New in 2011: Payment of Taxes During Pending VAB Appeal

July 12, 2011 — Sherri Johnson

Taxpayers who file Value Adjustment Board petitions in 2011 must now make sure that they pay their taxes before they become delinquent.  The newly-enacted Fla. Stat. 194.014, which took effect on July 1, 2011, requires taxpayers who file VAB petitions to pay all non ad valorem taxes and at least 75% of their ad valorem taxes before they become delinquent.  Likewise, taxpayers who challenge the denial of an exemption or classification or a determination that their improvements were substantially complete must pay all non ad valorem taxes and the amount of ad valorem taxes that they admit in good faith to be owing.  In Florida, property taxes become delinquent if not paid by April 1st of the next year.  Thus, if a taxpayer fails to pay their 2011 property taxes by April 1, 2012, the VAB is required to automatically deny their petition on that property.

What is not clear from the new statute is whether a taxpayer’s failure to pay its taxes before they become delinquent will also result in the dismissal of cases pending before the VAB from prior years.  Fla. Stat. 194.171(5), which applies to property tax cases in circuit court, requires the court to dismiss all pending cases if the taxes on the property in question become delinquent in any future tax year.  In some larger Florida counties, VAB cases are sometimes not resolved until several years after they are filed.  Thus, depending on how the statute is interpreted by the VABs, taxpayers whose taxes become delinquent in those counties could risk having all of their prior years’ pending VAB cases denied.

There is one silver lining for taxpayers, though.  The new statute also provides that, if a petitioner is entitled to a refund due to the granting of their VAB petition, the amount of taxes overpaid will accrue interest at the rate of 12% per year from the date the taxes would have become delinquent.

Posted in Property Tax Legislation, Value Adjustment Board. Tags: , , , , , , , . 3 Comments »

FAQs About the 10% Cap on Commercial Property Assessments

February 3, 2011 — Sherri Johnson

In 2008, Florida voters amended the Constitution to give non-homestead property owners some protection against dramatic increases in their annual property tax assessments.  As amended, the Florida Constitution now prohibits the assessment of certain non-homestead property from increasing by more than 10% per year.  Ironically, this amendment passed just as assessments of commercial property began to decrease, so few property owners have seen the benefits of this cap, but that may begin to change in 2011.  Thus, this post will address common questions about the 10% cap such as who qualfies, how the cap can be lost, and what to do if your value increases by more than 10%.

What property is protected by the 10% cap?

The 10% cap applies to most types of commercial property, including nonhomestead residential property (i.e. apartments and other rental property) and nonresidential property (i.e. commercial property and vacant land).  Property that is not protected by the 10% cap includes agricultural property, conservation land, and certain other property that is already accorded favorable tax treatment.  Of course, it also does not apply to homestead property, as homestead property is protected by the 3% cap of the Save Our Homes Amendment.  The requirements for residential property are set forth in Fla. Stat. 193.1554, and the requirements for other commercial property are set forth in Fla. Stat. 193.1555.

With values decreasing, does anyone really benefit from the 10% cap?

Actually yes.  In my experience, the taxpayers who really benefit from the 10% cap are those who successfully obtain a reduction of their assessment by the Value Adjustment Board process.  In the past, a taxpayer could obtain a reduction in one tax year, but have to fight the same battle over and over in future years.  Now, any reduction obtained during the VAB process is somewhat protected for future tax years as well.

What events will trigger the loss of the 10% cap?

The protection of the 10% cap is lost when there is a change of ownership or control.  This includes the transfer of the property by sale, foreclosure, or other means (other than tranfers to correct an error, transfers between spouses, and transfers between legal and equitable title).  If the property is owned by a corporation, LLC, partnership or other such entity, the cap will also be lost upon a transfer of more than 50% of the ownership in that entity.  Thus, a stock transfer may also trigger loss of the cap and re-assessment of the property at fair market value.  However, in 2010, the legislature amended the statute to create an exception for publicly-traded companies if the transfer of the shares occurs through the buying and selling of shares on a public exchange.

For nonresidential property, the cap can also be lost by adding an improvment that increases the value of the property by at least 25 percent.  Thus, while more routine changes, additions and improvements may only slightly affect the assessment, a substantial improvement that increases the overall value by 25% or more will result in the reassessment of the entire property at fair market value.

How does the Property Appraiser know if there has been a change of ownership or control?

Normally, the Property Appraiser learns that a property has been transferred when a deed is recorded in the public records.  However, the public records will generally not disclose if a property is owned by the same entity, but the entity itself has undergone a change of control.  Thus, Fla. Stat. 193.1556 requires any person or entity who owns property that is protected by the 10% cap to notify the Property Appraiser of any change of ownership or control on a form provided by the Department of Revenue.   If a property owner fails to notify the Property Appraiser and the Property Appraiser later discovers that the property was erroneously continuing to receive the 10% cap, the Property Appraiser can record a tax lien for the back taxes, a 50% penalty and 15% interest, which is the same penalty applied in cases of homestead fraud.

