un t stat s – anuary 2019 - ipti · tax rates do not necessarily have low tax revenue. if real...

International Property Tax Institute

IPTI Xtracts- The items included in IPTI Xtracts have been extracted from published information. IPTI accepts no responsibility for the accuracy of the information or any opinions expressed in the articles.

UNITED STATES – January 2019

Contents

STATES WITH THE HIGHEST (AND LOWEST) PROPERTY TAXES ............................................................................... 2

AS BIG RETAILERS SEEK TO CUT THEIR TAX BILLS, TOWNS BEAR THE BRUNT ......................................................... 3

ALASKA........................................................................................................................................................................... 5

HUNDREDS OF ANCHORAGE DWELLINGS WERE DAMAGED IN THE NOV. 30 EARTHQUAKE -- AND THAT MIGHT CHANGE THEIR PROPERTY-TAX ASSESSMENTS ...................................................................................................... 5

ARIZONA ........................................................................................................................................................................ 7

ASU PRESIDENT RESPONDS TO ATTORNEY GENERAL LAWSUIT OVER PROPERTY TAX ........................................... 7

EFFORT UNDERWAY TO BAN PROPERTY TAXES FOR ALL SENIOR AZ HOMEOWNERS ............................................. 7

CALIFORNIA ................................................................................................................................................................... 8

SAN FRANCISCO MAY PROPOSE A VACANT PROPERTY TAX ................................................................................... 8

49ERS TO GET $36 MILLION REFUND IN LEVI'S STADIUM PROPERTY TAX APPEAL ................................................. 9

OAKLAND’S VACANT-PROPERTY TAX TAKES EFFECT, SPARKING HOPE — AND ALARM ........................................ 10

A STUNNING TAX RULING FAVORING THE 49ERS REMINDS US OF THE FOLLY OF PUBLIC FOOTBALL STADIUMS . 12

MAY AN EASEMENT BE EXTINGUISHED BY ADVERSE POSSESSION WHEN PROPERTY TAXES ARE NOT TIMELY PAID? ................................................................................................................................................................... 14

PROPOSITION 13 IS NO LONGER OFF-LIMITS IN CALIFORNIA ............................................................................... 14

DELAWARE ................................................................................................................................................................... 15 MAINE .......................................................................................................................................................................... 16

PROPERTY TAXES HURT LOW-INCOME MAINERS MORE THAN EVER, BUT A FIX WON’T BE EASY ........................ 16

MASSACHUSETTS ......................................................................................................................................................... 18

WESTBORO OFFICIALS OPTIMISTIC ABOUT TAX DEAL FOR PENNSYLVANIA-BASED COMPANY ............................ 18

MICHIGAN .................................................................................................................................................................... 19

SHOULD YOU TRUST DETROIT'S NEW PROPERTY ASSESSMENT NUMBERS? ........................................................ 19

COMMERCIAL PROPERTY VALUES RISE 35 PERCENT IN DETROIT OVER PAST YEAR .............................................. 20

MINNESOTA ................................................................................................................................................................. 22

MINN. REJECTS 'DARK STORE' THEORY IN LOWE’S PROPERTY ROW .................................................................... 22

NEW JERSEY ................................................................................................................................................................. 23

THE LOCAL PROPERTY TAX APPEAL FILING DEADLINE REMAINS INVIOLATE AND CANNOT BE CIRCUMVENTED BY USE OF THE INTERVENTION TOOL ........................................................................................................................ 23

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AVERAGE NJ PROPERTY TAX IS $8,767 ................................................................................................................. 24

PROPERTY TAXES JUMPED ANOTHER $639M IN NJ IN 2018 ................................................................................. 24

2019 COMMERCIAL PROPERTY TAX APPEALS ...................................................................................................... 26

NEW YORK ................................................................................................................................................................... 27

NYC COUNCIL BILL WOULD SAVE COMMERCIAL LANDLORDS CASH IN A PROPERTY-TAX APPEAL ........................ 27

HOW MUCH COULD PROPERTY TAXES RISE IN WESTCHESTER, NEW YORK, IF THE CAP IS ELIMINATED? ............. 28

NY PROPERTY TAX CAP LAW TAKES STEP TOWARD PERMANENCY ...................................................................... 28

WHY NY’S PROPERTY-TAX CAP FACES A CRITICAL YEAR ....................................................................................... 29

UNDERSTANDING NY’S PROPERTY TAXES ............................................................................................................ 30

AMAZON HQ2 TAX BREAKS SCRUTINIZED BY CITY COMPTROLLER ....................................................................... 31

NORTH CAROLINA ........................................................................................................................................................ 32

REVALUATION IN SAMPSON NEARS FINISH ......................................................................................................... 32

OHIO ............................................................................................................................................................................ 33

TJX REQUESTS CHANGES TO PROPOSED TAX ABATEMENT AGREEMENT ............................................................. 33

PENNSYLVANIA ............................................................................................................................................................ 34

ONE EASY STEP TOWARD FIXING PROPERTY ASSESSMENT MESS ........................................................................ 34

PENNSYLVANIA SCHOOLS CAN TAX THE LAND ON WHICH BILLBOARDS STAND, APPEALS COURT SAYS .............. 35

PHILLY PROPERTY ASSESSMENTS ARE FLAWED, AUDIT FINDS ............................................................................. 35

SOUTH CAROLINA ........................................................................................................................................................ 37

SOUTH CAROLINA PROPERTY TAX CASE HIGHLIGHTS VALUATION ISSUES ........................................................... 37

TEXAS ........................................................................................................................................................................... 38

UPDATED TEXAS PROPERTY TAX INFORMATION AVAILABLE ............................................................................... 38

WASHINGTON .............................................................................................................................................................. 39

MAYOR DURKAN SENDS CONTROVERSIAL WATERFRONT TAX TO CITY COUNCIL ................................................ 39

WISCONSIN .................................................................................................................................................................. 40

SO-CALLED ‘DARK STORE’ LEGISLATION WILL RAISE YOUR TAXES ........................................................................ 40

CLOSING THE DARK STORE LOOPHOLE? ............................................................................................................... 41

________________________________________________________________________________________________________

States With the Highest (and Lowest) Property Taxes Property taxes, the single largest revenue source for local governments, are ratified, collected, and spent almost entirely at the municipal level. As a result, the United States is a patchwork of property tax codes, and depending on where you live, property taxes can be either a trivial expense or a major financial burden. Generally, property taxes are collected as a set share of the value of a given home or parcel of land. Depending on local laws, home or property values are assessed periodically based on estimated sale prices, or they are valued using the sale price at the last acquisition of the property.

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Though not all parts of the country use tax revenue the same way, property taxes generally fund fire and police departments, schools, and road maintenance, including snow removal, cleaning, and repair. On average, state and local governments in the United States collected $1,518 in property taxes per person during the 2015 fiscal year. However, in some parts of the country, per capita property tax collections were more than double that amount. To determine the states with the highest and lowest property taxes, 24/7 Wall St. reviewed the effective property tax rate — the total amount of property taxes paid annually as a percentage of the total value of all occupied homes — for all 50 states, from tax policy research organization the Tax Foundation. Property tax data is for the 2015 fiscal year, and is published in the Tax Foundation’s report “2018 Facts & Figures: How Does Your State Compare?” States with relatively low effective property tax rates do not necessarily have low tax revenue. If real estate values in an area are high, then even a relatively low property tax rate can generate considerable revenue.

Click here to see the states with the highest and lowest property taxes.

As Big Retailers Seek to Cut Their Tax Bills, Towns Bear the Brunt With astonishing range and rapidity, big-box retailers and corporate giants are using an aggressive legal tactic to shrink their property tax bills, a strategy that is costing local governments and school districts around the country hundreds of millions of dollars in lost revenue. These businesses — many of them brick-and-mortar stores like Walmart, Home Depot, Target, Kohl’s, Menards and Walgreens that have faced fierce online competition — maintain that no matter how valuable a thriving store is to its current owner, these warehouse-type structures are not worth much to anyone else. So the best way to appraise their property, they contend in their tax appeals, is to look at the sale prices on the open market of vacant or formerly vacant shells in other places. As shuttered stores spread across the landscape, their argument has resonated. To municipalities, these appeals amount to a far-fetched tax dodge that allows corporations to wriggle out of paying their fair share. Either way, homeowners and small businesses will have to pay more or live with smaller budgets for police, schools, garbage pickup and road repair. Businesses, of course, appeal property assessments as routinely as coaches work the refs. But this approach — labeled dark store theory by critics — significantly broadens the basis for those appeals while threatening to undermine municipalities’ ability to raise operating funds. “The potential for a domino effect of property tax appeals across the commercial and industrial portions of the tax base, which, were it to occur, could have a much more profound effect on some governments’ ability to levy” property taxes,” S&P Global Ratings concluded in a report last year. For a smaller town or school district, “the financial impact could be devastating,” said Scott Nees, a co-author of the report, noting that it could also threaten localities’ ability to borrow money. In Michigan, the state association of counties estimated that dark-store appeals reduced local revenue from 2013 to 2017 by $100 million. In Texas, the comptroller said such appeals could end up costing local governments $2.6 billion a year. And in Wauwatosa, a shopping polestar in Wisconsin where chockablock malls attract families in the market for $4,000 sofas, Adidas NMDs and a Cheesecake Factory pig out, the city is fighting property tax appeals in court dating back to 2015 from Lowe’s, Nordstrom, Best Buy, Meijer and United Healthcare. It recently settled with Target, Walgreens and a KFC franchise. “It’s like a virus,” said Kathleen Ehley, the mayor of Wauwatosa.

https://247wallst.com/special-report/2019/01/16/states-with-the-highest-and-lowest-property-taxes-4/2/

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In the Lowe’s case, the company spent more than $16 million to buy the land and construct its 140,000-square-foot building less than a dozen years ago. The city assessed the spot in a bustling retail hub right off Highway 41 at $13.6 million. The company’s appraisal was $7.1 million, based on sales of empty and once empty buildings in other neighborhoods. Lowe’s declined to comment because the case is being litigated. But the city’s assessor said Lowe’s had partly based its analysis on stores that were more than 25 years old and in economically declining neighborhoods. Another store was listed as comparable in part because of its “proximity” to a shopping mall, although instead of the booming center near this Lowe’s, that mall had closed 15 years earlier. City officials estimate that the current string of dark-store lawsuits alone would require it to refund $4.1 million of tax payments — the equivalent of about a tenth of its total property tax revenue this year. “Either my property taxes are going to go up or my schools are going to suffer,” said Lisa Williams, who lives in a classic Craftsman-style bungalow a few minutes’ drive from Lowe’s in Wauwatosa, a comfortable suburb of Milwaukee. “The stores want to get all the benefits of being here without any of the costs.” Ms. Williams, 53, a researcher at the University of Wisconsin-Milwaukee who has three children, added, “Everybody in the neighborhood shops there.” Efforts to reduce tax assessments on the local level are continuing even as businesses are seeing hefty reductions in their federal taxes from last year’s tax overhaul in Washington. The dark-store argument started to gain traction in a few states in the mid-2000s, but has snowballed in the last year. After retailers won some influential legal decisions, thousands of similar appeals from other commercial taxpayers — from manufacturers to owners of corporate office buildings — have followed. The judicial victories have elbowed the issue into the political arena. Several states, like Alabama, Texas and Indiana, have considered legislation that would curb the tactic. In nonbinding referendums in November, voters in 23 counties and cities across Wisconsin approved proposals calling for laws to prevent dark-store analyses from being used in tax assessments. (Wauwatosa was not among them.) That and similar legislative proposals have been opposed by Wisconsin Manufacturers & Commerce, the state’s largest business association. “Local governments want to exclude vacant buildings because a lot of retail has gone vacant in recent years,” said Scott Manley, the group’s vice president of governmental relations. “Retail property is less valuable today, and they don’t want to acknowledge it.” Appraisal guidelines vary from state to state. But mega-retailers argue, in essence, that traditional approaches that look at land and building costs or how much income the property can generate are not relevant. Instead, they say, appraisals should primarily rely on comparable sales, and the only sales that are comparable are of other big-box stores that have been vacated. Empty commercial buildings often go for bargain-basement prices because the structures — football-field-size stores or factories — were developed for specific purposes and, therefore, attract few, if any, buyers. “These warehouses are obsolete pretty much from the moment they build them,” said Robert Hill, a lawyer in Minnesota who has represented Walmart, Menards, Walgreens, CVS, Sturm Foods, United Healthcare and other companies. “It doesn’t matter whether they’re for sale in a suburb of Virginia or Nome, Alaska.” This is not an entirely new idea. In 1921, the New York Stock Exchange appealed its property tax assessment, arguing that because its building could not be adapted for any other use, it should be considered only a “tear-down proposition” that decreased the value of the land. A State Supreme Court judge disagreed. Sales comparisons often make sense for homes, experts say, because they can estimate what a willing buyer would pay by looking at recent sales of similar houses or apartments on the same block or in the neighborhood.

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Appraisals can be much more complicated when it comes to a specialized commercial property, where adjustments have to be made for location, condition, size, the incomes of area residents, traffic flow and much more. Is the property on Fifth Avenue in Manhattan or in a dead suburban mall? Is the building three years old or 30? Restrictive clauses in leases that companies themselves impose — such as prohibiting its use by a competitor — can further depress a property’s value. Sales comparisons are reliable benchmarks but only when there are lots of substitute properties and data, the International Association of Assessing Officers concluded in a 2017 report. “Using vacant sale comparables (without adjustment) to value an occupied property is not proper appraisal practice,” it said. What constitutes a fair comparison and adjustment, however, is open to debate. “Courts are grappling with the meaning of market value,” said Joan Youngman, chairwoman of the Department of Valuation and Taxation at the Lincoln Institute of Land Policy in Cambridge, Mass. “We are in the early stages of the issue working its way through the higher courts, and we don’t have the answers to some of these questions.” In Manawa, a town about 130 miles north of Milwaukee that has a population of 1,294, the mayor is carefully monitoring snow plowers’ overtime after settling a yearslong tax dispute with Sturm Foods, the largest local employer. The appeals began a couple of years after Sturm was bought by TreeHouse Foods, a multinational conglomerate, for $660 million in 2010. Sturm initially argued the factory’s property was worth less than half of its assessment. In 2017, when they finally settled, property taxes for everyone else rose by 12.4 percent — $300 per homeowner, on average — while the city’s borrowing ability was curtailed. “We have to be much more careful with services,” said Mayor John Smith. “It also reduces our ability to borrow.”

ALASKA

Hundreds of Anchorage Dwellings Were Damaged in the Nov. 30 Earthquake -- and That

Might Change Their Property-Tax Assessments Some homeowners may be looking at a lower home value because of damage caused by the earthquake and its aftershocks, city assessors say. Anchorage property values increased slightly overall in 2018, though a few hundred homeowners may be looking at a lower home value because of damage caused by the Nov. 30 earthquake and its aftershocks, city assessors say. About a week ago, the Anchorage property-tax appraisal office began mailing tens of thousands of assessment notices known as green cards. They show the city’s estimate of what a property would sell for on Jan. 1. It’s a critical step in determining a household or business property tax bill, which pays for essential city services such as police, firefighters and snowplowing. This year, those with significant damage from the 7.0 earthquake may be asked to pay less. In recent weeks, property appraisers worked with building-safety officials to identify damaged buildings. Officials have been using a system of green, yellow and red tags to indicate damage. Red-tagged buildings are unsafe to enter; a yellow tag means limited occupancy. About 275 letters were mailed to owners of properties tagged as yellow or red, according to Jack Gadamus, the city assessor. The letters urge the owners to contact assessors about significant damage that may affect property value. Documentation will be necessary, Gadamus said. The deadline to appeal an assessment is Feb. 14. After that, the assessment is set for this tax year. “The window is now to appeal,” Gadamus said.

