In the Winter 2016 Issue:
Two years ago, the Connecticut General Assembly created a panel to study Connecticut's real and personal property tax system in the hope that proposals could be developed to moderate its many negative effects. These levies, extremely high in Connecticut's major cities, impose substantial burdens on society and the overall economy. Sadly, while the members of the panel agreed that there were major structural problems in the current system, only the creation of a sale tax surcharge to assist struggling municipalities was proposed.
As Keith M. Phaneuf reports in the December 29 issue of the (online) CT Mirror, "most other major proposals to ease burdens on municipal taxpayers bogged down." The panel's charge prohibited it from developing any proposals to revise spending and demanded that any tax increase proposals required an equal reduction in another tax. Based on its understanding of what it could and could not do, the panel did not even adopt a proposal to improve funding of existing payment in lieu of taxes (PILOT) programs which are seriously under-reimbursed by the state.
Of some minor note was the group's ability to agree that the current five year reassessment cycle should be reduced to one year and regional revaluation programs should be encouraged to reduce cost.
The panel's understanding of the limitations on its mere consideration of more meaningful options dooms its ultimate report to likely irrelevance.
In a fascinating little tax case involving the value of a former gas station property in Burlington, Vermont, the property owner asserted that the site was valueless due to pollution remediation costs which she could not very well substantiate.
The Supreme Court of Vermont addressed three issues which also worked against her claims:
1. Because the owner had not paid real estate taxes for a while, the City of Burlington brought a tax lien foreclosure action. The owner’s claim that the “lack of bidders for her property at the tax sale demonstrated that the property was worth nothing . . .” did not help her. The court observed that “tax sales are not good indicators of property value because of low attendance and restrictions on the properties sold, such as the owner’s right to redeem.” The same observation could apply in Connecticut.
2. The owner’s claim of zero value was also undercut by her ongoing ability to rent the single family home on the property for a hefty sum on a regular basis.
3. The City’s evidence of an independent investor’s offer to purchase the property at a substantial price certainly did not help the plaintiff. While recognizing that an unaccepted offer does not have significant evidentiary value, it was proper for the trial court to rely on this evidence “not to set the fair market value, but to contradict taxpayer’s own testimony that she believed the property was worthless.”
This was a tax appeal doomed to go down in flames.
In re Bilmar Team Cleaners (Margaret Murray, Appellant) Supreme Court of Vermont, Docket No. 2013-414 (2004)
It may come as a surprise to readers of Property Tax and Valuation Topics that in some jurisdictions, assessors do not know the price at which commercial property sells. An example is Texas where sales price disclosure when conveyances are recorded is not required.
Last August, the City of Austin brought a declaratory judgment suit to obtain sales price disclosure claiming that its assessor is not able to do his job properly. Most importantly, the assessor argued that “it is nearly impossible” for appraisal districts to assess all properties at market value so that they are taxed equally and uniformly as required by the Texas constitution. . .” without disclosure.
The commercial real estate community responded that the assessor was seeking legislation through the courts rather than from the proper source - the Texas legislature. According to the November 3, 2015 Austin American – Statesman, opposition to sales price disclosure probably stems as much from concerns about the imposition of a conveyance tax on real estate transactions, a levy with which the Connecticut real estate community is quite familiar, as much as an effort to frustrate the functions of the assessor’s office.
Because it is easier to determine market values of residential properties given the wealth of data in brokers’ multiple listing systems, the Austin assessor argued that lack of disclosure has caused commercial properties to be undervalued, possibly by as much as 27 percent.
Apparently concluding that this effort would fail, the lawsuit was withdrawn leaving Texas assessors to continue guessing about commercial property sales until the Texas legislature sees fit to act.
The Appraisal Practices Board of the Appraisal Foundation has adopted what it calls a “Valuation Advisory” dealing with green building valuation. The first of three such advisories, this paper is designed to assist appraisers in obtaining the necessary expertise to value commercial and residential green buildings. Additional green advisories will be adopted in the near future.
This development follows a 2011 agreement between the Appraisal Foundation and the United States Department of Energy to educate appraisers on green valuation issues.
The Town of Portland conducted a community wide revaluation for its October 1, 2011 Grand List. On December 9 of that year, the plaintiff property owner received a notice from the assessor of its new value. That notice advised the owner he could meet with the firm conducting the revaluation for the Town and informed him of his statutory appeal rights thereafter if the proposed value was thought to be in excess of market value.
Quite surprisingly, in the middle of January, the owner received a revised notice which practically tripled the proposed value of which it had been notified in December and also advised it of the right to appeal to the town’s Board of Assessment Appeals. An appeal was filed and subsequently rejected by the Board.
In addition to challenging the new value in court, the property owner asserted that the January notice was statutorily deficient for a number of reasons, one of which was that no explanation was given for the tripling of the proposed new value.
There were no procedural defects in the revised notice, a Superior Court held. Towns are not required to justify assessments, whether new or revised, in their increase notices. Since the owner was properly notified of its appeal rights and suffered no prejudice from the revised notice, the Town had done nothing wrong. Moreover, the owner had full knowledge of and duly exercised all of its appeal rights. The Town’s willingness to schedule an informal hearing with the revaluation company initially was nothing more than a courtesy since there is no statute requiring such hearings, the court ruled.
The property owner’s claim of illegal action by the assessor was rejected on the Town’s summary judgment motion before trial.
Job’s Pond Waterfront Crop. v. Town of Portland, Docket No. CV-12-6016031 (May 11, 2015).
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