Monday, July 12, 2010

“Ryan Tax Professionals Serve as Advisors for Georgia Property Tax Reforms.” plus 3 more

“Ryan Tax Professionals Serve as Advisors for Georgia Property Tax Reforms.” plus 3 more

Ryan Tax Professionals Serve as Advisors for Georgia Property Tax Reforms.

Posted: 12 Jul 2010 08:51 AM PDT

ATLANTA, July 12 /PRNewswire/ -- Property tax professionals at Ryan, a leading tax services firm, served as advisors for legislation reforming Georgia's property tax appraisal process recently signed by Governor Sonny Perdue. The legislation provides property owners with more options and time to appeal a Notice of Assessment.

"This is considered to be the most comprehensive overhaul of Georgia's property tax system in decades," said Michael Allen, Principal at Ryan and one of the advisors for the reform.  "The reform package includes more than 50 changes to current state law."

Most of the reforms become effective January 1, 2011. Some of the changes to current law include:

  • Every property owner must receive an annual Notice of Assessment, which guarantees a right to appeal.
  • Every Notice of Assessment must contain the estimated property tax owed.
  • The time to appeal has been increased from 30 to 45 days.
  • The property owner automatically wins any appeal when the government fails to respond within 45 days.
  • Only "current use of property" can be used in determining fair market value.
  • The taxpayer must be given access to all data that tax assessors used in determining fair market value.
  • Sales price establishes the fair market value of a property for the next tax year.


"The new law also clarifies the intangibles that cannot be included when determining fair market value of a commercial real property," said Brad Gorski, a Principal at Ryan. "This is an important step towards ensuring that the value represents the real property only."

In addition to providing a more consistent and fair system, the law simplifies the tax appeal process while giving more power to taxpayers.  

About Ryan

Ryan is the leading tax services firm in North America, with the largest transaction tax practice in the United States and Canada. Headquartered in Dallas, Texas, the Firm provides a comprehensive range of state, local, federal, and international tax advisory and consulting services on a multi-jurisdictional basis, including audit defense, tax recovery, credits and incentives, tax process improvement and automation, tax appeals, and strategic planning. With a multi-disciplinary team of more than 800 professionals and associates, Ryan serves many of the world's most prominent Fortune 1000 companies.

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Property tax revenue in danger

Posted: 12 Jul 2010 10:46 AM PDT

When PMP Fermentation Products Inc. closed a section of its North Valley industrial plant a few years ago, it gave the company a chance to pay less in property taxes.

A whole heck of a lot less. The company's fair market value from 2006 to 2008 dropped 78 percent from $22 million to $4.8 million, a move approved by the Property Tax Appeals Board in Springfield.

PMP is not alone. Hundreds of taxpayers, led by large commercial and industrial properties in Peoria County, are challenging their assessments before the Board of Review or the state's appeals board, and often are winning.

The effects are starting to be felt at City Hall and at Peoria School District 150, where an attorney has been assigned to intervene in larger cases that ultimately chip away at the district's chief revenue source.

In April, the City Council was informed that the overall equalized assessed value for city properties in 2010 was going up less than 2 percent from 2009, representing the smallest year-to-year growth in value in two decades.

The city, for the first time since the 1980s, could face a decline in overall assessed valuation next year.

At City Hall, the slow growth in assessed values is compounded with slumping sales tax revenues and decreasing state income and personal property replacement taxes. Of the revenues funding city government, 22 percent comes from property taxes, second only to state income sources at 26 percent.

Add the rising costs of employing city workers, and the City Council likely will face another $10 million or more budget deficit for 2011.

"It might be a little higher," Peoria's Finance Director James Scroggins said. "(Revenues) are not going in the right direction."

Gary Twist, supervisor of assessments with Tazewell County, said cities such as Pekin and East Peoria will likely not see a decline in their overall assessed values. Countywide, though, he anticipates 1 percent to flat growth this year.

Twist said the region's EAV is still moderately valued compared to the Chicago area, where he said sales are 15 percent below assessed values.

"We've had an average increase in the range of 3 to 4 percent over the course of the last decade," Twist said, noting that strong property sales are continuing to occur in Washington and Morton. "What we would expect for 2010 is probably going to be closer to even or 1 percent. The average sale of property is still at or above the assessed value but only slightly."

Declining values

While the deficit number won't be known until August, Scroggins and other city officials are readjusting the city's finances for a future in which assessed values in Peoria are stagnant or declining.

Officials such as Scroggins and Peoria County Supervisor of Assessments Dave Ryan say that 2011 could show declines in assessed value. Future years also could be affected because of how assessed values are determined in Illinois.

In Illinois, values are based on multipliers that are determined on sales during a three-year period. During good economic times, such as 2006-2007, a positive multiplier leads to overall increases in assessed values. But during troubling times, the multiplier declines and assessed values are likely to plummet.