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The city assessor’s office is bracing for more appeals than usual this year. In spring 2018, the division processed just more than 350 appeals. Most are handled without going to the city board that handles valuation issues, called the Board of Equalization. But during a recent Anchorage Assembly work session, Assemblyman Fred Dyson of Chugiak-Eagle River speculated that “thousands” of appeals could flood in. As of Jan. 18, more than 10,200 homeowners had applied for individual assistance grants through a state disaster relief program, according to Jeremy Zidek, a spokesman with the Alaska Division of Homeland Security and Emergency Management. Gadamus said it’s still early but his office has noticed a spike in calls. A handful of property assessments were adjusted before Jan. 1 based on earthquake damage, Gadamus said. But data trickled out slowly, and damage may not be visible to assessors as they drive by, Gadamus said. City inspectors are also still working through a backlog of about 1,000 properties. Earthquake damage is unlikely to make a significant dent in an overall trend of rising home values, Gadamus said. Anchorage has roughly 86,000 parcels with at least one building on the lot, Gadamus said. Overall, the city’s inventory of residential property is worth about $26 billion. “It’s just such a small portion right now, I don’t see that being very significant at this point,” Gadamus said. Economic trends As of Jan. 1, Anchorage home values were estimated to have increased 1.7 percent on average in 2018, not including new construction, according to data collected by Gadamus. The slight boost comes after a dip in 2017. Home prices have generally stayed stable since the Alaska recession began in 2015. While Anchorage’s population has declined, there hasn’t been a flood of homes on the market, Gadamus said. Commercial property values rose a bit less than 1 percent, not including new construction. Hotel values dropped 6 percent overall in 2018 based on a three-year trend of stagnating revenue, which might be a result of higher competition, said Brent Schlosstein, the deputy director of the property appraisal division. Property values factor in a mix of other economic data, like rising interest rates and inflation, but also growing consumer optimism and tapering job losses, Gadamus said. It’s been some time since Anchorage has seen a construction boom. An 18 percent spike in new commercial construction in 2018 was mainly due to a few large projects, including a new Alaska Airlines hangar, a new Odom distribution center and several new hotels, Gadamus said. The level of residential construction in 2018 was on the same level as the late 1980s, the state’s last major recession. Home values fluctuate across a municipality that spans 2,000 square miles. Girdwood home values continued a rising trend in 2018, along with Chugiak-Eagle River and South Anchorage. Northeast Anchorage, including Fairview and Mountain View, saw a dip, while downtown saw almost no change, according to the city data. Crackdown on tax exemptions While managing assessments, the city assessor’s office has also been scrubbing its list of tax breaks awarded to seniors, veterans, residences and nonprofits. Those exemptions have gained scrutiny in recent years from policymakers. Roughly 67,000 tax exemptions were listed on tax rolls last year. For a variety of reasons, a property owner may be receiving an exemption they are no longer entitled to, Gadamus said. In some cases, a person is no longer living in their house for more than 185 days per year, or bought a new home and is renting out the old one, Gadamus said. Assessors check records like Alaska Permanent Fund dividends and mailing addresses to look for red flags.

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Over the past two years, assessors have added about $100 million to the city’s base of taxable value by eliminating tax exemptions that weren’t valid, Gadamus said. A recent internal audit by the city highlighted some of the problems. In a review of 158 properties registered with the city treasury as “vacation rentals,” nearly a quarter received residential property tax exemptions, auditors found. For 11 of those properties, the entire property was advertised as a vacation rental, the audit found. In other cases, the files for nonprofit exemptions failed to have enough documentation to prove the exemption was warranted, the audit found. Older files tended to lack the documentation, according to the audit. The assessor’s office routinely fails to meet a legal requirement to review all of the tax exemptions each year. The office would have to dedicate between two and three staff members to it, the auditors were told. Gadamus said his office simply doesn’t have the resources and would prefer to review exemptions on a six-year cycle. In a recent work session, some city Assembly members suggested changing the law to give assessors more time.

ARIZONA

ASU president responds to Attorney General lawsuit over property tax Arizona State University President Dr. Michael Crow says he is "confused how our own lawyer is suing us," after learning Attorney General Mark Brnovich asked a Superior Court Judge to stop ASU and the Arizona Board of Regents from using their tax-exempt status to facilitate special property deals for favored businesses. The lawsuit says ASU is wrongly leasing property that is meant for programs that benefit the university through education spaces. The land is property tax exempt, and Arizona State has done deals with companies like State Farm among others to build offices along the Marina Heights commercial space near Tempe Town Lake. “These deals are designed to shield selected companies from property taxes while generating revenue for ABOR (Arizona Board of Regents) and ASU, at the expense of the taxpaying community,” the lawsuit reads. The lawsuit works to force Omni to pay property tax on a deal that is in the works for a large hotel and conference center near downtown Tempe. The lawsuit says ABOR is “acting outside of their educational mission” to benefit off of the deals, however ASU says the deals are within legal boundaries and benefit the university. “The regents (AZBOR), who can speak for themselves, they have the task of helping the university to find the resources to pay for the university,” said Crow. “And so, if the university finds resources to pay for the university through the use of its property, that's fully allowable under the constitution.” Attorney General Brnovich, however, says the state is losing millions of dollars in property taxes because of the deals, and that ASU shouldn’t be in the real estate business. “My job is to be in the corner of hard-working Arizona taxpayers and I will fight every day to protect Arizona families and it doesn’t matter who the entity is Dr. Crow is one of the most powerful people in the state but he has to play by the same rules as anyone else,” said Brnovich.

Effort Underway To Ban Property Taxes For All Senior AZ Homeowners

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In Arizona, property taxes are collected and managed by the counties to pay for public education, emergency services, health, water and many other community services. But, a self-proclaimed "tax activist" and California transplant has found Arizona's property taxes "unpredictable and inexplicable" comparatively. Since moving here in 2016, Lynne Weaver has tried multiple times to enact similar reforms, but failed. This year, she is working with former state GOP chairman Randy Pullen to permanently ban property taxes on Arizona home owners who are 65 and older. Weaver, who admitted she is over 65, said the current program freezing taxes for eligible seniors who make less than $37,008 a year ($46,260 as a couple), has found the renewal process too burdensome and excluding for most seniors. "We have too many people losing their home, unable to pay property taxes,'' she said."Why should just low-income people be able to stay in their home after they retire and they're on a fixed income?'' In her latest proposal, anyone age 65 or older would be excused from paying a property tax. She has reasoned that, even when an elderly resident has substantial property, it can disappear quickly in a medical crisis. "You may be well-off today," Weaver said, "But you may be diagnosed with something tomorrow that's going to take everything you've got to keep up with it. Your luck changes quickly." When it does change, she continued, "People over 65, most are not working. And they can't go back and get a second job or a better job." She based her prior proposals off of California's Proposition 13, a 1978 measure rolling back property valuations and capping year-over-year increases. In this initiative, Weaver thinks she will have better luck targeting only Arizona's seniors, but that will take gathering 356,467 valid signatures before July 2, 2020 to make the ballot next year. Opponents to Weaver's plan point out that if her initiative passes, home owners under 65 would have to bear the entire property tax burden, which is necessary to fund public education, emergency services and other community programs.

CALIFORNIA

San Francisco may propose a vacant property tax San Francisco voters may decide if the city should impose a tax on vacant residential or commercial property. Supervisor Aaron Peskin is expected to introduce the idea because he wants to encourage property owners to lease out empty retail space and housing units. The proposal would charge $250 a day for up to 30 days on vacant properties. Supervisor Aaron Peskin, who has been mulling over the proposal for about a year, is expected to introduce the idea and joined us live on air for The 4. "Let's be real, the Amazon effect is impacting ground-floor commercial businesses not only in San Francisco, but around the United States of America," Peskin said. But he also notes seismic retrofitting and fires can cause long-term vacancy. "We also have chronic, long-term vacancies where landlords have unrealistic expectations of value, have held their units off of the market." Peskin said 20% of the vacancies in North Beach, which is included in his district are long-term vacancies where the landlord refuses to rent. "We can't make you rent, but we can give you a financial incentive to do so," he said. But that will require a vote of the people.

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Peskin said he and his colleagues hope to put that on the ballot by November 2019. The question remains, will a $7,500 a month tax create the incentive for landlords to rent? Peskin said the board will debate this issue before it goes on the ballot, but they do want to create a strong incentive to get properties that have been held off the market to be rented out, especially during a housing crisis. There could be exceptions. "If you are diligently pursuing a lease in good faith, obviously we will make exceptions. We want this to be fair and reasonable," Peskin said. The money raised from this tax actually doesn't aid the housing crisis directly, but would aid businesses that have been displaced by the city's mandatory seismic retrofitting program. "This is not meant to be a revenue generating tax," said Peskin. He sees it more as a behavior changer.

49ers to get $36 million refund in Levi's Stadium property tax appeal The San Francisco 49ers racked up a major victory that would grant them a refund of $30.8 million dollars in a property tax assessment appeal. Their season may be over, but the San Francisco 49ers racked up a major victory that would grant them a refund of $36 million dollars in a property tax assessment appeal. Those who will have to cough up the money are public agencies within Santa Clara County, including the school district. The 49ers organization and the city of Santa Clara jointly own Levi's Stadium, but over the last few years, there's been a dispute as to the assessed property value. Recently, the Santa Clara County Assessment Appeals Board sided with the 49ers, drastically slashing the stadium's assessed value-- cutting property taxes in half. "We think the Assessment Appeals Board was wrong, we think their conclusion is flawed," said Santa Clara County Assessor Larry Stone. Stone is disappointed with the ruling. On Wednesday, his office released a report, estimating the impact that the loss of $36 million in revenue would have on public offices. "To say that they only should be assessed and therefore taxed during the football season is really erroneous because there are a lot of other things that happen there like concerts and so forth that the Niners control that we think should be part of the assessment," added Stone. The agency slapped with the biggest hit: The Santa Clara Unified School District. The district will have to refund the 49ers $13 million plus lose out on $2.5 million in tax revenue each year. "We'd rather have that $13 million this year, we'd rather have the $2 and a half million ongoing so we can build on the great things that we're already doing here in the district. Now this will cause us to pause and reevaluate our priorities," said Eric Dill, chief business official with the Santa Clara Unified School District. In a written statement to ABC7, the 49ers say they accept the decision. "Our focus, as always, will be on ensuring that Levi's Stadium continues to be a premier sports and entertainment venue for the region," said Rahul Chandhok with the 49ers organization. The ruling is not yet final and the county has the option to appeal.

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Oakland’s vacant-property tax takes effect, sparking hope — and alarm As San Francisco supervisors consider putting a vacant-property tax on the November ballot, Oakland is struggling with the reality of implementing one. Oakland voters in November approved a tax that applies to any privately owned property in the city — including residential, commercial and empty lots — that is not “in use” for more than 50 days in a calendar year starting in 2019. The annual tax is $6,000 per parcel for most properties, regardless of size or value. The tax for condo or duplex units or ground-floor commercial space is $3,000 per year. There are 10 possible exemptions. The tax will be added to annual property tax bills starting with the one that goes out next year. It will continue for 20 years. Oakland’s City Council put Measure W on the ballot, saying it would raise $10 million annually, which can only be used for homeless services, affordable housing, programs to fight blight and illegal dumping, administer the tax and defend any possible lawsuits. Measure W passed with 70 percent of the vote. Among the many issues now facing the city: defining “in use,” identifying vacant properties, clarifying the 10 exemptions, developing software to administer the program and forming a commission on homelessness to recommend how the revenue should be spent. The City Council could, by ordinance, restrict the tax to certain zones within the city, but has not done so. In December, the city’s Finance Department sent a letter to owners of 25,000 non-owner-occupied properties warning them about the tax should their property be deemed vacant. The letter set off alarm bells for some owners. “I thought it was only on vacant homes, not vacant property,” said James Liu, who lives in Fremont and owns five steep lots on Ascot Drive in the Oakland hills. Liu bought the adjacent parcels in 2012 and 2013, thinking — naively, he admits — that he could develop them, despite their 50 percent slope. But architects and engineers told him it wouldn’t be possible. He put them on the market twice, with no takers. Meanwhile he’s paying $3,000 per year in property taxes on each lot, plus another $3,000 per year to have them cleared of debris. He said the the additional $6,000 per parcel tax is not just about money. “It’s about fairness. It’s not something I realized could happen in America.” The measure exempts owners “who can demonstrate that exceptional specific circumstances prevent the use or development of the property.” But most owners won’t know if they qualify for this or any exemption until the Finance Department writes rules implementing the measure and the City Council adopts them. Another provision that merits clarification says, “for parcels with multiple units, whether residential or non-residential, the parcel is not vacant if any unit on it is not vacant. A condominium, duplex, or town house unit under separate ownership is treated as a separate parcel …” The Finance Department will probably bring an implementing ordinance to the City Council in April, but it could take “a number of meetings” before it’s adopted, said Karen Boyd, a spokeswoman for the city. Vacancy-tax exemptions These are 10 exemptions to Oakland’s new vacant-property tax, as described in Measure W. The Finance Department will clarify them in an implementing ordinance, which must be approved by the City Council. (1) Owner is “very low income,” as defined by the U.S. Department of Housing and Urban Development. The city wouldn’t define it. But HUD’s website says that the income limit in Oakland is $40,700 per year for a one-person household and goes up with family size. (2) Owner is 65 or older and “low income,” as defined by HUD. That limit is $62,750 for one person.

