March 2017 Ad Valorem Board Hearing at City Hall

March 2017 Ad Valorem Board Hearing at City Hall
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Each year the Assessor in each community is required to accept a tax assessment appeal to have a complaint filed with their office. Once properly filed the paperwork is turned over to the town or city’s Board of Tax Assessment Review. That Board usually consists of two or three individuals appointed by the Mayor or City Council who are appointed on an annual basis to hear the tax payer’s complaints. Usually the Board hears and schedules hearings to discuss the complaints or the mistakes that may have been made by the Assessor’s Office; by the private Assessing Company that may have not properly examined the Subject property; or may have made a clerical error; the tax payer may have found or discovered an obvious or hidden error; or just a plain dumb error or mistake. In Hartford in 2017 there were over 1000 appeals filed. And in March the Board in each town and CT city begins hearings at city hall on the individuals, companies, and corporations (LLCs) who want to appeal their assessment valuations that the assessment company and Assessor’s offices have designated.

If you were one of the dissatisfied with your valuation numbers and filed an objection by February 20th then you need to be prepared for your Board of Tax Review Hearing starting this month and stretching on to April. The Assessor and staff are supposed to be there to guide the Revaluation company in the processing of the Assessments, in pointing out specific facts, locations, amenity adjustments, and particulars that are relevant to the community. Usually the political process picks one person from each party to sit in and go over your complaint. Whether they are “schooled in valuation” is usually not the case. They are usually there to verify the data and to report mistakes or big errors. They are supposed to consult with the assessment company and the Assessor’s staff to each and every file and appeal. Remember they do not fully understand USPAP, The Uniform Standards of Professional Appraisal Practice, yet they understand living in your city or town a mistake when they see it, and are supposed to present your findings to the staff and Assessor. The court system operates on USPAP yet Assessors operate on a mass scale of valuation finding for instance capturing trends on sales and categorizing properties and across the board findings. Assessment companies and Assessors do not “appraise” individual properties but “assess” properties on a mass scale using a logarithm formula that they input on a large scale usually using some form of regression analysis or method they are supposed to share in their analysis by CT state law. And any abnormal property will usually not fit into their model.

The Assessment figures, 70% of what they call fair market are derived from the Assessors standards which are different from USPAP “fair market” due to the very nature of assessing on a mass scale. If your property is assessed over $1Million, then they have the right to not allow a hearing and then you would have to go right to a lawsuit. And of course, while you may think the property is overvalued yet in some instances they can turn around in a suit and you can be ruled just the opposite and have your assessment increase if the tax court finds they were too low. All lawsuits if started and not resolved with this Board of Tax Review Hearing get moved to the New Britain Superior Court which handles the entire state of CT for ad valorem matters.

Both appraiser and assessment valuation methods use three methods- the comparable sales approach, the income approach, and the cost or replacement method. Depending upon the reliability of the Assessment Office or its Revaluation team one method may be stressed over another. One method is usually more reliable and thus more weighted over another which may be challenged. In any event the Assessors methods are different than the Appraiser’s methods in reaching a valuation or fair market value and in undertaking a hearing it would be good to determine which method is more weighted. In cases of an income property the taxes are typically removed from the calculations and later factored in at a 2% figure before a valuation number and added in as a capitalization rate figure.

Preparing for your March hearing takes a review of the three methods with usually the cost approach not relevant unless it is a brand new property. Look for errors- a true mistake or error first, then an age or depreciation or condition mistake; then a square foot mistake or actual gross living area-GLA, or usable commercial area; a wrong labeled use or not its best and highest use; quality or amenity errors such as an unheated area calculated as part of the area; a wrong zoning or use code; or something out of the ordinary. Make your case with the Board members why they need to change the numbers. Having a written appraisal, a review or summary statement, having some recent comparable sales and income figures for that October time period are invaluable .Be prepared by consulting with RE professionals ahead of time with 3rd party facts and figures and if commercial a formal appraiser it would be quite helpful, but some written facts a great start to support your beliefs and opinions.

OK so you are going to present the facts and bring logical proof for both the comparable sales approach and also present the income approach. You are presenting these facts to the Board of Assessment Tax Review and letting them know at the end of your meeting if they fail to recognize the mistakes then you will be forced to sue the town/city. This will cost their municipality money to hire an appraiser, use legal time and money to defend their actions and if proven wrong they might risk more losses. Politically they are appointed to listen to your arguments and hopefully they go back and confer with both the assessment company who undertook their revaluation process as well as the Assessor’s office. They have 2 weeks to respond.

When you get your response you have 60 days to decide to sue the municipality. Next you might want to consider the options. If they are not too off with their assessment valuation maybe it does not pay to risk the challenge especially if the assessment numbers are not high. Remember if this is at the beginning of the 5-year cycle it has a 5-year payback for legal, costs, appraisal, and other professional fees- accounting, marshal service and time. It will also put the municipality on notice you do not take this lightly for the future. Be specific what properties you pursue, and make sure you pay your taxes and if you do not pay the required amount you can be taxed at 18% you don’t win in court.

You might want to confer with your attorney and appraiser as to the scenarios.
Next month-The Suit Process

*Ad valorem tax-1.a tax levied in proportion to the value of the property being taxed (USPAP) 2. A tax levied in proportion to the value of the thing(s) being taxed; generally refers only to property taxes, although technically the term is applicable to income taxes, ad valorem tariffs, special property taxes, etc… Exclusive of exemptions, use value assessment provisions and the like, the property tax is an ad valorem tax.

Download: Ad-Valorem-Board-Hearing-at-City-Hall.pdf
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