in possession” of the county appraisal district whether current or not. Failure to send or receive a bill does not affect liability. Also, most tax bills are sent to agents rather than to the taxpayer. It is the taxpayer’s responsibility to pay all taxes with or without a bill.

Taxes must be paid by January 31, 2009 and will, if delinquent, incur up to 1% per month interest, 12% penalty and 15% attorney collection fee. Payment is recommended by postmarked, certified mail, return receipt.

Final Protest Opportunity: Some taxpayers are questioning why they did not contest their valuations last spring. It may not be too late if: (1) you did not protest during the regular protest period or (2) you protested but withdrew the protest.

These taxpayers may still protest their valuation if the taxable value exceeds the correct market value of the property by more than 33%. To do so, you must prior to February 1, 2009, (1) file the motion for correction with the Appraisal Review Board of the Appraisal District and (2) pay your 2008 taxes.

Utah law provides that all property which “operates as a unit across county lines” is subject to central assessment by the Utah State Tax Commission. Utah Code Ann. § 59-2-201(1)(a). On June 27, 2008, Qwest Corporation submitted a rulemaking request to the Commission wherein it requested that the Commission amend its central assessment rule to explicitly included cable companies that provide two-way telecommunications services within its umbrella of central assessment. Qwest argued that the current operation of certain cable companies in Utah clearly satisfies this statutory requirement for central assessment. Comcast and other cable have opposed the rule claiming that they should be viewed as local operating units because of the franchise agreements they are required to enter into to with cities and counties in order to provide services. The Commission should issue a decision by the end of September as to whether they are willing to entertain rulemaking procedures on this issue.

Most Northern Virginia jurisdictions fund a significant portion of their operating budget from real property taxes and are in the process of determining their 2010 budgets. The 2010 budgets are funded with taxes collected in 2009.

As a result, we expect to see significant increases in the tax rates as localities attempt to counter the loss in value to the tax base. At least two local jurisdictions, are discussing increases in the base tax rate of almost 15%. Of course, each property’s tax liability should be reviewed and budgeted for independently.

Our last article reported on early indications of how assessors are responding to the deteriorating real estate market. King County – Seattle and environs – continues to stand out with value increases of 10% to 15% over last year. How will you respond? First, know your administrative appeal deadline. This is a property-by-property inquiry. Second, if your administrative appeal deadline has already expired, you can pay the resulting taxes under written protest, setting forth the grounds for protest, and then commence a refund lawsuit. The first tax payment on your 2008 value will be due on April 30, 2009. Third, consider whether your 2008 value raises uniformity concerns. The statutes call for all real property to be valued at 100% of market value. In practice, however, many assessors are as far off the mark as they have been in decades. This may allow you to make more than the usual appraisal arguments.

October Opens Busy Season for Industrial Real Estate Taxpayers

The West Virginia property tax calendar enters its most active season in October, when industrial tax returns are due from taxpayers, listing industrial personal property. Through the balance of the calendar year, the State Tax Department and local assessors generate appraised values for all property in the state of West Virginia. By February 1 of 2009, those appraisals are delivered to the several county commissions, which sit as Boards of Equalization and Review during that month. Any challenge to any assessment must be initiated by appearing before the Board of Equalization and Review, generally during the first three weeks of February, and presenting competent evidence as to the true and actual value of the property. Failure to appear before the Board of Equalization and Review bars any further challenge, either directly or collaterally, to the true and actual value of the property. The only exception is for public utility property for which a challenge to appraised value must be taken before the state Board of Public Works in October.

Wisconsin Supreme Court Rejects Assessment Based On Above-Market Contract Rents

In a major decision rejecting an assessment theory which had been used by assessors across Wisconsin, Walgreen Company v. City of Madison, the Wisconsin Supreme Court unanimously held in July 2008 that property subject to a lease which provides for above-market rent cannot be assessed on the basis of the above-market income stream.

The taxpayer in Walgreen implemented a business model under which it leased the real estate for its retail locations rather than purchasing it. The taxpayer worked with developers who acquired the real estate and then built the stores to the taxpayer’s specifications. The leases contained contract rent payments designed to reimburse the developers’ land acquisition, construction, development and financing costs, and to provide a profit margin for the developers. The contract rent payments thus far exceeded market rent.

The Madison assessor, along with other assessors across the state, assessed the properties based on the above-market income stream under the leases, on the theory that a purchaser of the real estate would acquire the income stream under the leases and thus the income was attributable to the real estate.

The Supreme Court rejected that theory, however, holding that additional income attributable to an above-market lease represents a contract benefit and not increased real estate value. The Court held that a lease can never increase the value of real estate above its fair market fee simple value.