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(3) Owner of any age receives Supplemental Security Income for a disability or Social Security Disability Insurance benefits and has income that does not exceed 250 percent of the 2012 federal poverty guidelines issued by the U.S. Department of Health and Human Services. That limit is $11,170 for one person and goes up with family size. (4) The tax would create a “financial hardship due to specific factual circumstances.” (5) The property is vacant because of a “demonstrable hardship that is unrelated to the owner’s personal finances.” (6) The property is under active construction. (7) The owner has an active building permit application being processed by the city. (8) The owner has a “substantially complete application for planning approval” under review. (9) The owner can prove that “exceptional specific circumstances prevent the use or development of the property.” (10) The owner is or is controlled by a nonprofit organization. In its letter to property owners, the Finance Department said it would “be difficult to answer questions” until the ordinance is adopted. It strongly urged them, in a bold and underlined comment, to “not make any inquiries regarding this letter or the tax at this time.” It did give them an email address, [email protected], but said it could take up to 30 days to get their questions answered. The city’s finance director, Katano Kasaine, urged the council in a May letter to delay implementation for one year, citing “the aggressive timetable required for the implementation of the tax.” The City Council could delay implementation, but there’s no sign it plans to. The Finance Department estimated it would cost $425,000 per year to administer the tax, plus a one-time startup cost of at least $100,000. Boyd said the city has received a legal challenge to the tax but provided no details. Oakland Mayor Libby Schaaf supports the tax, her spokesman Justin Berton said in an email. “It’s a novel idea that will generate new resources to address some of Oakland’s biggest challenges, such as homelessness,” Berton said. It also “taxes people who are failing to utilize their property during a housing shortage, which damages overall community vitality.” Nobody is sure how many vacant properties there are and how many will get an exemption. Using data from the county assessor, Hayley Raetz, a researcher at the Terner Center for Housing Innovation at UC Berkeley, estimated that there are about 4,000 undeveloped, privately owned lots in Oakland. Most are small lots in residential neighborhoods. “If approved by Oakland voters, the tax could act as a deterrent for speculation, and encourage owners of vacant parcels to sell or develop their land, ideally unlocking sites for housing,” Raetz wrote in a report. She did not look at lots with homes or businesses on them, because there’s no methodical way to determine whether they’re vacant. Looking just at an estimated 4,000 vacant lots, the Finance Department said that the tax could bring in $6 million to $10.5 million a year, depending on how many got exemptions. Building a home or apartment building on raw land is not easy or cheap, and some vacant lots are in areas prone to landslides and wildfires. Oakland real estate agent Mel Copland owns one of several empty lots on Oakwood Court in the Montclair neighborhood. “The infrastructure is so expensive, to bring, solar, gas and water to the property, plus a private road,” he said, adding that the value of that land has dropped 50 percent since the last recession. “What’s going to happen, people are not going to pay the tax, and you are going to have a lot of defaulted lots.”

mailto:[email protected]

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Dragos Badeamic, a structural engineer and contractor who lives outside Sacramento, owns three vacant properties on Woodrow Avenue in Oakland., “I was planning to build some houses there, but for family reasons, I could not do that,” he said. He’s paying about $1,900 per year in property tax on each of the three lots; the vacancy tax would be nearly three times that per lot. Badeamic grew up in Romania, where the communists imprisoned his grandfather and seized the family’s property, forcing them to flee the country. He said the tax reminds him of what went on in the early days of the communist regime there. “I never thought I was going to see this here, in the bastion of capitalism,” he said. SPUR, a Bay Area urban planning think tank, said in its voter guide that it supports the idea of a vacant parcel tax, as a way “to help move vacant land into active use and eliminate blight,” but it opposed Measure W because it would be very difficult to implement fairly. “The definition of what constitutes vacancy is very broad,” it said, and “the exemptions are also very broadly defined,” such as a “demonstrable hardship that is not financial.” It also said a flat tax may disproportionately affect small property owners. Evelyn Sinclair, who owns a vacant lot next to her home in the Oakland hills near Redwood Regional Park, said she objects to the tax because “we shouldn’t be balancing somebody’s project for helping homeless people and urban blight on a tiny minority of people in the city.” Candice Elder, director of the East Oakland Collective, a Millennial-focused nonprofit, said that “once everything gets ironed out, (the tax) has the potential to help address some of the issues in homelessness and the housing crisis.” She said it won’t overcome all of the obstacles, but “it’s one component of the solution.” She hopes the tax will spur landowners “with a challenging piece of property, or low-income owners who can’t afford to develop, to work with the city or with nonprofit agencies to reimagine the use of the land.” James Vann, co-founder of the Homeless Advocacy Working Group, which campaigned for Measure W, said the tax “will probably deplete itself” as vacant lots, homes and buildings are put to use. Meanwhile in San Francisco, Supervisor Aaron Peskin said in a news conference Wednesday that he wants the Board of Supervisors to put a vacancy tax on the November ballot. The $250-per-day tax would apply to some commercial and multifamily residential properties that are “intentionally” kept vacant for more than six months of the year. Peskin has been talking about a vacancy tax since 2017 but hasn’t introduced any legislation. Before crafting a tax, San Francisco might want to consider the challenges facing Oakland.

A stunning tax ruling favoring the 49ers reminds us of the folly of public football stadiums The question of whether publicly-financed football stadiums are a boon or a bust for their local communities has been debated for years, with learned opinion tending toward the latter. In Santa Clara County, the debate is over: Levi’s Stadium, a $1.3-billion edifice opened in 2014 to house the NFL’s San Francisco 49ers, looks like a bust, big time. That’s because a county assessors appeals board just gave the team a $36-million tax win — money that will come out of the pockets of the county, local school boards and other local jurisdictions that receive property taxes from the team. We think the appeals board got so frustrated that they split the baby, 50-50. I think they just threw up their hands. The board’s ruling means that the localities will have to refund $36 million to the team by June 30 and receive $6 million a year less from the team going forward. The biggest hit is to the Santa Clara Unified School District, which will have to refund $13.1 million. That’s out of a budget of about $230 million. In a message to the taxing entities on Wednesday, County Assessor Lawrence Stone called the ruling issued that day “shocking and unexpected.”

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The team, needless to say, came to the opposite conclusion. “We accept the decision of the Assessment Appeals Board, and will cooperate fully with the Assessor’s Office,” a team spokesman told me. The tax blow is another indication of how stadiums can be oversold as municipal assets. Not only are their effects on the local economy generally vastly overstated, but the very principle of expecting taxpayers to help finance a facility for National Football League teams that typically are owned by billionaires is just bizarre. That’s the case with the 49ers team, which is owned by the York family, who are related to the DeBartolos, the billionaires who were long-term owners; current CEO Jed York is the nephew of Edward DeBartolo Jr., who ceded the team to his sister Denise DeBartolo York in 2000 after he ran into legal trouble. Team owners love to swank around as though they’re stewards of community adornments, but there’s a point at which money talks and the public interest walks. Let’s not forget that the 49ers still carry the name of San Francisco, which they abandoned in 2014 for Santa Clara, 40 miles south. Or that the two NFL jewels in Los Angeles are new imports from elsewhere — the Rams from St. Louis, to which they decamped from L.A. in 1995, and the Chargers from San Diego. The warning to Inglewood, where the Rams and Chargers will play in a new stadium, is: Beware. The same impulse to maximize financial return is what underlies the 49ers assessment appeal. The team’s case turned on an obscure provision of assessment law known as “possessory interest.” Since Levi’s Stadium is jointly operated by the team and the public — through the city of Santa Clara — the question before the board was how to divide the economic value between the private and public entities. In technical terms, the public and the team each “possess” the stadium for six months of the year, with the team’s possession coinciding with the football season. The county’s position was that virtually all the benefit flowed to the team, which controls event bookings at Levi’s, as well as the income from luxury suite rentals, year round. (The city takes concession and ticket revenues for non-football events.) Assessor Stone argued that the mismatch in value was similar to that of, say, a ski resort, where the property is vastly more valuable during the ski season than during the summer. The assessment appeals board, however, agreed with the team that the value was equal between the football and non-football season. As a result, the county, school districts, and other public entities have to return to the team half of the taxes they’ve received in recent years. Stone says he thinks the appeals board was flummoxed by the sheer complexity of the team’s arrangements for control of the stadium, which it exercises through a mind-boggling complex of subsidiaries. The case required 21 day-long hearings, he says. “We think the appeals board got so frustrated that they split the baby, 50-50,” Stone told me. “I think they just threw up their hands.” This isn’t the first time that the locals have discovered that a big stadium is a mixed curse, at best. The city of Santa Clara, where Levi’s Stadium is located, has been in several fights with the team over the facility. The battles started just as the stadium opened for business. The issue then was a municipal park with several soccer fields located in the shadow of the new stadium. The 49ers offered the city $15 million to take over the field, which the team wanted for parking and commercial development. After protests by soccer families that the offer was a low-ball figure, the team withdrew it. Over the following years, the team and city seemed locked in a permanent war over rent for the stadium. The team’s demand for a rent reduction eventually went to an arbitrator, who ruled last August that the team actually should pay more — raising the rent to $24.7 million a year, an increase of $262,000. On the tax issue, the assessment appeals board ruling is subject to appeal to Santa Clara Superior Court, but Stone says he hasn’t decided whether to take that step. In the meantime, the localities surrounding the stadium will have to dip into their pockets to pay the refunds.

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May an easement be extinguished by adverse possession when property taxes are not timely

paid? Facts: The owner of a property holds an easement over the servient property. The owner of the servient property installs a gate blocking the easement holder’s access to the easement for five years. The owner of the servient property later pays delinquent property taxes on the land covered by the easement in a lump sum and attempts to extinguish the easement by adverse possession. Claim: The easement holder seeks to quiet title to the easement and regain access, claiming their easement has not been extinguished since the servient owner’s property tax payments were not timely. Counterclaim: The owner of the servient property claims they extinguished the easement on their property since they paid delinquent property taxes in a lump sum within the five-year period of possession. Holding: A California court of appeals holds the owner of the servient property has not extinguished the easement through adverse possession since their property tax payments were not timely as they were delinquently paid in a lump sum. [McLear-Gary v. Scott (July 11, 2018)_CA6th_]

Proposition 13 is no longer off-limits in California Proposition 13 is untouchable. That’s been the thinking for 40 years in California. Politicians have feared for their careers if they dared suggest changes to the measure that capped property taxes, took a scythe to government spending and spawned anti-tax initiatives across the country. However, that is beginning to change. With Republican influence in California on the wane and ascendant Democrats making tax fairness an issue, advocates are confident that the time is right to take a run at some legacies of the 1978 measure. High on their list: making businesses pay more and ending a sweetheart deal for people who inherit homes and their low tax bills, then turn a profit by renting them out. Legislative Democrats hold so many seats that they don’t have to worry about the GOP blocking such ideas from going before voters. Gov.-elect Gavin Newsom has said that “everything would be on the table,” including Prop. 13, as he formulates a plan to reform the state’s tax structure. Perhaps most important, Prop. 13’s age is becoming an advantage to would-be reformers: California’s voting demography is changing. The generation of homeowners that grew up with Prop. 13 is well into retirement now, and some younger Californians blame flaws in the measure for everything from the underfunding of public schools to growing wealth inequality. “For Californians who grew up in the public education system that came after Prop. 13, their education was robbed from them. They didn’t get the same education their parents did,” said Catherine Bracy, executive director of TechEquity Collaborative, which is trying to rally the tech community to support changes to the state’s tax structure. Bracy, 38, moved to the state six years ago from Chicago. “For newcomers (to California) like me, who were born after Prop. 13, we want to experience the California dream, too,” she said. “But we don’t have the opportunity to, because all the goodies have been locked up by the older generations.” Prop. 13 was a remedy for a side-effect of one of California’s first housing bubbles — spiking property taxes. Moved by their own tax bills and horror stories of longtime homeowners being forced to sell because of skyrocketing assessments, voters overwhelmingly passed the measure. It rolled back assessments for homes and businesses to 1976 levels and capped annual tax increases at 2 percent. Jon Coupal is president of Prop. 13’s fiercest defender — the Howard Jarvis Taxpayers Association, named after the initiative’s co-author. He agreed that “the number of homeowners who were around in 1978 is shrinking. And many younger people don’t remember the fear and anger about losing your home.”

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But Coupal said that “notwithstanding the leftward movement of politics in California,” his organization’s internal polling shows support for Prop. 13 remains strong. And a survey in March by a nonpartisan group unaffiliated with Coupal’s organization, the Public Policy Institute of California, found that 65 percent of likely voters surveyed said Prop. 13 “turned out to be mostly a good thing for the state.” Under Prop. 13, residential and commercial property alike is reassessed only when it is sold. But while homes often change hands every few years, many large businesses remain in the same ownership for a long time. Some businesses are paying property taxes based on assessments that haven’t changed in 40 years. That’s one main target of people who want to tweak Prop. 13. The League of Women Voters of California says it has gathered enough signatures for a 2020 ballot measure that would create a so-called split roll system, under which businesses’ property would be reassessed every three years. Agricultural land and businesses with 50 or fewer employees would be exempt. Residential property would not be affected. The change could raise $11 billion in tax revenue statewide, including $2.4 billion for Alameda, Contra Costa, Marin, San Francisco and San Mateo counties, according to a January study by the USC Program for Environmental and Regional Equity. The study found that 56 percent of all Bay Area commercial properties had not been reassessed for 20 years, and 22 percent had assessments dating back to the 1970s. Could a split-roll measure pass? It might be close. Forty-six percent of likely voters surveyed by the Public Policy Institute of California in January said they supported the idea, while 43 percent were against it. Support was far higher among likely voters under 35 (57 percent) than with those over 55 (41 percent). However, the split-roll concept has actually been growing less popular over the years, the institute said: Six years ago, 60 percent of likely voters backed it. Helen Hutchison, president of the League of Women Voters of California, acknowledged that changing the law will be difficult because “Prop. 13 still has some kind of magical pull. But we think the time is right to do this.” State Sen. Jerry Hill has introduced a ballot initiative that would limit a tax break for heirs of Hill’s proposal, Senate Constitutional Amendment 3, takes aim at Proposition 58, which voters approved in 1986. The measure allowed parents to give their residential property to their heirs without triggering a tax reassessment. The intent of the measure was to insulate children from absorbing a huge spike in property taxes and help them stay in the family home. California is the only state to offer this tax break. Hill proposed the change after learning that many heirs are using their inherited properties as second homes or renting them out for many times more than what they’re paying in Prop. 13-controlled property taxes. The proposed ballot measure would require people who inherit property in this way to move into the home within a year if they wanted the property tax break. The change would apply to future heirs, not those who have already inherited homes. Getting this measure on the ballot in 2020 requires Hill to corral a two-thirds majority from both houses of the Legislature. If it makes it to the ballot, it could be passed by a simple majority of voters. Hill is mindful of the politics around property taxes. “We’re not touching Prop. 13. We’re touching Prop. 58,” Hill said. “The goal is to get people to pay their fair share.” Coupal, head of the Howard Jarvis Taxpayers Association, doesn’t think Hill’s measure is the biggest threat to Californians concerned about taxes.

DELAWARE

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Delaware lawmakers are considering legislation that would create a statewide property tax to fund repairs and renovations for aging buildings at the state's community college. Legislation enacting that change cleared a Senate committee this month and would allow Delaware Technical and Community College to issue bonds to finance building construction, repairs, equipment purchases and educational technology. The bill also establishes a Community College Infrastructure Fund to pay off the bonds and allows Del Tech to impose a statewide property tax to raise the required funds. "This is not about building any new buildings. This is not adding one new square foot of space here. It's about replacing roofs, replacing mechanical systems," he said. The tax would be capped at 6.5 cents on each $100 of assessed value of real property in all three counties. Delaware Tech received more than $90 million in taxpayer money in the current year's budget and is slated to receive $7 million for capital projects in Gov. John Carney's current budget proposal. Similar bills have failed in previous General Assemblies and this proposal faces some opposition from lawmakers like Rep. Ruth Briggs King (R-Georgetown), who worry about giving the authority to levy taxes to an unelected board. "It's a slippery slope," she said. "Who's going to come next wanting to do their own bonding, controlled by an unelected group that we don't have much control over?"

MAINE

Property taxes hurt low-income Mainers more than ever, but a fix won’t be easy AUGUSTA, Maine — After a long history of being the main funding source for state government, the property tax lives on as the mainstay for every Maine city and town budget. Now, it’s back at the center of tax policy talks in Augusta after last decade’s recession and burst housing bubble — followed by former Gov. Paul LePage’s crusade to lower income taxes — forced municipalities to rely more heavily on the state’s biggest tax than they have in recent memory. Members of the new Legislature — controlled by Democratic majorities and backstopped by Gov. Janet Mills — submitted more than 50 bills aimed at property taxes, not including dozens more on related issues, including the state’s share of K-12 education funding. While there’s bipartisan support for the concept of property tax relief, it’s a task complicated by New England’s long heritage of local government, the spread-out way that Mainers live and a desire not to raise other taxes. Whether lawmakers can overcome those hurdles in a way that satisfies property owners and municipal officials without nudging Mills to break her vow not to raise taxes will be a main story of the 2019 legislative session. “That’s what people are struggling with across the state and that’s our priority,” said Senate President Troy Jackson, D-Allagash. The property tax has long been targeted for lowering, partially because it has grown more unfair to low-income people. Property tax revenue has funded local governments since colonial times, but it was also the main way to pay for state government services through the beginning of the 20th century. In 1870, a property tax represented 98 percent of the state’s revenue, according to a 2005 article in the Maine Law Review. That mix diversified after 1900, when income and sales taxes gained popularity and the rise of the automobile led to gas and excise taxes. Maine adopted a sales tax in 1952. In 1969, Gov. Kenneth Curtis shepherded a progressive income tax through a Republican-led Legislature.

