Maureen Monaghan, Chief Counsel. Relative Property Tax Burden.
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Transcript of Maureen Monaghan, Chief Counsel. Relative Property Tax Burden.
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Board of Equalization Workshop 2015
Maureen Monaghan, Chief Counsel
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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
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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
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Property has a market value of $100,000 Classified as residential Assessed value is $19,000 6%
$1,140
Examples of Fractional Assmt
Residential
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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
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Property has a market value of $100,000 Classified as commercial - $32,000 AV 6%
$1,920
Examples of Fractional Assmt
Commercial
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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
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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
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Assessor
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January 1 – valuation date Odd year vs even year March 1 – Personal property declaration Impact notices July 1 – turn over their books
Timeline
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Appraised Value Fair market value True value in money
Value
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Agriculture Business Personal Property Automobiles Residential and Commercial Real Property
Valuing Property
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Grade 2015 Pre 20151 $1,035 $9852 $850 $8103 $645 $6154 $405 $3855 $205 $1956 $158 $1507 $79 $758 $31 $30
AG VALUES
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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
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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
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Land Buildings, structures, improvements and
fixtures Rights and privileges belonging to the land
Real Property
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Cost Sales Comparison Approach Income Approach
Approaches to Value
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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.
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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
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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
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Marshall and Swift Boeckh
Publications Dodge Cost
Systems
Source books
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Physical Functional External
Depreciation
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Curable items – worn flooring, paint, etc Incurable items – cracked foundation
Physical Depreciation
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Curable: inadequate hot water heater Incurable: poor layout, ceiling height (too
high, too low)
Functional Obsolescence
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Outside factor impacting the property
Zoning, busy roads, economy, environmental
External
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Sales Comparison Approach
Uses property sales to estimate the value of an unsold property.
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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
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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
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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
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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
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$1000 income $300 expenses $700 net income OAR 8% $700 / 8% = $8,750 indicated value
General Formula
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Boards of Equalization
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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
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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)
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Hear complaints and appeals Equalize assessments – adjust, correct, and
equalize Add Omitted Property
Role of the Board of Equalization
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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
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2nd Monday in July – Appeals Due 7/1 May start meeting in reassessment
year 3rd Monday in July – must start 7/31 End
Timeline
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Exempt Overvaluation Misclassification Misgraded Ag Discrimination/Ratio
Appeal Categories
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(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.
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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
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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
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Improved properties transitioning Vacant Land Based upon the actual use of the property
Misclassification
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(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
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Taxpayer believes their property is assessed higher than others
Extremely hard to prove Must show the median assessment of the
subclassification of property
Discrimination
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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
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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.
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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
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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
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Negotiate a settlement Adjust based on hardships or individual’s
circumstances Grant exemptions without a legal basis Allow unproductive arguments
DO NOT!:
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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
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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
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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
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Member Maintains the records Adjusts the books according to the decisions
or orders of the BOE
Clerk’s Duties
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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
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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
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www.stc.mo.gov Legal decisions Information on
valuation Information on
appeals
Department of Revenue◦ Property tax
assistance programs
Resources