I met the requirements, so why did my assessment increase more than 10% this year?

Assuming that you met all of the requirements for the 10% cap, it could very well be that the Property Appraiser made a mistake.  It seems that some of the Property Appraisers’ computer systems have had difficulty processing the 10% cap.  Quite a few taxpayers contacted me in 2010 with concerns about the fact that their assessments erroneously increased more than the 10% cap and almost all of those issues were due to simple computer or data entry errors.  Thus, I would recommend contacting the Property Appraiser’s office, as it may be a simple issue to correct.  If that does not work, then you may be able to seek relief through the VAB process.

Posted in Commercial Property, Property Tax Legislation. Tags: , , , , , , , . 8 Comments »

The Actual Use Doctrine in Florida: Tax Exemptions Determined as of January 1st

January 12, 2011 — Sherri Johnson

When it comes to property taxes in Florida, everything revolves around the January 1st assessment date.  Property values are determined as of January 1st.  A person’s right to a homestead exemption is determined based on whether they qualified on January 1st.  The taxability of newly-constructed improvements is determined based on whether they were substantially completed as of January 1st.  And, according to the Florida courts, a property’s entitlement to an exemption or special classification must also be based on how the property was actually used as of January 1st.  This “actual use doctrine,” as it is commonly referred to, can cause headaches for owners of agricultural property and owners of vacant land or other property that is in a state of transition.  This article will attempt to address some of those issues.

Fla. Stat 194.042 provides that all property shall be assessed according to its just value as of January 1st of each tax year.  It also goes on to provide that improvements shall not be taxed unless they are substantially completed as of January 1st of the tax year in question.  Likewise, Fla. Stat. 196.031 requires a taxpayer’s entitlement to the homestead exemption to be determined as of January 1st of each tax year.  Notably, the statutes do not expressly require the taxability of other types of property to be determined as of January 1st.  However, Florida courts have held that the character of a particular parcel of land, including whether or not it should be classified as agricultural, is determined by its use as of January 1st.

Impact on Agricultural Property

Established agricultural operations generally should not have difficulty establishing their entitlement to an agricultural classification as of January 1st of each tax year.  The problems tend to arise when a property is being newly converted to agricultural use or when it is being transitioned from one type of growing crop to another.  For cattle-grazing operations, problems can also arise if the cattle is frequently rotated among different parcels, leaving some parcels with no cattle present on January 1st.  Thus, in the agricultural context, the question of what constitutes actual use of the property for agricultural purposes can be a bit tricky.  If a parcel is used throughout the year as part of a larger cattle grazing operation, but the cows happened to be grazing another parcel on January 1st, does that mean that the property was not actually used for agricultural purposes on January 1st?  Unfortunately, the courts have offered little guidance on this issue, and thus the answer tends to vary from county to county.

With respect to growing crops, the most common issue seems to be whether a property is being actually used for agricultural purposes if no crops have yet been planted as of January 1st.  One appellate court held that there was no evidence of agricultural use as of January 1st where the crops were not planted until late January and, as of January 1st, 90% ofthe property was not even cleared.  In effect, the property was being prepared for future use, but was not actually used for growing crops as of January 1st.    However, if a property owner has in fact made significant efforts to clear, plow, irrigate and otherwise prepare the property for planting, that would seem to constitute actual agricultural use, especially if the crop in question is one that is not usually planted until the spring.  In such a situation, it is critical that the property owner document every effort made to prepare the property for planting.

Unfinished and Remodeled Buildings

Fla. Stat. 196.192 provides that all property owned by an exempt entity and used for exempt purposes shall be exempt from taxation.   The seminal case dealing with application of the actual use doctrine to exempt entities is the Supreme Court of Florida’s decision in Dade County Taxing Authorities v. Cedars of Lebanon Hospital Corp.  In that case, the patient care facility in question was completed in mid-1973 and issued a certificate of occupancy in August 2003.    However, the facility was not used for patients during 1973 or 1974.  The court thus found that it was not exempt because it was not actually usd as a hospital or other exempt facility on January 1, 1974.  Other courts have followed the Cedars of Lebanon case, albeit reluctantly in some cases.  In one case, the appellate court reluctantly denied an exemption to a Miami Dade Community College building that was acquired on January 1st, where the remodeling for use as an educational facility was not completed until July of that year.   Thus, charitable and other exempt entities should be mindful of the actual use doctrine before engaging in any property acquisition or remodeling projects.