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Now, state government relies on income and sales taxes. Municipal governments rely on the property tax. Cities and towns amassed nearly $2.4 billion in property taxes in 2015, the Maine Municipal Association estimates. It’s far larger than the individual and corporate income tax or the sales tax, of which Maine collected $1.8 billion and $1.4 billion, respectively, in the 2018 fiscal year. The income tax is only paid by Maine residents and the sales tax is largely paid by them. Comparatively, Maine residents paid $959 million in property taxes in 2012, but the tax is regressive for those people as property value has become an increasingly flawed way to measure wealth. On average, the bottom 80 percent of households — those making less than $78,000 — paid more in property taxes than in income taxes in 2012. The top 1 percent of earners paid an effective property tax rate of 0.57 percent, less than a quarter of what Maine paid on average. Property taxes reflect how people live and move. A 1997 report from the State Planning Office under then-Gov. Angus King largely blamed sprawl for increases in local spending. Nearly half of the $727 million to fund new school construction from 1975 and 1995 was used in fast-growing areas, though Maine’s overall student population decreased. “My 30,000-foot perspective is that we’re over-reliant on the property tax,” said Evan Richert of Brewer, who ran the State Planning Office under King. “It kind of warps decisions from time to time because we’re so reliant on it — whether it’s decisions about economic development or decisions about needed infrastructure or the funding of schools.” Maine has responded with state-level programs aimed at easing property tax burdens. They have often been shorted, though that could soon change. The state began sharing tax revenue with cities and towns in the 1970s. Maine passed a 2004 referendum saying the state must pay 55 percent of essential local education costs. Other relief programs exist, including the homestead exemption, which lowers the taxable value of a household’s primary residence. However, the 55 percent threshold has never been met. Revenue sharing was shorted in the recession and during the tenure of LePage — who repeatedly proposed ending the program — to the tune of $700 million, according to the Maine Municipal Association. In 2013, the Legislature replaced the “circuit breaker” property tax relief program with a smaller tax credit. During this time marked by a rebounding economy, cities and towns grew even more reliant on the property tax, which accounted for 56 percent of municipal revenues in 2015, according to the Maine Municipal Association. That was up from 53 percent in 2010. In the Legislature, there are at least 13 bills looking to restore revenue sharing in some way, though the $219 million price is figured into state revenue projections. Others want to meet the 55 percent school funding threshold. That will cost $320 million, according to the liberal Maine Center for Economic Policy. Jackson wants to restore the circuit breaker program. Complicating matters is Mills’ campaign promise not to raise state taxes in her two-year budget proposal due to the Legislature in February. Mills spokesman Scott Ogden said high property taxes “are of serious concern” to her after campaigning on promises to work toward full school funding and restoring revenue sharing. It’s unclear what kind of property tax relief lawmakers could provide if they stick to those tax constraints. Jackson said he’s “adamant” revenue sharing be fully funded. But he “can’t say for certain that we’re going to get all the way to 55 percent” on school funding, though he called it “a definite priority.” While Mills remains in a honeymoon period with Democrats, there are liberal divisions on taxes. Many see the reversal of LePage-era income tax cuts as ways to reduce property taxes, and the Maine Center for Economic Policy has proposed hikes on high earners that Mills opposes. Rep. Ryan Tipping, D-Orono, the liberal co-chair of the tax committee, said while he hasn’t discussed taxes with Mills, he’s “optimistic that we can make progress on a lot of different issues.” Some urban legislators have proposed allowing cities and towns to enact local-option sales taxes. Republicans oppose that.

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Senate Minority Leader Dana Dow, R-Waldoboro, is proposing allowing service centers to get higher revenue-sharing rates than other cities and towns. He said all lawmakers want to lower property taxes, but if other taxes are raised to do it, it amounts to taking money “out of one pocket and into the other.” “My solution is we better the economy and continuously work on that so we don’t have to take that buck out of your pocket,” Dow said. After LePage’s heavy focus on income taxes, Kate Dufour, a lobbyist for the Maine Municipal Association, said cities and towns are back “on the radar” in Augusta, waiting to see “how high we are” on the list of priorities. “It’s just nice to know that people are acknowledging that there has been a significant shift onto the property taxpayers,” she said.

MASSACHUSETTS

Westboro officials optimistic about tax deal for Pennsylvania-based company A special town meeting will be held Jan. 10 to decide the fate of a proposed Tax Increment Financing Agreement that would save a Pennsylvania-based company less than $1 million, but generate nearly $4 million for the town. The meeting will be held in the Town Hall at 34 West Main St., beginning at 6:30 p.m. The proposed TIF is the only warrant article for the special meeting. Olympus Corporations of Americas, the nation’s largest distributor of endoscopes, is seeking approval of a 15-year TIF, proposed to begin July 1, 2020, the beginning of fiscal 2021. The company plans to invest $45 million to construct a 150,000-square-foot building on 17.6 acres of undeveloped land at 800 West Park Drive. The facility would be used as the company’s corporate offices, as well as for research and development. The Center Valley, Pennsylvania-based Olympus Corporation has it’s Olympus Scientific Solutions America division in Waltham and its surgical technologies division in Southboro. The nearly 100-year-old company - which employs more than 5,300 throughout North and South America - had approximately $2.6 billion in net sales as of March 31. The warrant article also seeks authorization for the Board of Selectmen to create an Economic Opportunity Area at the West Park Drive site, with the potential to later include 12.74 acres of undeveloped land at 1200 West Park Drive. The company expects to relocate up to 400 employees to the new Westboro facility, and add another 25 full-time positions. The article takes a simple majority vote to pass. According to town officials, approval of the TIF will result in no tax revenue loss; only a temporary reduction in how much of a tax increase would be applied to the increase in value of the property. The real estate tax exemption would decline over the life of the agreement and would range from 50 percent the first year to 10 percent in years 5-15. The personal property tax exemption would range from 25 percent the first year, to 5 percent in year five; and 0 percent in years 6-15. The undeveloped property at 800 West Park Drive is currently valued at a little over $2 million. Chief Assessor Jon Steinberg said any amount of valuation over the $2 million would be reduced the first year of the TIF by 50 percent. He estimates that over the course of the 15-year TIF, the real estate tax benefit to Olympus would be $767,523, while the town would receive approximately $3.8 million in real estate taxes. The company would also save a little over $6,000 in personal property taxes, but would pay the town $117,000. “It’s a big benefit to the town ... considering right now the property is only worth $2 million,” Mr. Steinberg said of the proposed TIF.

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Selectmen Chair Leigh Emery was surprised to learn from a reporter Thursday that Olympus was fined $646 million by the U.S. Department of Justice for allegedly paying millions of dollars in kickbacks to doctors and hospitals to purchase its medical products. In the 2016 statement from the DOJ, a subsidiary of Olympus, the largest distributor of endoscopes and related equipment, also agreed to pay $22.8 million to resolve criminal charges relating to improper payments to health officials in Central and South America. In a Dec. 10, 2018 press release Kiroyuki Sasa, president and representative director of Olympus Corporation, said the company “deeply regrets its failure to e and supplement the (Medical Device Reports) identified in the plea agreement and accepts full responsibility for these failures.” Ms. Emery said the board first heard about Olympus Corp. at its last meeting on Dec. 8, when the special meeting was called. But the board did not know anything about the fines Olympus had to pay. She said she does not think knowing would have stopped the special town meeting. “My take on it is the town isn’t at any risk. We’re offering them a TIF and they have to comply with the TIF. If they don’t, then they would have to relinquish the benefits they receive,” she said by phone Thursday. “We are happy to have a vibrant company in town that will give us more taxes. And to bring in 400 more workers, that will presumably be good for our economy.” Former Town Manager James Malloy, who left in August to become town manager in Lexington, said he first met with representatives of Olympus in April. But he did not learn about the federal charges and fines until Thursday. He said he Googled every pharmaceutical company that he could think of and added the word “fine,” and found that they had all been fined. He said there were practices openly done in the pharmaceutical industry that are not being done today because they are watched much more closely. He said the only thing he would have done differently, if he had known, was to make sure Olympus is not longer involved in the kinds of practices that resulted in the large fine. The 2016 DOJ press release said the company was cooperative and is committed to full compliance with the reform and requirements outlined in the agreement. “They appeared to be a very good company,” Mr. Malloy said of his interactions with Olympus representatives. “This is a prime piece of property that has been a priority for the town to develop for a long time, like 20 years. New construction in Westboro ... I think it’s a good thing.”

MICHIGAN

Should you trust Detroit's new property assessment numbers? The real estate market in Detroit is a study in extremes: In the city's most stable and prosperous neighborhoods, home values have skyrocketed beyond the wildest aspirations of most Detroiters; on the city's less-fortunate blocks, residents live with deterioration and blight. But this week, there's good news for almost everyone. Numbers released by Detroit Mayor Mike Duggan's office this week suggest that the city is starting to climb out of its long real estate decline. Residential property values have increased in more than 90 percent of the city's neighborhoods, at an average of 12 percent. In some neighborhoods, those prosperous and stable ones, values have gone up by 20 percent. Property values have declined in just 16 city neighborhoods. For Detroit homeowners, who've learned to treat both assessments and real estate booms with healthy skepticism, it's a welcome development.

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The new assessment numbers are the result of a years-long citywide reassessment, prompted by a Detroit News investigation that found city properties were over-assessed by an average of 65 percent. Because of that investigation, the city assessor's office operated under state oversight until 2017. Detroit was hit hard by the 2009 housing crisis; property values, and the municipal tax base that's tied to them, plummeted. Because Michigan law caps increases in taxes levied on property values to the rate of inflation, cities have been slow to recoup the revenue lost during the recession, curtailing their ability to provide services like police and fire protection, code enforcement and snow removal. In Detroit, where the real estate market was pummeled by both bank and tax foreclosures, property values have been so low that for many homeowners inclined to sell, the math just hasn't worked out. And because banks' willingness to lend money is based on an assessment of similar, nearby home sales, it has been difficult for would-be Detroit homebuyers to obtain mortgages for home purchases, much less rehab expenses. Real estate folks tell me buyers are expressing unprecedented interest in Detroit. Neighborhoods that relocating suburbanites wouldn't have considered five years ago are seeing sales pop, driven in part by skyrocketing home values. Despite these promising numbers, Detroit remains an unusual real estate market. Most would-be home buyers in Detroit can't get mortgages. A Bridge Magazine investigation found that just 21 percent of Detroit home buyers in 2017 obtained mortgages (see: stable, prosperous neighborhoods). Nationally, it's about 77 percent. And of the estimated 65,000 real estate transactions in Detroit over the last two years, Michigan Radio's Sarah Cwiek found, just 11,000 are mortgage sales, cash sales or registered land contracts that can be used to calculate assessments. The rest? They're less conventional transactions like quit-claim deeds or unregistered land contracts — mechanisms more likely to be used in the least prosperous neighborhoods, where buyers find it harder to obtain mortgages and property values haven't risen that much, if at all. All of which is important context for this week's good news. Things are getting better in Detroit, and they're getting better across the city, something Duggan — who's been dogged by the assertion that there are two Detroits, for two kinds of Detroiters — is justly proud to publicize. But, as always, it's complicated. And, as always, the city still has a long way to go.

Commercial property values rise 35 percent in Detroit over past year Detroit commercial property values grow 35 percent from 2017 to 2018 Residential property values up an average 12 percent in city neighborhoods Detroit has seen an upsurge in commercial property values over the past year. Commercial property values in Detroit rose 35 percent between 2017 and 2018 after the city completed its first citywide reassessment of commercial buildings in decades, Mayor Mike Duggan said Tuesday. The overall value of commercial property in Detroit rose $2.96 billion to more than $4.5 billion, according to data from the city assessor's office. Industrial property values made an 18 percent jump between 2017 and 2018, from $513 million to $629 million, according to the assessor's office. The rising value of retail and office building property in downtown, Midtown and along mainstay commercial corridors in Detroit's neighborhoods came as residential property values rose an average of 12 percent across the city, according to the mayor's office. Overall, Detroit's total property values rose 21 percent in 2018 to $10.2 billion, which is comparable to citywide assessments from 2011, according to the assessor's office.

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The increased property values reflects what city officials are hearing from real estate agents as the city attracts new businesses and residents, Duggan said. "I always thought that we would see double-digit increases," Duggan said Tuesday. "But it's one thing to think it should be happening and it's another thing when the assessor walks into your office and shows you the map that it's happening all across the city." However, because of state constitutional caps on property tax growth, residential property tax bills will rise by an average of just 1.02 percent this year, Duggan's office said. The same constitutional limits on taxation apply to commercial and industrial property tax bills as well when they get mailed to property owners in July. The cap on taxable value is lifted when a home or other property is sold. Growth in residential property value — fueled by 11,000 transactions in 2017 and 2018 — represents a $400 million increase citywide and follows a modest 5 percent increase in residential values between 2016 and 2017, city data shows. The growing property values in Detroit are partly a result of a four-year citywide reassessment following Detroit's 2013-14 bankruptcy that dramatically lowered the taxable value of residential, commercial and industrial property in Detroit. Those reassessments better reflected the true value of homes and long-abandoned commercial buildings following 17 consecutive years of steadily dropping property values, including a $1 billion drop in total residential home values between 2013 and 2014. Detroit's 263,000 residential properties assessed at a citywide value of $3.4 billion, up from $2.8 billion in 2017. In 2008, the city's housing stock was valued at $8.8 billion in assessed value. The majority of Detroit's neighborhoods — 100 of 194 — saw average residential property values increase between 10 percent and 20 percent. Approximately 52 city neighborhoods had residential property value growth ranging from 1 percent to 10 percent, according to the assessor's office. Two dozen neighborhoods in the city saw average residential property values grow by 20 percent to 40 percent. The fastest-rising residential property values in Detroit were in Midtown and Brush Park, which were the only Detroit neighborhoods to see values spike more than 40 percent, city data show. Neighborhood redevelopment was the topic of discussion at Tuesday's Detroit Economic Club luncheon, where Duggan spoke on stage alongside Chemical Bank Chairman Gary Torgow and Alicia George, owner of Java House and Detroit Artist Village in the Old Redford neighborhood on the west side. Torgow said the rising property values are creating comparable housing sales data, enabling bankers to write mortgages in Detroit again. A half-decade ago, "you couldn't get an appraisal" needed to get a mortgage, he said. "Today, we are seeing a tremendous surge of opportunity, which is only good for the profitability of companies and banks," Torgow said. Torgow, a native of Detroit, recently quarterbacked a coalition of seven corporations that each donated $5 million to the city's Strategic Neighborhood Fund to spur reinvestment along commercial corridors. "If you're in Detroit and you want to succeed in Detroit, the community has to succeed around you," Torgow said. Detroit had approximately 1,200 residential mortgages in 2018, four times as many home loans than were issued four years ago, Duggan said. "We ought to have 3,000 or 4,000 mortgages a year," the mayor told reporters. "We're not where we need to be. But I think this is going to continue to shift the market in a healthy direction."