Tom Johnson, president of the Taxpayers Federation of Illinois, said that taxes paid in 2010 are based on values on Jan. 1, 2009 and reflect a three-year average of property sales from 2006-2008. The market, Johnson noted, didn't start declining until 2008.

"As 2006 drops off ... you will see a further decline in 2011 in equalized assessments," Johnson said.

Ryan said his office should have an estimate on the city's EAV by later this month. He, like Johnson, predicts a similar effect.

"We'll look at sales in 2007 and 2008, which were pretty good economically," Ryan said. "In 2009, you saw a leveling off of sales. The amount of new construction has been dropping, and that also has an effect on EAV."

The city had to readjust its budget in April, cutting about $800,000, after the EAV grew only 1.95 percent from 2008-09.

Ryan said 2 percent growth is something his office estimated for the city about a year ago, but that no one from City Hall contacted him about the slowdown in values.

"I would anticipate the city will call me this year," Ryan said.

Scroggins agreed, saying he wasn't sure why the city didn't acquire the county's assessed value estimates last summer. He said, though, that the timing of the county's estimated figure for the city doesn't coincide well with the city's budget process, which typically is over by November.

"The (reassessed) adjustments don't begin until February, so it's beyond my budget time," Scroggins said. But he added, "I guarantee that I'll talk to him this year."

Commercial and industrial properties

Leading the devaluation are big-box retailers and large commercial businesses.

According to county records, the number of commercial and industrial property cases filed at the Board of Review spiked to 414 in 2009, up from 290 in 2008. Of the 414, only 145 of the complaints were granted a reduction, although taxpayers have the right to appeal their assessments to the state's Property Tax Appeals Board in Springfield.

Commercial and industrial property owners have an advantage in resources, officials say, over residential homeowners who may not have the money to hire a professional to help challenge property taxes.

In many large-scale reduction cases, a commercial or industrial business hires a private firm to conduct an appraisal. Those can cost $7,000 to $15,000, depending on the size and scope of the property.

Corporations, such as Wal-Mart, have their own in-house appraisers who conduct market studies of comparable properties to justify lower assessed values for their properties.

That was the case with the Wal-Mart Supercenter on Allen Road, in which the company conducted an appraisal that led to its property being reassessed in November to $12.6 million market value ($4.23 million assessed value) from a 2008 value of $16.5 million ($5.5 million assessed value).

With a decline in the marketplace, at least one local appraiser believes more challenges to commercial values might be coming.

"When you get into this kind of market situation, much like what we've been through in the '70s to mid-'80s and the economy is where it's at, then you see the tendency for properties to be overvalued," said Jim Klopfenstein of Morton, an appraiser since 1965.

Klopfenstein was hired to analyze the Landmark Plaza property at 3225 N. Dries Lane, which received a reassessed market value from the state appeal's board earlier this year from $8.1 million to $5.75 million. "Historically, our experience with (the state) is if there is good, solid evidence presented by taxpayers, they will use that valuation," Klopfenstein said.

He isn't the only one to think that more challenges are coming.

Johnson, of the Taxpayers Federation of Illinois, believes more homeowners could go to local boards of review if they experience increases in their property's assessed values while the city's overall assessed value is on the decline.

"This will be a phenomenon over the next few years as the three-year average valuation gets factored into the assessment process," he said.

Tax pressure

A devaluation of property could lead to pressure on city officials to raise property taxes, although past Peoria City Councils have shown a reluctance to do so during a recession.

The assessed valuation situation is on the minds of state lawmakers as well, as they struggle to find solutions to help struggling municipalities, such as Peoria, which are faced with having to raise property taxes or cut services and staff such as police officers and firefighters.

State Sen. Dave Koehler, D-Peoria, has been a proponent of the General Assembly considering Gov. Pat Quinn's proposal to hike the state's income tax to alleviate pressure on local municipalities because of slumping revenues. A proposal to hike taxes, though, went nowhere during the legislature's past session.

"As we see property values fall, we'll have more people protesting their taxes and having them lowered, and it will compound the effect," Koehler said. "We're in a stage where everything is in a negative spiral. We have to turn this thing around."

State Sen. Dale Risinger, R-Peoria, believes the state, city and all other taxing bodies need to be patient and let the market work itself out.

"Whether it's a school board or municipality, all of them are suffering right now from a lack of revenue and a lack of revenue growth," he said. "Until we create additional jobs on the private side, we'll suffer."

 

John Sharp can be reached at 686-3282 or jsharp@pjstar.com.

