Property Tax Updates

Tennessee — Property Tax: Component Door Parts Were Inventory, Not Raw Materials,(Dec. 1, 2015)

Component parts held by a company that sold door frames and related items and used the parts in door frame assemblies were exempt inventory, rather than assessable raw materials, for Tennessee property tax purposes because the company was not a manufacturer, and the component door parts used in the assembly of completed doors were not raw materials. Under applicable provisions, items of tangible personal property may only be assessed as raw materials if they are held by a manufacturer. Here, the company was subject to gross receipts tax on sales and was not considered a manufacturer for any other taxation purposes. In addition, the company primarily sold door frame components and only assembled those components into a completed door upon request.

Central Woodwork, Inc. v. Johnson, Tennessee Court of Appeals, No. W2015-00040-COA-R3-CV, November 24, 2015, ¶401-629

Utah — Property Tax: Government Lease Opinion Amended Without Change in Ruling,(Dec. 1, 2015)

Ruling on a petition for rehearing, the Utah court of appeals has amended a property tax ruling that an aerospace and defense products manufacturer was exempt from a Utah county privilege tax on a property-tax-exempt federally owned facility the manufacturer used pursuant to a permit from the U.S. Navy. (TAXDAY, 2015/04/24, S.17) Facts that the court was asked to not consider on rehearing had not been directly challenged in the initial appeal, and the court of appeals therefore assumed that they were supported by the record.

Alliant Techsystems, Inc. v. Salt Lake County Board of Equalization, Utah Court of Appeals, No. 20130532-CA, April 23, 2015, as amended November 27, 2015, ¶401-122

Missouri — Property Tax: Assessment of Commercial Property Was Discriminatory,(Dec. 1, 2015)

The assessment of commercial property for Missouri property tax purposes at 42% of fair market value, while the median level of assessment for the county was 29.4% that same year, was grossly excessive and, therefore, the difference between the median level of assessment and the level of assessment for this property was unconstitutionally discriminatory. In addition, the owner of the property could present the board of equalization decision as evidence of the fair market value of the property for purposes of showing discrimination, and did not have to present only the assessor’s value as sole evidence of fair market value.

Zimmerman v. Mid-America Financial Corporation, Missouri Court of Appeals, Eastern District, No. ED102716, November 24, 2015, ¶204-020

Kansas — Property Tax: Value Determination of Casino Land Based on Sale Price Upheld,(Dec. 1, 2015)

The Kansas Court of Tax Appeals’ (COTA) value determination of a casino facility’s land for property tax purposes was upheld because it was based on the actual sale price of the land. The casino’s argument that COTA failed to exclude the value attributable to the management contract from the real property value of the subject property was meritless because the additional value that was willingly paid by the casino distinguished the subject property from the surrounding tracts that were not eligible for casino development. The casino’s other arguments pertaining to COTA’s inclusion of the acquisition payment for other tracts were also invalid since the casino could not have obtained the fee simple interest without the purchase of these options. Additionally, COTA’s reliance on certain aspects of the county’s appraisal report for value determination was not erroneous because the report was well-reasoned and not materially flawed. Further, the county’s claim that COTA undervalued the property was also dismissed since COTA’s determination was supported by substantial evidence.

In the Matter of the Equalization Appeal of Kansas Star Casino, LLC, Kansas Court of Appeals, No. 111,650, November 20, 2015, ¶201-825

Ohio—Property Tax: Failure to Adjust Comparables to Reflect Leases Was Error,(Dec. 2, 2015)

In an Ohio property tax appeal from a valuation case before the Board of Tax Appeals (BTA), an appraiser’s failure to adjust the sales prices of comparable properties to remove the effect that long-term leases would have had on the comparables’ prices was improper. However, the owners’ objections to an appraiser’s testimony were not upheld.

As to the comparables, the property at issue was unencumbered by a lease and would likely have sold for less. Further, there was no indication, let alone any finding, that the property in question satisfied the threshold criterion for "special-purpose" treatment.

The property owner’s objection to the appraiser’s competency to give testimony before the BTA and to the lack of the appraiser’s independence from the county were issues for the BTA to decide. The owner did not raise the objections before the BTA, and there was no plain error on the part of the BTA on those issues. Further, although the appraiser’s written report on the highest and best use of the property fell short of the standard for matters that ought to be addressed, the owner demonstrated no reversible error based on its objection to the appraiser’s testimony on the highest and best use of the property.

Steak ‘n Shake Operations, Inc. v. Warren County Board of Revision, Ohio Supreme Court, No. 2014-0744, November 25, 2015, ¶404-390

New Jersey — Property Tax: Complaint Dismissed for Property Owner Not Timely Filing Income/ Expense (Chapter 91) Information,(Dec. 3, 2015)

The New Jersey Tax Court denied a township’s motion to dismiss a property tax assessment challenge because the township failed to file the motion within the required time period. After the taxpayer failed to timely respond to a request for income and expense information made pursuant to N.J.S.A. 54:4-34 (Chapter 91), the township filed a motion to dismiss the taxpayer’s complaint. The applicable rule requires that all motions to dismiss for refusal or failure to comply with a Chapter 91 request be filed no later than the earlier of 180 days after the filing of the complaint, or 30 days before the trial date. However, the township’s motion to dismiss was not filed until 184 days after the complaint was filed. The township contended that, because the intention of the rule is to provide a municipality with 180 days to file a dismissal motion, the 180 days should be calculated from the date of service of the complaint, rather than the date of filing. The court denied the township’s motion, stating that the clear language of the rule sets out the time frame based on the date the complaint was served.

Villager Realty Associates v. Irvington Township, New Jersey Tax Court, No. 001098-2015, December 2015, ¶401-912

California — Property Tax: BOE Announces Base Year Value Inflation Factor for 2016 Assessment Rolls of 1.525%

Based on information from the Department of Industrial Relations concerning the California Consumer Price Index (CCPI), the Board of Equalization (BOE) has asked county property tax assessors to prepare their 2016 assessment rolls using an inflation factor of 1.01525. Under state law, base year property values are compounded annually by an inflation factor not to exceed 2%.

Indiana — Property Tax: Board Did Not Err When Reducing Value of Shopping Center,(Dec. 15, 2015)

The Indiana Board of Tax Review did not err when it reduced a shopping center’s real property tax assessment because the assessor, and not the property owner, bore the burden of proof and the evidence offered by the assessor lacked probative value. In addition, the shopping center owner was not required to submit additional evidence to prove the correct assessment.

Marion County Assessor v. Gateway Arthur, Inc., Indiana Tax Court, No. 49T10-1212-TA-00082, December 3, 2015, ¶402-332

Michigan — Property Tax: Guidance Issued on Calculating Taxable Personal Property Value,(Dec. 21, 2015)

The Michigan State Tax Commission has issued a memorandum to assessors to provide guidance on calculating taxable value for personal property. The document discusses the application of the "capped value formula," the statutory principle which provides that the taxable value of property cannot increase by more than the rate of inflation from one year to the next. Further, situations where the capped value may be lower than the state equalized value are detailed, in addition to methods of calculating capped value for personal property and correction of errors relating to calculation.

Memorandum: Calculating Taxable Value for Personal Property, Michigan State Tax Commission, December 16, 2015, ¶402-039


For more information contact:
Frank Lima
Managing Director
Hilco Valuation Services