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Just 16 of Detroit's 194 neighborhoods saw an overall decrease in property values last year. Those ranged from 1 percent to 15 percent declines, according to the assessor's office. Detroit spent $8.25 million reassessing all residential, industrial and commercial parcels in the city, said city assessor Alvin Horhn, Detroit's deputy CFO. Rising city assessments — and tax bills — typically give rise to more appeals from property owners. Detroit's Board of Review begins accepting assessment appeals Feb. 1. For more information about the appeals process, visit the city's website here.

MINNESOTA

Minn. Rejects 'Dark Store' Theory In Lowe’s Property Row The Minnesota Tax Court has said a Lowe’s store is entitled to a market value reduction, but the attorney for the county the store is located in lauded the decision as rejection of the “dark store” theory of property valuation. In a Thursday decision, the tax court reduced the market value of the Lowe’s Home Centers LLC store in Hennepin County from $11.8 million for 2015 to $10.5 million. The appraiser hired by Lowe’s had requested the property be valued at $5.3 million. Similar to a Tuesday decision lowering a Menards store’s market value, the court said it relied mostly on the cost approach to value in its decision. The cost approach determines the current cost of constructing a property’s existing improvements, subtracting depreciation and then adding the land value to calculate a property’s market value. The court said it gave the cost approach a 75 percent weight in determining the property’s value, while giving the sales approach a 25 percent weight. The sales approach compares sales of similar properties to determine value. The court said it gave the sales approach “very limited weight” because none of the presented comparables were similar to the store at issue in terms of retail location. “Both experts agreed there are a very limited number of sales of single-user owner-occupied buildings that are similar to the subject property and no sales of these properties performing well in good locations,” the court said. Dan Rogan, managing attorney of the Civil Division of the Hennepin County Attorney’s Office, said the office was pleased with the decision. “It represents a rejection of the recently popular ‘dark store’ theory,” Rogan told Law360 in a phone interview Friday. “Dark store” theory, Rogan said, refers to the practice of so-called big-box retailers appealing valuations of their property for tax purposes by asserting their properties should be compared to sales of other big-box property lots, which he said often have “distressed” stores that are not truly comparable. Big-box retailers have asserted the improvements to any given big-box property are tailored for the specific owner’s needs and therefore are of little value to any other potential buyers. Because of this, retailers have asserted the best way to value such properties is to look at sales of other big-box properties to determine what buyers are willing to pay. Rogan said the court recognized that available sales for comparison are often of failed stores or stores that are otherwise inferior and that comparing the Lowe’s store at issue to such stores would not give an accurate value. “In this case the tax court rejected this approach and outlined a more appropriate method to value these properties,” Rogan said. “The sales approach, where you compare it to a dark store, that’s really not appropriate.” The court took three available recent sales of physically comparable big-box stores that both the Lowe’s appraiser and the county’s appraiser had offered, but said all of them were “significantly inferior to the subject property in several respects.” The

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court said two of the sales had deed restrictions, which are anti-competitive restrictions on what the property can be used for, which limited demand for the properties and therefore their values. Additionally, the court said all three sales were in “significantly inferior locations, by both trade area, household and income demographics and traffic access and exposure.” In contrast, the court said the cost approach was well-supported in the case at hand. The court said in determining the land value it relied most on a comparable used by both appraisers, which required very minimal adjustments. For replacement cost estimates, the court said it adopted the Lowe’s appraiser’s estimates and found that based on the “quantity and quality of evidence in the record, we find that the cost approach is substantially reliable.” Representatives for Lowe’s declined to comment. Robert Hill, an attorney for Menard Inc. in its Minnesota property tax disputes, told Law360 in a phone interview Friday the Lowe’s decision was evidence of collusion. “This is a set up. It’s a fix,” Hill said. “These guys are desperate to prop up market value.” Rogan said the decision properly reflected the assessed value of the store and “protects the county’s tax base by ensuring big-box stores pay their fair share of taxes.” Otherwise, Rogan said, “it would impact homeowners and others that would be picking up those taxes unfairly.”

NEW JERSEY

The Local Property Tax Appeal Filing Deadline Remains Inviolate And Cannot Be Circumvented By Use Of The Intervention Tool In Farmland Dairies, Inc. v. Borough of Wallington, N.J. Super. App. Div. (per curiam) (unpublished decision) (35-2-7909), the Appellate Division upheld the decision of the Tax Court in denying an unrelated neighboring property owner’s efforts at intervening in a pending local property tax appeal between the property owner and the Borough. The court concluded that the intervention application of the putative intervenor was out of time and barred by the statute of limitations. Although all residents of municipalities have standing and maintain the right to pursue tax appeals as “aggrieved” parties under the statute, including those related to their neighbor’s properties, any such contests must nonetheless comply with the statutory filing deadline. The New Jersey Supreme Court has consistently recognized the necessity of complying with filing deadlines in the area of taxation. The statutory scheme establishing the court’s jurisdiction in this area is “one with which continuing strict and unerring compliance must be observed.” See McMahon v. City of Newark, 195 N.J. 526, 546 (2008). Indeed, our Supreme Court has declared that the “failure to file a timely appeal is a fatal jurisdictional defect.” F.M.C. Stores v. Borough of Morris Plains, 100 N.J. 418, 425 (1985). The Supreme Court has also explained that strict adherence to statutory filing deadlines is of particular concern in tax matters, given “the exigencies of taxation and the administration of local government.” F.M.C. Stores, 100 N.J. at 424. The Legislature “has attempted to set out a well-organized time-table for the purpose of enabling a municipality to ascertain the amount of taxable ratables within the jurisdiction in order that it might adopt a responsible and fairly accurate budget.” Id. at 425. “By incorporating a strict deadline in [the statute], the Legislature intended to ensure that municipalities receive timely notice that a particular property’s valuation is subject to challenge.” Prime Accounting Dept. v. Township of Carney’s Point, 2013 N.J. Lexis at *31. After previously remanding the matter to the Tax Court for further proceedings concerning the timeliness and propriety of the putative intervenor’s application for permissive intervention, the Appellate Division made it plain, mindful of the above-referenced well-settled jurisprudence, that any effort to intervene must, in the first instance, be timely pursued and that the annual tax appeal filing deadline will effectively wait for no one. Although as demonstrated above, the inviolate nature of this statutory deadline is plain, the court’s decision here may have been made easier by the attendant distasteful nature of a case involving an unrelated party’s efforts at meddling with pending litigation between the real parties in interest (the actual owner of the property in question and the municipality).

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AVERAGE NJ PROPERTY TAX IS $8,767 The average residential property tax bill in New Jersey rose fastest in the counties with lower household incomes, according to a review of 2018 tax data by New Jersey 101.5. Official data from the state Department of Community Affairs isn’t expected to be available for another two or three weeks, so this analysis relies on the 21 county abstracts of taxable properties and average residential assessment figures from the state Division of Taxation. The data includes 65 columns of information about 565 municipalities. Here are some highlights:

The average statewide residential tax bill rose by the smallest amount in decades: $77, or 0.9 percent. But that was skewed by long-overdue revaluations, particularly in Jersey City, which limited the impact of increased property values to only a few municipalities.

The biggest increases for the average tax bill were in South Jersey counties: up 3.6 percent in Cumberland, 3.2 percent in Salem and 3.1 percent in Cape May. Those three counties, however, still have the three lowest average tax bills in the state.

That pain wasn’t the case for the entire South Jersey region: The average tax bill was down 2.3 percent in Burlington County, up 0.4 percent in Atlantic County and up 1 percent in Gloucester County.

Passaic County for the first time joined four other North Jersey counties – Bergen, Essex, Morris and Union – with an average tax bill topping $10,000. Passaic also nudged past Somerset County on the tax bill rankings.

Among New Jersey’s 565 municipalities, the median increase in 2018 was 1.9 percent. That’s better than a year earlier, when it was 2.1 percent.

There were fewer cities and towns in which the average property tax bill dropped – 59 last year, after there were 66 in 2017.

Four towns saw the average residential tax bill increase by more than 10 percent: Interlaken, Elmer, Wrightstown and Stow Creek. It went up by more than 2 percent – which is the cap on levies, not bills, and exempts some government expenses – in 267 municipalities.

“People are angry, and residents have every right to be angry. And the anger is only going to increase every time you see that bill,” said Brian Thomas, executive director for Citizens for Accountable Taxation, which launched last year and runs Fair Property Taxes for All New Jersey. “But unfortunately, a lot of residents due just chalk it up to the fact that this is the way the situation is in New Jersey, and they’re not expecting things to change,” Thomas said. Thomas said there are solutions and ideas “floating around out there” that can help but that haven’t been made priorities. He said the state should study how the 2 percent tax levy cap of 2010 is working and make school funding more equitable. “It’s not a one-off solution that’s going to lower everybody’s property taxes. It’s kind of a combination of things that have to come together to bring about the relief in the state,” Thomas said. Statewide, the school-purposes property tax levy has doubled since 2000, reaching $15.5 billion. Municipal taxes have more than doubled since 2002, nearly $8.7 billion. The county tax levy doubled since 1999, reaching $5.3 billion. School taxes account for 52.6 percent of the statewide property tax levy – inching higher for a fourth straight year but still below its peak of more than 55 percent between 2002 and 2005.

PROPERTY TAXES JUMPED ANOTHER $639M IN NJ IN 2018 Property taxes across New Jersey increased by another $639 million in 2018, now approaching a cumulative $30 billion.

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By some measures, the news was relatively good for taxpayers. The bill on the home assessed at the statewide average went up by the smallest amount in decades – up $77, or 0.9 percent, to $8,767, in part because the statewide tax ratable base increased by the most since 2009. The increase in the total levy was 2.2 percent, pushing it to $29.8 billion. The increase was more than the prior year’s 1.7 percent, but it marked the eighth consecutive year in which the levy increased less than 2.6 percent. “And it’s clearly better than what we’ve seen in the past, particularly if you look at the past 15 or almost 20 years where we had numbers at some points that were going up 8 or 9 percent a year,” said Marc Pfeiffer, assistant director of Rutgers University’s Bloustein Local Government Research Center. Pfeiffer said the numbers reflect the impact of tax levy caps approved in 2007 and 2010 and a now-expired cap on arbitration awards for police contracts. The current levy cap is 2 percent with a limited number of exceptions for pensions, health benefits, debt, construction and emergencies. “The combined caps have managed to keep local property tax levies at what’s probably the lowest rate of increase we have seen in probably 30 or 40 years, if not longer,” Pfeiffer said. The numbers cited for this report were compiled by the Townsquare News Network from county abstracts of ratables and average home assessment data from the state Division of Taxation. The official data from the Department of Community Affairs isn’t expected to be available until late January or early February. Gov. Phil Murphy’s office said the slower growth in the average tax bill reflect the benefits from a $350 million increase in school aid, possible in part because the income tax on 8,000 “mega-millionaires” was increased in a move expected to raise the state around $280 million. “The investments Gov. Murphy has made in our public schools and in middle-class tax relief by asking those with incomes over $5 million to pay a little more are proving to be effective,” said Matthew Saidel, a Murphy spokesman. “These investments, especially those being made directly in our classrooms, are benefiting our students while taking some of the weight off the shoulders of our property taxpayers.” Murphy’s office says 31 towns had reductions in both school levies and property taxes. But Jersey-wide, despite increases in state aid in the last two state budgets, school taxes were up 2.3 percent in 2018, or $348 million – the second highest pace in the last eight years. School taxes now total nearly $15.5 million. Municipal taxes increased $186 million to almost $8.7 million. County taxes were up more than $94 million to $5.3 billion. And levies from special taxing districts in 136 municipalities – for garbage, fire and other services – were up $10 million to $317 million. When asked about property taxes, Murphy generally points to two efforts: Increasing school aid and appointing bipartisan shared services czars. “Believe me, we have people every single day working on cutting the burden of property taxes. By example, shared services,” Murphy said last month. ““That’s an obsession of ours as an example.” Murphy’s office says the Jan. 15 State of the State will outline plans to improve the financial security of middle-class families, though it hasn’t specified what that will mean. The governor said last month he’d love to include a tax break if the state’s books can still be balanced. “I’d like to frankly deliver tax relief to certain communities in our state,” Murphy said. The average assessed home value in New Jersey was $316,710 in 2018, up nearly $9,800 from a year earlier. A lot of that increase derived from revaluations in Jersey City, where the average home assessment went from $90,979 in 2017 to $433,320, and Weehawken, where the assessed value of the average home went from $245,847 to $744,412. Including commercial property, the Jersey City revaluation accounted for more than 60 percent of the $46 billion increase in assessed value statewide.

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The average residential tax bill dropped 9 percent in Jersey City, helping keep the statewide increase down to 0.9 percent. However, the average bill increased by more than 0.9 percent in 77 percent of New Jersey cities and towns.

2019 Commercial Property Tax Appeals A reduction in the real estate tax component of a commercial property owner’s expenses will be reflected directly in the bottom line. Therefore, it is important to consider whether or not the assessed value of commercial property (shopping centers, office and industrial buildings, and multi-family apartments) are paying more than their fair share of taxes. The assessments on which real estate taxes are based, if inappropriate, can be challenged. However, property owners who wish to consider an appeal of their 2019 property tax assessment have a limited window of time to act. FAQs and Important Dates Notice of Assessment: Local assessors are required to notify each taxpayer by mail of their 2019 assessment on or before February 1, 2019. How Assessments Are Calculated: If the municipality has conducted a municipal-wide revaluation or reassessment, the assessment will be in the amount of the assessor’s estimate of the market value of the property (the so-called “true value”) as of . Otherwise, the assessment will be in the amount of the assessor’s estimate of the market value of the property as of October 1, 2018, adjusted by the average ratio of the assessed value to the market value of other properties in the municipality. This average ratio is determined by the State Director of Taxation. In considering an appeal, property owners need to determine the true value of the property reflected in the assessment to ascertain whether there is a basis for a tax appeal. Filing an Appeal: An appeal from the 2019 assessment must be filed on or before April 1, 2019; however, if the assessment is the result of a municipal-wide revaluation or reassessment, the appeal deadline is extended to May 1, 2019. Appeals are filed with the County Board of Taxation, except in instances where the assessment exceeds $1,000,000, in which case an appeal can be filed directly with the New Jersey Tax Court. Special rules apply to property in Monmouth County where County Tax Board appeals must be filed by January 15, 2019 and Tax Court complaints must be filed by April 1, 2019. The Appeals Process and Sample Outcomes The Tax Court rules mandate that parties must participate in a settlement conference, and, in fact, most tax appeals do settle. Examples of past settlements in which the firm represented the owners of various types of properties include:

The assessment of contaminated vacant land was reduced by 45% from $550,000 to $300,000.

The assessment of a vacant office building was reduced by 53% from $16,110,000 to $7,519,200.

The assessment of a 130,000 square foot office building was reduced by 47%, from $5,900,000 to $3,119,800.

The assessment of 288 condominium units was reduced by 46% from $121,395,500 to $65,464,000.

The assessment of a 197,000 square foot industrial building was reduced by 26% from $4,400,000 to $3,227,200.

The assessment of a hotel/office building was reduced by 22%, from $12,458,100 to $9,672,000.

The assessment of a multi-tenanted warehouse/self storage facility with 21,000 square feet was reduced by 18% from $1,523,700 to $1,250,000.