Vacant Land

Of course, the actual use doctrine also applies to vacant land owned by exempt entities although, as discussed below, the legislature has loosened the doctrine with respect to churches and charities such as Habitat for Humanity.  Years ago, following the Cedars of Lebanon case, the courts generally denied exemptions to churches, charities and other exempt entities that owned vacant land.  In one case, the court denied an exemption to the American Lung Association for vacant land on which it planned to construct its new corporate headquarters.  Another court denied an exemption to the Palm Beach Community Church for 47 acres on which it had planned to build a church.  Following these cases, many counties had difficulty deciding whether to grant an exemption to vacant land owned by Habitat for Humanity, which was being held for future building purposes.  The circuit court in Sarasota County ruled against Habitat for Humanity on two occasions, but those cases were not appealed.

In 2007, the Legislature amended Fla. Stat. 196.196 to provide that property owned by an exempt entity is considered to be used for religious purposes as long as the church has taken affirmative steps to prepare the property for use as a house of public worship.  Such “affirmative steps” may include permitting activities, creation of plans, land clearing, site preparation,  and similar activities.  When that legislation passed, the Property Appraisers inquried as to whether that standard could also be applied to charities like Habitat for Humanity, but in AGO 2008-52, the Attorney General replied in the negative.  Thereafter, in 2009, the Legislature passed a similar statute allowing charities like Habitat for Humanity to receive an exemption on vacant property if they have taken affirmative steps to prepare the property to provide affordable housing to low-income persons or families.

Naturally, the question arises as to whether this standard could be applied to vacant land owned by other exempt entities that have acquired land for future use.  The Attorney General opinion indicates that the “affirmative steps” standard is limited to religious property, and now future low-income housing property owned by charities such as Habitat for Humanity.   However, absent further legislative amendments expanding the “affirmative steps” test, there is also the possiblity that a similarly-situated exempt entity could claim to be denied equal protection of the laws if they are denied an exemption on vacant property on which they have taken affirmative steps toward constructing potentially-exempt improvements.  Charities and other exempt entities in this situation should be prepared to address these issues before acquiring new property or commencing a new construction project.

Posted in Agricultural Classifications, Property Tax Exemptions, Property Tax Legislation. Tags: , , , , , , , , , , , . 1 Comment »

New Policies & Procedures for 2010 VAB Hearings

August 4, 2010 — Sherri Johnson

Just when I think I know everything there is to know about property tax appeals, they go and change the rules on me again.  VAB season should be interesting this year, given all of the new policies and procedures promulgated by the Florida Department of Revenue and its infamous (and at times puzzling) 2010 Value Adjustment Board Training materials that are required reading for all VAB Special Magistrates in Florida.  Below is a quick summary of some interesting administrative changes that are included in the new Rules and the VAB Training materials.

Good Cause for Late VAB Petitions

The DOR has now included a definition of “good cause.”  According to Rule 12D-9.015(11)(a), “good cause” means the verifiable showing of extraordinary circumstances.  Examples given by the DOR include a personal, family or business crisis, or a physical or mental illness, infirmity or disability that would reasonably affect the petitioner’s ability to timely file, as well as miscommunications with the Board Clerk, Property Appraiser or their staff regarding the filing time.

Agents for Taxpayers

Rule 12D-9.018(3) clarifies that a taxpayer may be represented by anyone, including a family member, and that the agent need not be a licensed individual.  However, a petition filed by an unlicensed agent must be signed by the taxpayer or be accompanied by a written authorization from the taxpayer.

Rescheduling Hearings

Florida Statute 194.032(2) allows a petitioner to reschedule a hearing one time without good cause.  In my experience last year, some Value Adjustment Board Clerks interpreted this section as only allowing the petitioner to request one rescheduling, regardless of whether they had a conflict or other good cause.  Rule 12D-9.019 clarifies that a rescheduling for good cause shall not be treated as the one time rescheduling to which a petitioner has a right upon timely request under Fla. Stat. 194.032(2).  This Rule also clarifies that if a hearing is rescheduled, the deadlines for the exchange of evidence shall be computed from the new hearing date, if time permits.

Effect of Failure to Provide Income Data/Higgs v. Good

Higgs v. Good is, of course, the case that held that where a taxpayer refused to provide his income data to the Property Appraiser when the Property Appraiser was trying to prepare the tax roll, the taxpayer could not later use that data in an administrative or judicial challenge to their property tax assessment (yes, the case did expressly say “administrative or judicial”).  Thus, the DOR has created quite a stir by stating in its 2010 VAB Training materials that “the case of Higgs v. Good does not apply to proceedings of the value adjustment board.”