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Ryan Tax Professionals Serve as Advisors for Georgia Property Tax Reforms

Posted: 12 Jul 2010 10:17 AM PDT

ATLANTA, July 12 -- Property tax professionals at Ryan, a leading tax services firm, served as advisors for legislation reforming Georgia's property tax appraisal process recently signed by Governor Sonny Perdue. The legislation provides property owners with more options and time to appeal a Notice of Assessment.

"This is considered to be the most comprehensive overhaul of Georgia's property tax system in decades," said Michael Allen, Principal at Ryan and one of the advisors for the reform. "The reform package includes more than 50 changes to current state law."

Most of the reforms become effective January 1, 2011. Some of the changes to current law include:

-- Every property owner must receive an annual Notice of Assessment, which guarantees a right to appeal.

-- Every Notice of Assessment must contain the estimated property tax owed.

-- The time to appeal has been increased from 30 to 45 days.

-- The property owner automatically wins any appeal when the government fails to respond within 45 days.

-- Only "current use of property" can be used in determining fair market value.

-- The taxpayer must be given access to all data that tax assessors used in determining fair market value.

-- Sales price establishes the fair market value of a property for the next tax year.

"The new law also clarifies the intangibles that cannot be included when determining fair market value of a commercial real property," said Brad Gorski, a Principal at Ryan. "This is an important step towards ensuring that the value represents the real property only."

In addition to providing a more consistent and fair system, the law simplifies the tax appeal process while giving more power to taxpayers.

About Ryan

Ryan is the leading tax services firm in North America, with the largest transaction tax practice in the United States and Canada. Headquartered in Dallas, Texas, the Firm provides a comprehensive range of state, local, federal, and international tax advisory and consulting services on a multi-jurisdictional basis, including audit defense, tax recovery, credits and incentives, tax process improvement and automation, tax appeals, and strategic planning. With a multi-disciplinary team of more than 800 professionals and associates, Ryan serves many of the world's most prominent Fortune 1000 companies.


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New Jersey Assembly passes property tax cap

Posted: 12 Jul 2010 12:16 PM PDT

TRENTON, N.J. (AP) -- The New Jersey Assembly overwhelmingly approved legislation capping local spending and property tax increases at 2 percent on Monday, a week after the Republican governor and Democratic Senate president announced a deal to tame the nation's highest property taxes.

The Assembly vote was 73-4. The Senate approved the measure 35-3 last week.

Gov. Chris Christie plans to sign the bill Tuesday.

Assembly Speaker Sheila Oliver, who said she wasn't involved in the compromise brokered by Christie and Senate President Steve Sweeney, described the bill as a flawed but necessary first step toward reining in runaway property tax growth.

"You do not allow imperfection to get in the way of what could be a start," Oliver said after the vote. "And that is what the Assembly Dems embraced."

However, she echoed concerns expressed by Assembly Democrats during Monday's debate that the legislation doesn't provide enough wiggle room for towns, school districts and counties facing fiscal situations they can't predict or control, like a state aid cut or an increase in the number of special education students.

"How is the mayor of Trenton going to address running his city with 2 percent cap and absence of $43 million in state aid," Oliver asked. "It is up to us in the Legislature to now aggressively and very assertively move forward some legislative agendas that are going to equip local operators of government."

The bill allows exceptions to the cap for certain costs towns, school districts and counties can't control, like pension and health care costs, which have been rising by double-digits. Otherwise, only voters would be able to override the cap.

Assembly sponsor John McKeon said a similar cap in Massachusetts has created a schism between affluent and blue-collar towns, with wealthier voters three times more likely to override the cap than those in lower-income areas.

The legislation is one of dozens of proposals the Legislature will consider this summer to rein in property tax growth. New Jerseyans pay the highest property taxes in the nation, averaging nearly $7,300 per household.

"A hard cap of 2 percent with limited exceptions that puts final authority to exceed the cap in the hands of the people is the substantial and sustainable reform New Jersey needs," Christie said in a statement after the vote.

The governor thanked the Legislature of the opposing party for its quick action while urging members "to enact the necessary tool kit reforms to control costs and empower local governments to effectively manage under this new cap."

Christie has 32 other proposals to help stem property tax growth, including freeing towns from state-mandated costs, and capping salary and benefits amounts that arbitrators can award to municipal police and firefighters who aren't allowed to strike.

Bill Dressel, executive director of the League of Municipalities, said the tax cap will fail unless local governments and school boards are given additional tools to manage costs.

The compromise was struck after a couple of tense days during which Christie threatened to recall the Legislature to Trenton every day through the July 4th weekend until a tax cap bill was passed.

Sweeney and Oliver convened their members and set up a schedule to debate competing proposals through the summer, but refused to bring their members back through the holiday weekend. The Legislature had passed a 2.9 percent cap bill before leaving for the holiday, but Christie refused to sign, insisting on a bill with fewer exemptions.

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