The assessment of a 115-room hotel was reduced by 16% from $5,262,300 to $4,400,000.

The assessment of a shopping center with a total area of 57,500 square feet was reduced by 14% from $6,513,400 to $5,600,000.

The assessment of a 93-unit cooperative was reduced by 13% from $10,320,000 to $8,900,000.

The assessment of a 240-unit garden apartment complex was reduced by 12% from $19,230,700 to $16,800,000.

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On occasion, the difference between the property owner’s estimate of market value and that of the town cannot be reconciled. In those cases, formal appraisals are exchanged and the parties prepare for trial.

NEW YORK

NYC Council Bill Would Save Commercial Landlords Cash in a Property-Tax Appeal The City Council passed a bill last week that could give thousands of commercial and apartment-building owners in New York City a financial break when they appeal their property-tax assessments. Owners of rental-apartment, store or office buildings assessed at $1 million or more have since 1973 been required to submit documentation of their income to the city's Tax Commission to appeal their property taxes. The city considers income on the property when assessing its value or adjusting an assessment. In 2015, the city added a costly step: Owners of commercial or rental properties assessed at more than $1 million had to submit an audit of their income done by a certified public accountant. Accountants had pushed for a more-formal audit of these documents in 2015, according to Jason Hoffman, a CPA and the senior manager of real-estate firm Janover LLC. But certified audits of buildings can cost an owner as much as $ 10,000 a year. Under the bill -- which the city council passed unanimously Thursday -- only owners of commercial and rental properties assessed at a value of $5 million or more would have to submit a certified audit of income when they appeal. The higher threshold could save an estimated 18,000 property owners from having to pay for an audit when they appeal their assessments, according to city officials. To become law, the bill must be signed by Mayor Bill de Blasio. A spokeswoman for the mayor said he is reviewing it. Queens City Councilman Barry Grodenchik, the bill's sponsor, said an update was long overdue. The $1 million threshold was determined more than four decades ago, when real-estate values were far lower, he said. Under the bill, the cost would be indexed for inflation and the city would revisit the cap every five years. "After 45 years it's time to update things," he said. "The thought that many people have a minimum of $10,000 a year for the right to challenge their property-tax assessments was outrageous." Property tax is New York City's largest source of revenue, with more than $27.8 billion paid in fiscal year 2019. The city calculates property tax based on a percentage of the property's assessed value. The percentage varies with the type of property: Most rental and commercial properties are categorized as class 2 and class 4 buildings. Property owners can appeal their assessment for a number of reasons, from clerical errors to disagreeing with the market value. In fiscal 2018, about 54,500 appeals were filed with the tax commission over the assessment of a class 2 or class 4 property. The number of class 2 and class 4 properties assessed at $1 million or more that sought property tax appeals was more than 25,200 that year, according to Ellen Hoffman, president of the tax commission. The number of these properties assessed at $5 million or more was over 6,900. "The $1 million threshold does not have the same significance today as it did when it was adopted 45 years ago," she said at a city council hearing on the bill in October. Mr. Hoffman, the accountant, said the audit requirement put a strain on property owners as well as accountants.

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By the time they paid for the report to appeal their taxes, property owners often didn't end up saving much money. This change will help them save thousands of dollars if they appeal, he said. "It really helps the real-estate investor at the point where they probably need it," Mr. Hoffman said.

How Much Could Property Taxes Rise in Westchester, New York, If the Cap is Eliminated? Limits enacted in 2011 could expire next year Q: I live in Westchester County, New York, and I know the governor is trying to make the property tax cap permanent. If he doesn't succeed, how much could property taxes go up? A: The New York State Legislature has just passed a bill to make a tax cap enacted in 2011 permanent, according to a spokesman from Senate Majority Leader Andrea Stewart-Cousins’ office. The tax cap has been in effect across the state since 2011, Gov. Andrew Cuomo’s first year in office. It limits the annual growth of property taxes levied by local governments and school districts is 2% or the rate of inflation, whichever is less, according to New York State’s Department of Finance. The cap is set to expire in 2020, but Mr. Cuomo is pushing to make it permanent, and the state legislature proposed a bill earlier this month to do just that. The state assembly passed the bill on Tuesday, and the senate passed it Wednesday. and It will now be delivered to the governor’s office for approval. Before the cap was enacted, school taxes went up on average 5% a year, according to Mr. Cuomo’s office. Westchester County has some of the highest taxes in the U.S., according to ATTOM Data Solutions, a California-based company that analyzes real estate and property information. The average property tax bill in the county in 2017 was $17,178, with an effective property tax rate of 2.39%. Data for 2018 is not yet available. The Westchester County Budget for the upcoming year has a proposed 2% property tax increase, according to Westchester County Executive George Latimer’s office.

NY property tax cap law takes step toward permanency New York state's popular property tax cap may soon become permanent. "The taxes in Nassau County are astronomical. It's why the people move," says Syosset's Stew Fleisig. That's why he says he supports the property tax cap, which limits governments and school districts to annual tax hikes of 2 percent. When the law passed nine years ago, it included a provision that the law be renewed periodically, in case there were negatives impacts. But the state Senate will vote Wednesday to make it permanent. "I think making the...the 2 percent tax cap permanent is going to give us some consistency and will bring relief to the residents of Long Island," says state Sen. Jim Gaughran. Long Island Association President Kevin Law says a permanent tax cap is vital to Long Island's economy. According to an LIA study, the average Long Island homeowner would be paying nearly $4,000 a year more in property taxes today if the tax cap had not been approved. "Over 90 percent of the property taxes come from residential properties," Law says. "But businesses, on average, pay almost twice as much as the residential. So it's a significant cost to do doing business here."

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But not everyone supports the tax cap. School districts have complained that over the years, they've had to make drastic cuts because of the cap or couldn't implement new programs. And the bill still needs approval in the state Assembly, which is usually sympathetic to teachers unions, which oppose the cap. So Long Island's Assembly members say their task will be convincing their city counterparts to support it. The law does allow tax hikes greater than 2 percent. But it requires the approval of 60 percent of governing bodies, or 60 percent of residents in the case of school budget votes

Why NY’s property-tax cap faces a critical year Gov. Andrew Cuomo wants to make the property-tax cap permanent in 2019, but he will face pressure from powerful special-interest groups and a new state Legislature who may not support his proposal. The cap is one of Cuomo's top legislative achievements because it has slowed the growth of property taxes in New York, which has among the highest taxes in the nation. As part of his 2019 agenda, Cuomo pledged to make the cap permanent. It expires in 2020, but is legally tied to rent-control laws, which end in June. In a speech Dec. 17 laying out his priorities, Cuomo appeared to tie making the tax cap permanent to another issue important to Democrats: keeping higher taxes on the rich. "Our state tax code is more progressive today than it has ever been. We must maintain our millionaire's tax, also make permanent our two percent cap on the regressive local property taxes," Cuomo said. Cuomo got the state Legislature to install the tax cap in 2011, his first year in office. It has worked as he intended: School taxes went up on average 5 percent a year prior to the cap. Now it's limited to less than 2 percent growth annually. Democrats will control the state Legislature in January, and the powerful teachers' union in particular may look to chip away at some of the provisions of the cap. About that cap The cap limits the growth in property taxes for all local governments and schools to 2 percent a year or the rate of inflation, whichever is lower. The tax can be overrode by a 60 percent vote by a municipality's governing board or by 60 percent of voters during school budget referendums each May. The cap has been difficult for schools to pierce: The public rarely approves an override. School groups have wanted to do away with the 60 percent supermajority provision and instead only require a simple majority to override the cap. They have also sought to get rid of tying the cap to inflation, because in some years the cap hovered at 1 percent or less, severely limiting governments' ability to raise revenue for their budgets. "Our position has not changed," Carl Korn, spokesman for the New York State United Teachers union, said. "The tax cap is arbitrary and undemocratic. It unfairly limits the ability of local communities to decide for themselves how much to invest in their own local schools.” Cuomo stands pat on cap

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Cuomo has been steadfast in opposing any wholesale changes to the cap, and his efforts were supported by Republicans who held the Senate majority — who also pushed for the cap to be made permanent, but didn't win support from the Democratic-led Assembly. The cap has been extended in the past, but never made permanent. The issue will come up again this year because making the cap permanent could be a bargaining chip for Cuomo in what will be a fight over reforming rent-control laws in New York City and its suburbs. "It’s an issue that we’ll discuss with our members in January," said Michael Whyland, a spokesman for Assembly Speaker Carl Heastie, D-Bronx. In 2015, a Siena College poll showed 70 percent of New Yorkers supported the cap, and it has been defended by upstate and suburban lawmakers where property taxes are most pronounced. Cuomo said the cap is important, especially because the federal government is limiting state and local income-tax deductions to $10,000 a year in 2019, called SALT. The Democratic governor also hinted at looking to lower taxes next year. "We will fight SALT to the death, and I will once again propose cutting taxes for our hardworking middle-class families," he said Dec. 17. What's next Some upstate counties, including in the Rochester area, pay among the highest property taxes in the nation compared to home values. The New York City suburbs, meanwhile, including the lower Hudson Valley, pay among the highest property taxes total in the country. Incoming Senate Democratic Leader Andrea Stewart-Cousins, D-Yonkers, has stressed in recent weeks that she's a suburban lawmaker who acutely understands the issue of property taxes in New York. She has already ruled out raising taxes on New York, despite calls from incoming members to raise taxes on the wealthy. If Cuomo can make the tax cap permanent, it would be a major part of his legacy as governor, said E.J. McMahon, president of the Empire Center for Public Policy, a fiscally conservative think tank in Albany. McMahon has applauded the cap's ability to control taxes and has warned against efforts to water it down. "The best possible result is that he stands firm against any change and he insists that it be permanently enacted," McMahon said.

Understanding NY’s Property Taxes Whether people like it or not, taxes are necessary, and it is particularly true in the case of property tax. Local governments levy a tax on property to generate additional revenue. This is used as funding for public schools, the local police and fire departments, garbage collection and disposal services, as well as maintaining our streets. Unfortunately for those with properties in New York, The Balance reveals that the state’s property tax is quite high. It is, in fact, one of the highest in the country, and is computed like this: the property’s assessed value multiplied by the local property tax rate. The tax rates are set by local governments, and they vary from location to location. Local assessors, meanwhile, are tasked

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to assess every property in-state (except in New York City and Nassau County) at a uniform percentage of market value — determined by the local assessor’s office — annually. This means that your property tax this year will likely be different from that of next year, and the year after, and so on. The reason for this is that the uniform percentage of market value will likely vary from year to year. Even the tax rate might change from year to year as well, like what happened in 2017 in Mount Vernon. As reported here, Mount Vernon City Council adopted that year the city’s lowest budget. Yet they increased the property tax rate to 1.82% for that same fiscal year. Still it should be noted that there are certain tax reliefs that can lower your property tax in New York. Those who use their homes as their primary residence, for instance, are entitled to an exemption. Senior citizens, veterans, and persons with disabilities (PWDs) also get exemptions. Owners of residential buildings, meanwhile, can gain tax abatements to ease the burden of high property taxes. The J-51 tax abatements are a prime example of this. The J-51 tax abatements article by Yoreevo states they were first made available way back in 1955, right after the city required all buildings to provide basic utilities such as central heating, indoor plumbing, and hot water. Response to the mandate was lukewarm, with landlords complaining that they didn’t have the money to add said utilities to their buildings. The J-51 tax abatements were born, with a simple premise: invest in improvements, and recoup the costs via tax breaks. Today, the J-51 tax abatements are incentivizing building improvements, and both landlords and tenants are benefiting — the former get lower property taxes, while the latter enjoy better amenities. These tax breaks, clearly, are important nowadays for property owners in New York, especially in New York City. As stated already, New York has some of the highest property taxes in the U.S., and property taxes in the Big City are still rising “at an alarming rate”. The rise is particularly alarming when juxtaposed with the income of New Yorkers. Over the past decade, New York City’s property tax rate “has grown at triple the rate of New Yorkers’ incomes.” This means that property taxes are getting an increasingly larger portion of a homeowners’ income. It’s quite unfortunate that property taxes in New York are so high, and it seems they are continuing to rise. At the very least, there are tax breaks, and the onus now is on property owners to take advantage of them.

Amazon HQ2 tax breaks scrutinized by city comptroller Comptroller Scott Stringer has issued a request to the EDC for information that would help him fact check the numbers behind the deal City Comptroller Scott Stringer has publicly decried Amazon’s deal with the city, calling it a “taxpayer-funded entitlement program” in an early December op-ed in the Gotham Gazette. Now, Stringer has issued a firm request to the city’s Economic Development Corporation for the detailed information behind the numbers that sealed the Amazon deal behind closed doors. On Friday the comptroller requested the EDC return specific information that would help him fact check the assertion that Amazon’s Long Island City development would provide a 9-to-1 return on investment, as well as breakdowns on the refundable tax credits Amazon stands to gain through the Relocation and Employment Assistance Program (REAP) and the Industrial and Commercial Abatement Program (ICAP), the New York Daily News reports. REAP is a tax credit program originally designed to help attract employees outside of Manhattan’s business core. In his Gotham Gazette op-ed, Stringer says Amazon stands to receive some $900 million in tax credits from the program. By comparison, last year 205 firms shared $32 million in tax credits under the program; but because there’s no cap on REAP, Amazon can accrue $75 million in tax credits from the program in a single year. The program as it stands also does not require its recipients to meet performance goals, so if Amazon does not deliver on its promise to hire 25,000 employees at an average pay rate of $150,000—and instead hires 25 employees at an average pay rate of $30,000, for example—it can still receive the tax credit. In the op-ed predating the EDC request, Stringer called for a reevaluation of the program, considering that “our economy is already doing the work of REAP. Indeed, from 2007 to 2017, 83 percent of new jobs in New York City were outside of

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Manhattan, raising the question of whether the REAP program is needed in a city where businesses are already spreading across the five boroughs on their own.” ICAP is a tax credit that offers incentives to companies that renovate or build outside of Manhattan to spur economic development. Amazon stands to gain $400 million in property tax abatements from this program, Stringer says. When an ICAP tax break exceeds $1.5 million, it requires the receiving group to seek at least three bids for construction from city-certified minority- and women-businesses enterprises (MWBE). Because Amazon’s tax break could be nearly 267 times that minimum threshold, Stringer has inquired whether Amazon will be seeking more than three MWBE bids for the project. Stringer has also requested of the Economic Development Corporation information on its agreement to lease Amazon public buildings, including buildings used by the departments of transportation and education. The comptroller has requested that the EDC return the information by January 11.

