Friday, February 8, 2008

Suggest you read this if you are appealing your appeal.

Greetings Friends and nieghbors,

As you appeal your appeals you need to read and understand this short article from the Daily Herald. It is exactly what I have been telling our legislators and trying to tell local news. Sadly we are not really being listened too enough. One Senator even had the outrageous nerve to call HB 54 "his version of modified acquisition value" in a thinly veiled effort to silence our voices.

As usual, ironically a Provo newspaper gets it right, where the others remain clueless at the editorial level. Who would think we have to go to Provo/Orem to get at the truth? I salute the editors of the Daily Herald again.

Minor Machman

Saturday, 02 February 2008
(House Bill 54) changes model for assessing property taxes

Rette Speight - DAILY HERALD
As officials supported the new mass appraisal system for determining property values, some citizens spoke out against it. The bill, sponsored by Rep. Wayne Harper R-West Jordan, amends provisions in the Property Tax Act in relation to property appraisal requirements for assessors. The bill was passed with some hesitation, but Rep. John Dougall, R-Highland, said he believed that Harper is "trying to move [counties] into the 20th century."
The mass appraisal system would take samples of real estate dealings and create an average, which would be used to determine other property values.
Utah County Assessor Poulson said in August that his office uses a computer algorithm to assess the 150,000 properties in the county. But there can be errors in the system, especially when dealing with more than 100,000 properties.
"I am concerned as we move to a computerized system that we're giving a false hope to the people," said Rep. Tim Cosgrove, D-Murray. "If we want to be upfront, if we want to be able to evaluate the true value of the property we must provide the assessors the tools. I'm struggling to see how we're going to provide that for the citizens of the state."
Rep. Craig Frank, R-Pleasant Grove, reminded the committee that "even though we're using a computerized system there's enough hands-on personal touches for evaluating the data. We can't forget that there's human beings running the system."
University of Utah economics professor Jim Gander spoke to the committee concerning issues of how the samplings were picked when determining the general values.
"I sense a feeling among most of the public that members don't feel comfortable with the existing appraisal system," Gander said.
Gander pointed out sampling problems, concerning what he calls "arms length dealing," or dealings between family members.
"What is missing is the information a willing buyer and a willing seller have," Gander said. "When homes are bought for moving in or establishing residence, that information is quite different than what speculators have. Any other sale is outside of a fair market."
These "other sales" might be what are affecting the market value, Gander told the committee. He is worried that this skewed model could be "why people aren't happy."
Poulson told the committee that although he and Utah County commissioners support the bill, Gander's sampling concerns are valid.
"If you're trying to sample the general population, if you don't have enough samples, you can go out and find more," Poulson told the committee. "But when you're dealing with real estate, you only have as many homes as are being sold. You're very limited by the amount of data you have. There are a lot of sales out there that we don't even have the access for the data."
Poulson also told the committee that Utah County has "some of the worst real estate fraud, not only just in the state, but possibly even in the nation."
Poulson said that Utah County is very involved with the transactions and data that is analyzed, and great effort it put into making adjustments to keep the property values fair.


Jeremy said...

You're right...this is a great article. The real best answer for legislators is to eliminate non-disclosure. This would be the most obvious solution to the problem of limited sales data for assessor offices.

You're also right that HB54 has nothing to do with an assessment system based on acquisition value which, by the way, is also completely impossible in Utah due to non-disclosure. I guess I'm preaching to the choir since you already knew that but it can't be brought up enough that this policy is really bad for Utahns.

Minor Machman said...

I am pretty sure it was Kris Poulson, Utah Co. assessor, who said in October, when asked how many states have full disclosure? Kris responded by saying forty-five (45) states and of the other five (5), four (4) are talking about going to it.

That prompted Senator Gregg Bell, (R) Davis Co. to offer his opinion about how Utah is just not ready for "full disclosure". Neighbors had rather lie and lay low and not admit how much they paid for their homes. Very curious?

That leaves Utah. The land of moral authority and family values?

In my conversations with assessors they say they get purchase price on a property anyway within one to two weeks using other means such as MLS and Realtor software they also have. Hmmmmm Back to Mortgage fraud and shady deals and concerns raised by Mr. Gander about non-arms length and for sale by owner deals not even in the MLS fraudulent database. WE are right back to unfair, injustice, fraud, hyped assessments, etc. again aren't we?

The solution is to throw out the baby (MLS and Realtor Association controlled "fair market value" schemes) and the bathwater ("Truth in Taxation" which relies upon fraudulent data and dishonest reappraisals) and replace it with something that is more fair for everyone and considers ability to pay.

