These days I find myself having a plethora of conversations with clients regarding the status of property tax appeals. Everyone wants reductions and refunds NOW! Although I can understand the urgency, it is also important to realize that pursuing property tax reductions can take time.

There are many things to consider when estimating the timeframe of a property tax appeal. Can appeals be resolved informally? Does the local/administrative board typically grant reasonable reductions? How big is the reduction being sought? What is the appeal volume/backlog in the jurisdiction? Is it likely that the case will go to court? Is there no chance of the case going to court? These are just a few of the myriad factors that are important to consider regarding the timeframe of an appeal.

I understand that, in the current economy, companies are attempting to achieve savings as fast as possible. However, speed should not be such a driving force that it negatively impacts the result of the appeal.

The Texas Legislature has enacted H.B. 3612, establishing a three year pilot program which allows taxpayers an alternative to appealing Appraisal Review Board determinations to district court. The program applies to properties with an appraised value of $1 million or more in Bexar, Cameron, Dallas, El Paso, Harris, Tarrant and Travis counties. The program is effective January 1, 2010.

The California State Board of Equalization has issued a Property Taxes Information Directory containing contact information (email & phone numbers) for property tax contacts at the BOE.

In the recently decided case of Ace Hardware Corp. v. Little, the State of New York Supreme Court, Appellate Division agreed with the Supreme Court’s dismissal of the taxpayer’s petitions for failing to meet it’s burden by a preponderance of evidence. The trial court found the taxpayer’s appraisal inappropriate, in large part, due to the fact that the taxpayer’s appraiser utilized a “reconstruction cost approach” which was “not included in the treaties traditionally relied upon by real estate appraisers”. I was hoping there would be more details describing the “reconstruction” approach, but the decision does not offer an explanation.

In the case of Aida Renta Trust v. Maricopa County the Arizona Court of Appeals recently affirmed a trial court decision finding that Maricopa County engaged in unconstitutional, discriminatory property tax valuation procedures. It appears as though Maricopa County decided to value properties within the same class (apartments) differently. The Decision states: 

“The County did not merely make an appraisal error; it applied a wholly different valuation procedure to properties within the same class. The County acted purposefully. The multiple incidences reaffirm the belief that they are systematic and intentional. We do not believe repeated taxation conduct is a random mistake.”

In the recent post California Property Tax Revenue is way up Despite Prop 13, Morgan Conrad offers a rebuttal to the myriad claims that California’s economic woes can be blamed, in large part, on Prop 13. It seems that since 1981 property tax revenue has increased some 600%. According to the numbers that’s about twice as much as inflation and population growth combined.

Today I came across an interesting article titled Big Box Recycling that discusses what happens when big boxes go dark.  Some of the alternative uses mentioned are churches, swap meets, go-cart tracks, schools, private prisons and even a museum dedicated to spam. I will throw in roller skating rinks, bars, flea markets and a meat processing facility, to name a few.

In the recently decided case of Target Corp. v. Green County Board of Revision, the Supreme Court of Ohio affirmed a BTA decision finding that the taxpayer’s appraiser properly valued a big box retail property by utilizing second-generation sales and lease rates. 

In this instance the appraiser utilized sales and rentals of two abandoned Ames stores and two abandoned Kmart stores to arrive at an opinion of value. The decision reads: 

“After a lengthy discussion of big-box marketability, the appraisal states that ‘the fee simple market value of these properties is substantially lower than replacement costs, not only due to physical depreciation but also obsolescence. This obsolescence occurs the day they are completed thus even brand new big box stores are worth less than their cost to rebuild’” 

This is a good case for big box taxpayers in Ohio. I think it fairly and realistically addresses the market value for big boxes after “the name” vacates the property.

Yesterday Governor Charlie Crist signed HB 521 into law. The legislation supposedly shifts the burden of proof (at least in part) to the property appraiser relating to property tax appeals. The Governor’s press release states: 

“This bill makes it easier for Floridians to challenge property appraisers’ valuation of their properties and also helps to ensure a more fair valuation. Previously, Florida law left the burden of proof to the taxpayer and presumed an appraiser’s assessment was correct. This legislation provides that taxpayers who can present evidence that is more convincing than the property appraiser’s assessment will be entitled to a revised assessment.” 

However, the actual language of the bill is not quite as clear. 

Section 1 states: 

“In any administrative or judicial action in which a taxpayer challenges an ad valorem tax assessment of value, the property appraiser’s assessment is presumed correct if the appraiser proves by a prepondeance of evidence that the assessment was arrived at by complying with s. 193.011, any other applicable statutory requirements relating to the classified use values or assessment caps, and professionally accepted appraisal practices, including mass appraisal standards, if appropriate.” 

So far so good. The property appraiser needs to prove that the assessment is correct, hence placing the the burden of proof on the property appraiser. 

But then section 2 states: 

“In an administrative or judicial action in which an ad valorem tax assessment is challenged, the burden of proof is on the party initiating the challenge” 

Is it just me or is there a contradiction here?

In the recently released case of J.C. Penny Corporation v. Town of Manchester the Connecticut Appellate Court affirmed the trial court’s decision denying J.C. Penny’s appeal of it’s personal property assessment, finding that J.C. Penny failed to meet the burden of proof that it had been aggrieved by the assessor’s actions. 

J.C. Penny filed an amended declaration of it’s personal property assets along with a statement indicating that the declaration contained a large amount o ghost assets and that they reserved the right to appeal the assessment after a physical inventory was completed. The assessor then established the assessment according to the filed declaration. J.C. Penny appealed the assessment administratively, to Superior Court and then to the Appellate Court. 

The Appellate Court’s decision states: 

“The critical document in the present case is the plaintiff’s amended declaration, filed with the assessor on December 5, 2005. There are, in effect, two ways in which to characterize the plaintiff’s amended declaration: (1) as a complete filing of all of its personal property for the given tax year; or (2) as an incomplete filing. In either respect, the plaintiff has failed to meet its initial burden of demonstrating that it has been aggrieved by the actions of the town assessor.” 

The decision then goes on to indicate that it is a taxpayer’s obligation to file a timely, complete and accurate declaration. If the taxpayer fails to do so then the assessor is entitled to rely upon the best available information in valuing the property. Therefore, by seeking a reduction after filing the amended declaration the taxpayer was essentially requesting a “do-over”, which is not permitted by law. 

I would be interested to hear your take on this case.