NORTH CAROLINA

Revaluation in Sampson nears finish A sweeping revaluation of properties in Sampson County is nearing the backstretch, as the schedule of values has been approved and new tax bills are slated to be mailed out in a mere two months, a process that is often followed by a caravan of informal and formal appeals by property owners. State law requires counties to undergo a revaluation of real property a minimum of every eight years. Sampson’s last revaluation became effective Jan. 1, 2011 and the current revaluation will become effective January 2019. The purpose is to assure all properties reflect current market value and to promote equity and fairness within the tax base. The current reval process began with the award of the bid for revaluation services to Pearson Appraisal Service in December 2016. Fred Pearson of Pearson’s Appraisal Service and Robert Ezzell, project manager for Pearson and the supervisor for Sampson’s 2019 appraisal. They spearheaded the Sampson reval, which included visits to approximately 50,000 total parcels in this county. The appraisers collected basic characteristics of the property, such as building dimensions, total square footage, type and quality of construction, type of heating and cooling, plumbing, age, condition, desirability, usefulness and other characteristics. As part of the reappraisal process, uniform schedules of values, standards, and rules to be used in appraising real property at its true value and at its present-use value are prepared. Those have to be reviewed before Jan. 1 of the year they are applied. The proposed schedule of values were delivered on Nov. 5, and the required public hearing was held on Nov. 26. The Sampson Board of Commissioners signed off on them earlier this month. “This schedule of values contains the base rates, adjustment tables, depreciation factors — the actual tools that we’ll need, as appraisers, to assess property for the next eight years in Sampson County,” said Tax administrator Jim Johnson. “We anticipate at this point in time that the (tax) notices for 2019 will be mailed some time around March 1. That will give approximately two months for Pearson to hold informal appeals prior to the Board of (Equalization and Review) convening and having their appeals and their verdict.” In Sampson, the Board of Commissioners acts as the Board of E&R, hearing appeals from property owners. Revaluation covers all residential and commercial land and structures, such as homes, apartments, and office buildings, stores and warehouses. It does not include what is known as “personal property,” such as cars, boats and airplanes. The values for those are adjusted annually.

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Property is appraised at “fair market value,” which is the most probable price a property would bring in a competitive and open market. Property values for revaluation are determined by comparing sales prices for similar properties, what it would cost to replace a property, the potential income for a property and many other factors. At the beginning of this year, according to the North Carolina Department of Revenue, the most recent sales ratio study listed Sampson County as just over 100 percent of market value. Pearson’s appraisers said some properties will go up in value, meaning higher tax bills, while some may decrease. “There will be areas where we will have a little bit of an increase, there will be some areas that go down and a lot of areas will remain very close to the same,” Ezzell said earlier this year, speaking to Sampson’s revaluation. “Our job is to make it as uniform and as equitable as we can, not overtax anybody and try not to undertax anyone.” New tax bills to be mailed in March; appeals follow

OHIO

TJX requests changes to proposed tax abatement agreement We're learning more about the finer details and changes made to a proposed tax abatement agreement between the Village of Lordstown and the upcoming TJX HomeGoods distribution center project. The core of the proposed agreement has not changed; TJX is still seeking a 75 percent, 10-year property tax abatement for the company's proposed 1.25-million-square-foot distribution center, and in return for the tax abatement, TJX would give Lordstown Local Schools a $500,000 donation. Mayor Arno Hill has said that after that, the school district should receive about $405,000 each year after the plant is up and running. However, TJX requested some minor changes to the agreement. One request touches on the promise of 1-thousand permanent jobs by the end of 2024. TJX still plans to meet that promise but is asking for a little leeway in the event that a new industry moves into the area or GM restarts and pulls from their workforce. "Say they have employment and all of a sudden General Motors came back and everyone rushed to General Motors, then they would want 90 days to be able to get their employment numbers back up because the abatements are reviewed every year and they want to make sure they are covered," said Hill. This comes at a time when the village and the Valley have seen job loss due to General Motors' decision in early and mid 2018 to cut two shifts at its Lordstown facility -- and then GM's recent decision to idle production at the plant altogether due to a decline in sales of the Chevy Cruze, GM Lordstown's sole product. The proposed Lordstown TJX facility itself has been met with both eagerness and animosity, with a legal battle over rezoning residential land lasting for months. The tension caused the issue to be put before voters and a judge. At one point, TJX said that it was considering pulling its proposal from Lordstown, due to the amount of rejection it was facing. But with the facility now moving forward, the tax abatement approval is seen as another hurdle in the effort to bring TJX to Lordstown. The proposed changes to the agreement were approved by council.

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Council will cast a third and final vote on the proposed tax abatement agreement on January 2nd from there it will be passed on to the Trumbull County commissioners, who would hold a public hearing. A TJX representative said they hope to begin construction in March and complete the project two years later. Although the contract has a proposed firm date of the end of 2024.

PENNSYLVANIA

One easy step toward fixing property assessment mess For the past few years, we’ve told ourselves a new story about our city — that Philadelphia is no longer content with the status quo, that we have embraced change and progress, and become a serious modern city encouraging growth in development and population. It’s a nice story, but it’s not exactly true. Case in point: the city’s broken system for assessing the value of properties for taxation. For decades, the city was content to let an ill-managed Board of Revision of Taxes establish wildly inaccurate, arbitrary, and unfair values. Reform of this broken system took hold in earnest in 2010 when then-Mayor Michael Nutter proposed a system of Actual Value Initiative that would not just tax properties based on their full market value, but break the BRT into two parts — one to assess properties and one to collect taxes. It took years, but AVI was finally implemented in 2014. Four years later, the city is still struggling to get it right. Homeowners are still getting inaccurate and unfair property tax bills, and assessments are still not uniform. In January, City Council released the results of an audit that identified some of the underlying problems that still plague the Office of Property Assessments. Mayor James Kenney’s office said the audit was based on faulty data. A few days later, the administration released a rebuttal report by an expert that disagrees with some of the points made by Council’s auditor but agreed that assessments are based on insufficient information. Both experts agree that OPA lacks routine reports that would make the assessment process more transparent, and fails to explain its method to the public. Why is this so hard to fix? Given that lower-valued properties are being over-assessed and higher value properties under-assessed, the commitment to simple fairness should be informing this process with an urgency that, to our eyes, is absent. City leaders could take one simple step that would dramatically ease the anxiety and uncertainty around the latest chapter of property tax mess: do a better job communicating. Both sides claim there is a review process through which homeowners can challenge their assessments; the OPA says taxpayers can call and ask questions. But why should the burden of correcting a broken system fall on its victims? (Besides, who in their right mind would protest paying too little?) Instead, the administration and Council should be standing as a united front committed to solving the problem instead of placing blame. Together, they should host town halls. Last spring, after many residents saw their property tax bill increase, the Center City Resident Association held a public meeting with OPA leadership. We need more of these meetings — with political leadership involved. It’s time that Mayor Kenney, Council President Darrell L. Clarke, and representatives from OPA to leave City Hall and explain the situation to their constituents. They can debrief the public about the audits' findings, answer basic questions about AVI, the assessment process, and the steps forward. By listening to taxpayers, they can get a sense of the urgency of the matter. Or, they can wait until after the May municipal primary, when they may no longer have jobs.

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Pennsylvania schools can tax the land on which billboards stand, appeals court says In a tax case involving two Delaware County school districts and more than 20 billboards along I-95 and Route 322, a Pennsylvania appeals court last week overturned a long-accepted property-tax exemption for billboards in counties outside Philadelphia. The finely tuned opinion upheld tax exemption for billboards themselves and the structures that support them, but said the assessed value of the land where the signs stand should take into account the rent paid to the property owner. As the current law does not permit taxing billboards, the Chester-Upland and Chichester School Districts were hoping to increase the assessment of the land the signs were on because the rent could raise the value of the land. The creative legal move was seen as a desperate attempt by school districts to increase revenue amid strained budgets. A prominent Philadelphia-area real estate attorney called the Dec. 27 decision significant because it could lead to a “creep” that would undermine other exemptions, such as those for silos, amusement park rides, and wind turbines, in the 2006 Consolidated County Assessment Law. “Here’s what worries me as a property owner’s lawyer: What’s next?” wondered Peter F. Kelsen, of Blank Rome LLP, which does not represent billboard companies. Lawmakers already denied exemptions to cell-phone towers, Kelsen said Thursday. “But what other things could now become taxable because there’s a rent being derived by the landlord or the property owner?” Kelsen said he expected that billboard companies would attempt to take the case to the state Supreme Court to gain final clarity. An attorney for one of the billboard companies, Outfront Media Inc., said Wednesday that the company was still deciding how to proceed. “We think Commonwealth Court is clearly wrong and what it did conflicts with what the legislature provided in the statutory exceptions,” said Alan C. Kessler of Duane Morris LLP. Donald J. Weiss, the attorney for the school districts, said he came up with the idea for taxing billboard parcels in 2013 while sitting by a pool reading the statute. The statute says that “no sign or sign structure shall be assessed as real property. It doesn’t say the ground on which the sign sits shall not be taxed,” Weiss said in 2017. “If I own a piece of ground and I’m renting it to a billboard company for $2,000 a month, why shouldn’t I have to pay tax on the ground as if I can rent it for $2,000 a month?” Weiss said. Weiss, who brought the case on a contingency basis, said this week that he found it gratifying that the three-judge Commonwealth Court panel agreed with him and did not find his argument “nebulous and unfocused,” as did Delaware County Court of Common Pleas Judge Charles B. Burr II in a 2017 decision that upheld the exemption for the billboard parcels. The Commonwealth Court decision is not expected immediately to lead to higher tax bills on billboard parcels. The ruling is of enough “public importance that the Supreme Court may want to take a look at it,” said John P. McBlain, chairman of the Delaware County Council.

Philly property assessments are flawed, audit finds

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Philadelphia’s property assessments do not meet accuracy standards and are plagued by deficient data, according to an audit of the city’s Office of Property Assessment released Thursday. The audit, commissioned by City Council last year after a reassessment of residential properties sparked outrage by homeowners facing large tax increases, found that flaws in the city’s methods lead to inequities in assessments. An Inquirer and Daily News analysis found that more than 165,000 of the city’s properties — better than 35 percent of the total — were overassessed. The audit’s impact remained unclear Thursday. It will have no immediate effect on existing assessments or thousands of pending appeals filed by taxpayers. But its release set off a public clash between Council President Darrell L. Clarke and Mayor Jim Kenney’s administration, which oversees the Office of Property Assessment (OPA). Clarke used the audit to call for a change of leadership in the assessment office and the hiring of an outside company to help correct inaccurate data. “Based on the existing operation of OPA, we clearly have some challenges,” Clarke told reporters. Meanwhile, Kenney’s office said the audit was based on “faulty data," and criticized it for not including specific recommendations for improvement. “It would be inappropriate, and frankly unfair, for the OPA team to become political scapegoats in light of the progress they have made," said Mike Dunn, a spokesperson for Kenney. Clarke, who said the audit validated the concerns he has long raised about OPA, shot back. “The truly inappropriate thing to do would be to dismiss an independent assessment’s findings because they are politically inconvenient,” said Jane Roh, his spokesperson. City Council paid J.F. Ryan Associates, Inc., a Massachusetts-based firm, $160,000 to complete the audit. Among its findings:

Assessments — the value assigned to a property to calculate real estate taxes — do not meet industry standards for residential and commercial properties as well as vacant land.

In many areas of the city, assessments are off, on average, by more than 15 percent. The report did not distinguish between properties that are overassessed or underassessed, finding simply that the assessments are not uniform.

Land values vary greatly among similar properties, showing that assessments are not uniform.

OPA has deficient data and does not document all of its procedures. “There are many activities performed either in an ad hoc manner or in disconnected ways that preclude either addressing or solving the problems," the report stated.

The assessment methods are not made public, making it difficult for property owners to determine how their values were calculated.

While the Kenney administration took issue with the audit’s findings, Dunn said OPA has also hired its own consultant to recommend how to improve assessments. “The value of the audit toward improving the work of OPA is extremely limited,” Dunn said. “Still, we take the spirit of the auditor’s concerns seriously.” The audit also found some successes: Condominium assessments meet accuracy standards, and it applauded the informal appeal process, known as a first-level review. The city’s speed of reviewing first-level reviews, however, is lacking. The audit noted that only 36 percent of requests filed in May had been completed by mid-September, which was about two weeks before the deadline for taxpayers to formally appeal their assessment. Councilman Alan Domb said he was pleased to hear that the audit found that inequities notwithstanding, the city’s total assessed value of properties nearly matches the total market value of the city. That was an improvement, he said.

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“The goal here should be for Council and the administration to work together and come up with suggestions and reforms and recommendations to make the process better,” Domb said. The Inquirer and Daily News analysis of the city’s most recent assessments found that assessment inaccuracy remains a problem, as lower-priced properties tend to be overassessed, resulting in owners paying more than their fair share in property taxes, while owners of higher-prices homes are getting relative tax breaks. City assessment officials disagreed with the newspapers’ findings, citing concerns similar to those they found with the audit released Thursday. The average assessment of a single-family home increased 10.5 percent with last year’s reassessment, prompting City Council members to express doubts about OPA as they heard complaints from residents about large tax increases. Council rejected Kenney’s proposed 4.1 percent property tax rate increase last year, citing the tax increases that many residents already faced due to their increased assessments. Philadelphia’s property assessments have long been a source of controversy. The city launched the Actual Value Initiative (AVI) in 2014 as a means of eliminating unfair and inaccurate assessments. Under AVI, the city assesses every property at 100 percent of market value, or the amount for which it could be sold. City officials touted the AVI system as one that would do away with steep increases because assessments would be kept current and updated every year. Last year, however, was the first time since AVI began that the city reassessed all residential properties. The reassessment led to the largest number of appeal cases since 2014.

SOUTH CAROLINA

South Carolina Property Tax Case Highlights Valuation Issues A recent decision by the South Carolina Administrative Law Court (ALC) highlights many of the valuation issues that can arise when property is appraised by a county assessor. In Taylor v. Aiken County Assessor, S.C. Admin. Law Ct., Dkt. No. 17-ALJ-17-03466-CC (December 27, 2018), a taxpayer sought to challenge the appraised value of a 6.4 acre parcel of land. The amount in dispute was not significant, with the taxpayer claiming the value was $15,800 and the county assessor contending the value was as high as $30,080. The taxpayer purchased the property at a tax sale for $3,075.10. The county assessor initially appraised the land with a value of $30,080 using the County’s Computer Aided Mass Appraisal (CAMA) system. CAMA systems are used by South Carolina counties to efficiently appraise large numbers of properties without having to inspect each property. The taxpayer appealed the initial $30,080 valuation, arguing the value was $12,800 based on the taxpayer’s assessment of comparable property sales prices and the physical state of the subject property. The county assessor then visited the property and determined the value should be $28,800. The taxpayer disagreed with this valuation as well and brought a gorge located in the property to the county assessor’s attention. The county assessor then reduced the value to $22,400. The taxpayer appealed the county assessor’s valuation to the county board of assessment appeals. The county board of assessment appeals agreed with the county assessor’s final valuation of $22,400. The taxpayer appealed the county board of assessment appeals decision to the ALC. After the appeal was filed, the county assessor visited the property again to conduct a more extensive walk-through of the property. Following the walk-through, the county assessor asserted that the value of the property was $28,800 based on comparable sales. The taxpayer maintained the value was $12,400 and relied on comparable sales first introduced at trial before the ALC. The ALC found the taxpayer’s comparable sales were not probative of value because they were not between willing sellers and willing buyers. The taxpayer’s comparable sales involved a tax sale, sales between family members, a bank sale, and a sale to an adjacent landowner. The ALC found the county assessor’s comparable sales were also not probative of value because there were no adjustments for the detrimental site characteristics of the taxpayer’s property. In the end, the ALC upheld the $22,400 valuation determined by the county board of assessment appeals.

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While the Taylor case involved a dispute over less than $15,000, it illustrates the following issues that apply to all county property tax cases:

The process to appeal a property tax case can take years. The first appeal in the Taylor case was filed early in 2016 and the ALC decision was not issued until December 2018.

There are multiple levels of factual review in a property tax case. A taxpayer must challenge the valuation first with the county assessor, then with the county board of assessment appeals, and finally with the ALC.