The only way that is going to happen is to put in new blood and rid us of these "Ivory Tower" established Commission members and legislators who are ethically challenged. It will be in your and my hands at election time.

Jeremy said...

Ugh...sorry...but now I really have to disagree with you.

1. Fair market value assessment is a far better way of ensuring a fair distribution of the tax burden than any other method I've heard. There just isn't any reason that people who've got property worth millions of dollars should be given a tax break merely because owned the real estate for a long time. Acquisition value based assessment systems result in massive inequities.

2. If your "re-appraisal" isn't done correctly appeal your assessment to the state. If you provide real market evidence that your parcel isn't worth what the county says it is you'll win. Non-disclosure makes it nearly impossible for a citizen to appeal their assessment without a Realtor's help but most Realtors will give you free comps for tax appeal purposes.

3. MLS contains only a fraction of the sales that actually take place...especially the sales on the upper end of the scale. This results in an unfair portion of the tax burden being placed on home owners instead of people who hold onto large tracts of land or mansions that aren't typically listed in MLS. Our constitutional system of assessment would be far more fair without non-disclosure.

4. If ability to pay is a big problem then expand circuit breakers.

YGBSM said...

Ahhh the cool aide tastes good! If market value is so great why have virtually all of the rest of the entire United States of America rejected it as grossly unfair? Is there some pride in the Utah system of inequity? Something the rest of us have missed entirely?

#1 Property taxes of any description create massive inequities. Consider the stupidity of the concept of ppenalizing those who maintain or improve their home. The inequity of taxing a speculative or imagined gain. The inequity of taxing unrealized captial gains. The double and even triple taxation of an asset if it is sold. The list is long. Read the Daily Herald Article posted on this bogspot for a summary.

Point #2 Appeal it? How is appealing to the same people who screwed up your assessment in the first place going to solve anything? Most people are hearing back from their appeals saying they owe even more for having challenged the assessment in the first place. Really good idea Jeremy, solve the problem by asking the fox to help fix the lock on the hen house. YGBSM! No sir, it does not work well that way.

I do however respect your right to disagree and appreciate your comments. And agree with your point #3.

But you are so dead wrong about property taxation I have to suspect you are either in the assessor's office, an appraiser or work in the Real Estate business.

As for Circuit Breakers, how do you feel about Froerer's and the Realtor Association sponsored "Deferred taxation for seniors" (with a 6% interest rate or higher)?

Am I close? Assessor's office, appraiser, or Realtor? Come on now fess up...

Minor Machman said...

Jeremy dude! I have another thought for you my man... You said "There just isn't any reason that people who've got property worth millions of dollars should be given a tax break merely because they owned the real estate for a long time. Acquisition value based assessment systems result in massive inequities."

Drive up to Huntsville. I will show you hundreds of acres in "Green belt" that have NEVER been used for any crop production efforts. The land is held by investors for decades and is worth "Millions". Yet it is taxed at only fifteen pennies (15 cents) an acre. That is up from only 8 cents an acre from a few years back. Now there is "market value" taxation and loop holes for the wealthy that you speak of under our current system. With FAA agriculture or so called "Green Belt" properties which have shifted property taxes onto the little people and homeowners/residents since 1967!

The State Tax Commission has one (count'em one) person assigned to audit these properties for the entire State. And Denny tells me when they intend to go out they have been instructed to first send a notice in the mail to the property owner(s). Frequently, by the time he gets to the property he will find a lone cow on it.

Now there is an area I think we (both you and I) can agree needs significant reform and updating.

And before you point out any new purchaser has to pay 5 yrs. back taxes at "market value". The large landowner has been paying less than $106.50 on 710 acres for twenty or thirty years. That sound "fair"? Or is it a fleecing of Utahn's who only own their own home and have to pay the large land owner/developer's share of all taxes?

Point is there is no property tax which is fair. Only perhaps a Georgian model "land tax" which taxes only land and not homes, buildings, etc. based upon how much acerage has been removed from "production". But no State embraces this.

As much as I have researched the subject there is only one which could be remotely considered fair for property owners and it is called "Baseline". Contact me if you are interested in the specifics and details. I will be happy to share them.

Richard said...

I have to agree with Mr. Machman. I just got a call from a desperate Huntsville Resident who appealed their inflated assessment. They used an appraisal that was conducted within the requisite last two years that showed the value less than the County assessed value.

Well, when they got the decision from the board of appeals, the new assessed value had been increased by $40K. They promptly called the Assessors office to be afforded their right to a hearing, and in one breath the Assessor said there had not been a problem in Ogden Valley, but at the same time she said the date for the hearing is full and they would have to be placed on a waiting list for another hearing date.

The SYSTEM IS BROKE and the legislators are not going to do a damn thing to correct it!