When a property tax value is challenged, the value can be increased from the challenged value. There is a risk whenever a taxpayer challenges a property tax value that the value will increase from the original valuation.

Property tax values are based on a willing seller, willing buyer fair market value standard. Tax sale values, bank values, and related party sales are not indicative of the fair market value.

Counties use mass appraisal systems and do not account for detrimental property characteristics. Mass appraisals are often successfully challenged based on the specific condition of property.

Hiring an appraiser is almost always necessary to support a claimed valuation and should be done prior to filing an appeal, or at least before going before the board of assessment appeals.

TEXAS

Updated Texas Property Tax Information Available New and updated property tax information has just been compiled by Shelby County Appraisal District and is available now to assist taxpayers. This property tax information is current and covers a wide range of topics, such as taxpayer remedies, exemptions, appraisals and is of value to select groups, such as disabled veterans and persons who are 65 years of age or older. “Whether you are a homeowner, business owner, disabled veteran or a taxpayer, it’s important you know your rights concerning the property tax laws.” said Robert Pigg, chief appraiser of Shelby County Appraisal District. “You can contact us about any property tax issues with full confidence that we will provide you the most complete, accurate and up-to-date available information to assist you.” This includes information about the following programs:

Property Tax Exemptions for Disabled Veterans - The law provides partial exemptions for any property owned by veterans who are disabled, surviving spouses and surviving children of deceased disabled veterans. This includes homesteads donated to disabled veterans by charitable organizations at no cost or not more than 50 percent of the good faith estimate of the homestead’s market value to the disabled veterans and their surviving spouses. The exemption amount is determined according to percentage of service-connected disability. The law also provides a 100 percent homestead exemption for 100 percent disabled veterans and their surviving spouses and for surviving spouses of U.S. armed service members killed in action.

Property Tax Exemptions - Non-profit organizations that meet statutory requirements may seek property tax exemptions and must apply to the appraisal district by a specific date. Businesses that receive tax abatements granted by taxing units; ship inventory out of Texas that may be eligible for the freeport exemption; store certain goods in transit in warehouses that are moved within 175 days; construct, install or acquire pollution control property; own and operate energy storage systems; convert landfill-generated gas; or store offshore drilling equipment while not in use may also be eligible for statutory exemptions.

Rendering Taxable Property - If a business owns tangible personal property that is used to produce income, the business must file a rendition with its local county appraisal district by a specified date. Personal property includes inventory and equipment used by a business. Owners do not have to render exempt property such as church property or an agriculture producer’s equipment used for farming.

Appraisal Notices - A Notice of Appraised Value is mailed to each taxpayer in mid May. This is the taxpayer’s opportunity to check for any discrepancies in their value, property description, address, exemptions, etc.

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Property Taxpayer Remedies - This Comptroller publication explains in detail how to protest a property appraisal, what issues the county appraisal review board (ARB) can consider and what to expect during a protest hearing. The publication also discusses the option of taking a taxpayer’s case to district court, the State Office of Administrative Hearings or binding arbitration if the taxpayer is dissatisfied with the outcome of the ARB hearing.

Homestead Exemptions - A homestead is generally defined as the home and land used as the owner’s principle residence on January 1 of the tax year. A homestead exemption reduces the appraised value of the home and, as a result, lowers property taxes. Applications are submitted to the appraisal district.

Productivity Appraisal - Property owners who use land for timberland production, agricultural purposes or wildlife management can be granted property tax relief on their land. They may apply to the appraisal district for an agricultural appraisal which may result in a lower appraisal of the land based on how much the taxpayer produces, versus what the land would sell for in the open market.

Residence Homestead Tax Deferral - Texas homeowners may postpone paying the currently delinquent property taxes due on the appreciating value of their homes by filing a tax deferral affidavit at the appraisal district. This tax relief allows homeowners to pay the property taxes on 105 percent of the preceding year’s appraised value of their homestead, plus the taxes on any new improvements to the homestead. The remaining taxes are postponed, but not cancelled, with interest accruing at 8 percent per year.

Property Tax Deferral for Persons Age 65 or Older and Disabled Homeowners - Texans who are 65 years of age or older, or who are disabled as defined by law, may postpone paying current and delinquent property taxes on their homes by signing a tax deferral affidavit. Once the affidavit is on file, taxes are deferred, but not cancelled, as long as the owner continues to own and live in the home. Interest continues to accrue at 5 percent per year on the unpaid taxes. You may obtain a deferral affidavit at the appraisal district.

Notice of Availability of Electronic Communication - Chief appraisers of a county appraisal district and appraisal review boards may communicate electronically through email or other media with property owners or their designated representatives. Written agreements are required for notices and other documents to be delivered electronically in place of mailing.

Protesting Property Appraisal Values – Property owners who disagree with the appraisal district’s appraisal of their property for local taxes or for any other action that adversely affects them may protest their property value to the appraisal district’s appraisal review board. For more information about these programs, contact the Shelby County Appraisal District at (936) 598-6171. More information is also available from the state Comptroller’s Property Tax Assistance Division website at www.comptroller.texas.gov/taxes/property-tax/.

WASHINGTON

Mayor Durkan sends controversial waterfront tax to City Council The new Seattle waterfront will be made possible by the demolition of the Alaskan Way Viaduct and $711 million in state, city and private money. On Thursday, Mayor Jenny Durkan announced the finance plan is ready to go and transmitted the Waterfront Local Improvement District and its property tax to the City Council. “This will be transformative for Seattle. Mark my words, every one of you is at the equivalent of the groundbreaking of the Space Needle,” Durkan said at a news conference at the Seattle Aquarium. Downtown and waterfront property owners will chip in $160 million on top of their regular property taxes. That's down from the original, $200 million plan.

http://www.comptroller.texas.gov/taxes/property-tax/

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The mayor says it will cost the median condo owner $1900 spread over 20 years. While Durkan says condo owners are now on board, condo owner Karen Glisen still opposes the plan. “No, she's not correct in that assessment.” Glisen told us the assessment for her medium-priced, two-bedroom condo will be $18,000 on top of the property taxes she already pays. “The argument that we have increased property values as a result of the park could be said about any park in Seattle, any park that's being developed. And yet no one is assessing the adjacent property owners for that. In a twist, Glisen says, developers of a parking lot say it will be assessed on its value as a parking lot -- not the $200 million high-rise the developers have applied for permission to build. In addition to the cost, there will be years of construction and traffic congestion, but Durkan says it will be worth it. “This a waterfront for all, and we mean that. It is something to be enjoyed by everybody in Seattle, regardless of where they live or where they're from, and not just tourists and others who we're going to welcome with open arms.” The Waterfront Improvement District still needs approval from the City Council. A vote is expected in the next few weeks.

WISCONSIN

So-called ‘dark store’ legislation will raise your taxes On Monday, Jan. 7, the Sheboygan Common Council voted to side with taxpayer-funded special interests in Madison to raise property taxes in your community. The common council voted to put a biased and factually inaccurate referendum on the April ballot that encourages legislators to raise your property taxes. This referendum question is similar to other canned questions written up by taxpayer-funded lobbyists in Madison, not your local elected officials. The question says: "Should the state legislature protect residential property taxpayers by preventing commercial and manufacturing property owners from using tax loopholes that shift an ever-increasing tax burden to homeowners who already pay 68% of the statewide property tax levy by enacting legislation that: 1) prohibits using closed, vacant (dark) properties as comparable properties for determining the assessed value of open, occupied, and fully operational properties; and 2) overturns the 2008 Wisconsin Supreme Court decision in Walgreens v. City of Madison, which is being interpreted by the courts as requiring municipalities to assess many leased commercial properties at a substantial discount, often 50% below the actual sale price of such properties?" First, this question accuses commercial property owners of significantly reducing their legally assessed valuation through the use of a “loophole” – which they are not and cannot do – when it is actually local governments who have illegally over-assessed businesses. In numerous cases, aggressive assessors have valued and taxed them as high as three or four times the amount the business would sell for on the open market. After Wisconsin courts repeatedly ruled that local governments were illegally over-taxing businesses, these governments decided to spend millions of taxpayer dollars on campaign ads, PR firms and lobbyists to cover up their illegal actions by selling the bills as a fix to a “loophole.” Second, there has been a tax shift, but in the opposite direction. In the last decade, Wisconsin Department of Revenue numbers show the tax burden has shifted by over two percent from homeowners to businesses – not the other way around as this question claims. The policy behind these bills is even worse. The so-called “dark stores” bill would have allowed tax assessors to value occupied property higher solely because of its occupancy. For example, if you had two homes identical in every respect except that one was occupied and one was vacant, the occupied home would be valued (for tax purposes), and taxed, more than the vacant one. No rational buyer would pay more for

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the occupied home than the vacant one. The fair market value of each property would be the same, but this legislation would increase the assessed value and thus the property taxes for the occupied home. The “lease” bill would have allowed tax assessors to value and tax financial agreements, contracts, and other things of value that are “inextricably intertwined” with a property. This bill targets the value of financing agreements that help businesses open or grow. Tax assessors want to add the value of those agreements to the value of the building and land when determining the amount of property tax you owe. If this were applied to a residential home – which it could be because of the Wisconsin Constitution’s uniformity clause – your local government could raise your property taxes because you took out a mortgage. However, property taxes would not be hiked on your neighbor who bought an identical house but had the means to purchase it with cash. These pieces of legislation would result in tax increases on businesses through no fault of their own. Increasing the tax assessment on a property based on occupancy or based on financing does not reflect economic reality. The business will not have expanded, improvements will not have been made to the property and the neighborhood will not have become more attractive to the market. In short, the market value will not have changed – just the tax bill. Arbitrarily increasing property taxes is bad for Wisconsin. All businesses and residential properties will be roped into abiding by these new subjective property tax assessment laws. The Wisconsin Constitution’s Uniformity Clause will spread these tax increases to all property taxpayers because it requires all property to be taxed in a uniform manner. There is not an exception that allows small businesses, manufacturers and residential properties to be taxed differently from “big box” retailers. Further, the legislation creates uncertainty because it changes bedrock rules of property assessment that Wisconsin has followed for decades. If these bills are enacted, Wisconsin will become a national outlier in both the amount of property tax we charge and the process we use to charge it. Local governments and property owners will both attempt to clarify the new laws through more litigation. Higher taxes and more litigation is not the kind of change Wisconsin needs. Elected officials have worked tirelessly over the last eight years to improve Wisconsin’s high property tax burden. Let’s not go backwards now and raise taxes on job creators and working families who help our state continue to move forward.

Closing the Dark Store Loophole? Referendum results deliver resounding ‘yes’ for eliminating tax wrinkle that benefits big-box stores For a seemingly abstruse issue, the so-called dark-store loophole in state law received a resounding rejection when it was put on the ballot this past November. In referenda held in 23 counties, cities, villages and towns throughout the state, the dark-store loophole was voted down by a majority of the people who showed up to polling places on Tuesday, Nov. 6. On average, 78.65% voters answered “yes” to ballot questions asking if the loophole should be closed. The rejection vote was far bigger in individual places. In Dane County, for instance, 91.79% of voters called for ending the loophole, as did 89.59% in the nearby village of DeForest, 89.5% in Sun Prairie and 87.88% in Glendale. Since the referenda were all non-binding, they will result in no actual changes to state law, but legislators in Madison are already taking notice. So, then, what exactly is the “dark-store loophole”? To critics, it’s an unfortunate wrinkle in Wisconsin’s tax system that unfairly shifts taxes onto homeowners and non-retail businesses. Rather than via state law, the loophole originated in the Wisconsin Supreme Court’s 2008 decision in the case of Walgreens v. City of Madison. The case bore directly on how local assessors calculate the property values of retail stores for tax purposes. The Supreme Court found that local assessors should be calculating these values not merely by trying to learn what a particular building might be generating in lease income, or how much it cost to build; instead, they should be taking into account the sales prices of similar properties, even if those properties were vacant, or “dark,” at the time of the sale.

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Critics of the loophole argue that it has allowed big retailers to pay far less than their fair share of property taxes. Thriving stores see their tax bills reduced every time a nearby vacant building once used for retail is sold for a fraction of what its value had been when it was a going concern. Loophole opponents say they aren’t out to pad local governments’ budgets. Since local officials are prohibited by state-imposed caps from raising property taxes beyond a certain amount every year, eliminating the dark-store loophole would not bring in additional money. Groups like the League of Wisconsin Municipalities instead claim they’re merely after fairness. The league has long noted that, when the dark-store loophole lets a retailer like Walgreens lower its tax bill by a certain amount, it’s not as if local governments’ need to collect money diminishes proportionally. Rather than forgo revenue, local officials meet their budgetary needs by turning to other types of taxpayers. Homeowners and smaller businesses find themselves having to pick up the slack. Who Pays? The result is a shift in who pays for local government. The League of Municipalities estimates that homeowners in Wisconsin now shoulder 68% of the total property tax burden. Jerry Deschane, executive director of the League of Wisconsin Municipalities, said such facts should be persuasive in themselves. The recent referenda results merely underline the point for state lawmakers. That’s not to say it will be easy getting something passed in the Wisconsin Legislature. In the state’s most recent legislative session, strong bipartisan support for bills meant to close the dark-store loophole was not enough. One piece of legislation had 84 legislative sponsors from both sides of the political aisle, yet it was never given a vote on the floor of the state Assembly or Senate. One of the biggest defenders of the dark-store loophole has been the business lobbying outfit Wisconsin Manufacturers & Commerce (WMC), which spent $407,800 to lobby the state legislature in the first six months of 2017, the most of any such group. Cory Fish, director of tax policy at WMC, said the recent referenda results were far less damaging to WMC’s case than many might believe. For one, Fish said, it’s obvious the ballot questions were phrased in a leading way. In West Milwaukee, for instance, the question put to voters started with the words: “Should the state legislature protect residential property taxpayers by preventing commercial and manufacturing property owners from using tax loopholes that shift an ever-increasing tax burden to homeowners who already pay 68% of the statewide property tax levy…?” “The referendum results were exactly what you would expect with such biased questions,” Fish said. He also quibbled with the League of Wisconsin Municipalities’ figures. Fish conceded that homeowners do pay about 2/3rds of all property taxes in Wisconsin but said the league fails to note that about 2.5% of the total burden has shifted to businesses in the past 10 years. All this is not to say Fish and others at WMC don’t think the current system can be improved. On Tuesday, Dec. 11, a legislative study committee released draft proposals calling for a series of reforms that are at least close to something WMC could support, Fish said. Among other things, the legislation would require businesses to furnish more of the sort of information that assessors could use to assess a property according to its income and let municipalities share with counties and schools the cost of defending property assessments that are challenged. Fish also questioned the League of Wisconsin Municipalities’ advertising tactics. He said the group sent out a letter to municipalities soliciting money that was eventually used to pay for a large online ad campaign. “All of it was taxpayer dollars,” Fish said. But even a heavyweight like WMC might not exercise enough influence to get its way on this issue. Members of both parties, including some of the most conservative Republicans, still favor closing the dark-store loophole, and Governor-elect Tony Evers has said he would sign legislation doing just that. Brian Sikma—a spokesman for state Sen. Duey Stroebel, a Republican from Saukville—said this coming legislative session could very well be the time when the dark-store loophole is closed forever. Deschane said that he and others at the League of Wisconsin Municipalities similarly like their chances. “Although, with the legislature, you never want to say it’s a slam dunk,” he said. “There are still people putting a lot of energy into trying to say, ‘There’s nothing to see here,’ which defies all common sense.”

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