Note, however, that Fla. Stat.  194.034 still prohibits the VAB from accepting evidence if the Property Appraiser requested it from the petitioner in connection with the VAB proceeding and the petitioner had knowledge of it, but declined to provide it to the Property Appraiser.  If such a request is made by the Property Appraiser (and it always is), Rule 12D-9.020(8) deems the petitioner’s evidence timely if it is submitted at least 15 days before the hearing.  If submitted less than 15 days before the hearing, it is still considered timely if the VAB finds that it was provided a reasonable time before the hearing.

Order of Presentation of Evidence

Rule 12D-9.024(7) clarifies that the Property Appraiser should present their evidence first in a hearing involving a value dispute.  Presumably, the taxpayer would still present their evidence first in exemption and classification hearings.  However, if the parties agree, the Special Magistrates generally prefer for the Property Appraiser to state their reasons for denial of an exemption before the taxpayer presents their case.

Applicability of Rules of Evidence

Rule 12D-9.025(2)(a) provides that VAB proceedings are not to be controlled by strict rules of evidence and procedure.  However, while formal rules of evidence do not apply, fundamental due process shall be observed and shall govern the proceedings.  The VAB Training materials further state that the VABs must not apply strict standards of relevance or materiality in deciding whether to admit evidence into the record, and that any decisions to exclude evidence must not be arbitrary or unreasonable.

In practice, what this likely means is that the VABs should give the parties a bit of leeway when their evidence is challenged on relevance or materiality grounds.  However, parties should still be wary about relying on hearsay to prove their case (such as affidavits or appraisals by persons not present at the hearing).  The Rules specifically allow petitioners to notify the VAB on their petition that they do not intend to appear, but that they would like their evidence considered anyway. In such situations, Rule 9.024(11) states that the VAB must take into consideration the inability of the opposing party to cross-examine the non-appearing party in determining the sufficiency of the evidence.

Applicability of USPAP

Florida Statute 194.301 now requires the Property Appraiser to comply with “professionally accepted appraisal practices.”  Some (including me) had speculated that these “practices” could be construed to include the Uniform Standards of Professional Appraisal Practice [“USPAP”].  Not so, however, as the DOR’s 2010 VAB Training materials have instructed the VABs and Special Magistrates that they are not authorized to determine whether a party is required to comply with USPAP or whether their evidence complies with USPAP.

The Eighth Factor (Costs of Sale)

Another issue that has many people scratching their heads is the DOR’s discussion of “the eighth criterion” in the VAB Training materials.  The materials seem to suggest that where the Property Appraiser has reported to the DOR on Form DR-493 a certain percentage adjustment for the eighth criterion of Fla. Stat. 193.011, but has not made such an adjustment to the petitioned property, the VAB should go ahead and make that adjustment.  Thus, it would seem that the DOR is advising the VABs to ensure that the same adjustment is made to all properties, regardless of the approach used to calculate the assessment and regardless of whether it would result in an assessment at less than fair market value.  I expect that the DOR will be receiving questions from many people about this, and hopefully further clarification will be forthcoming.

Working Waterfront Properties

The VAB Training materials clarify that, despite the legislature’s failure to pass implementing legislation, the constitutional provisions relating to working waterfront properties do apply in 2010, and the DOR anticipates issuing rules later in the summer of 2010.

Electronic Hearings

Finally, the new Rules allow for electronic hearings if the VAB approves of their use and the special magistrate agrees.  Procedures for the use of electronic hearings are set forth in Rule 12D-9.026.

Posted in Property Tax Legislation, Value Adjustment Board. Tags: , , , , , , , , , . 1 Comment »

Property Tax Reductions for Chinese Drywall

June 23, 2010 — Sherri Johnson

Beginning in 2010, owners of property affected by defective Chinese drywall will be entitled to significant property tax reductions.  In prior years, the treatment of property affected by defective drywall was up to the discretion of the individual county property appraisers.  However, Florida Statute 193.1552, which takes effect this year, requires county property appraisers to consider the impact of defective drywall on single family homes and, in some cases, to reduce the assessed value of the building to $0.

Essentially, the new statute requires Property Appraisers to consider the effect of drywall that contains elevated levels of elemental sulfur that results in corrosion of certain metals if the building need remediation to bring it up to current building standards.  If the building cannot be used for its intended purpose without remediation or repair, the Property Appraiser must assess the value of the building at $0.  This statute only applies to single family residential property, and it only applies if the owner was unaware of the presence of defective drywall at the time of purchase.

The statute also clarifies that an owner who vacates the property for the purpose of repairing the defective drywall will not be considered to have abandoned their homestead unless they establish a new homestead elsewhere.

Posted in Chinese Drywall, Property Tax Legislation. Tags: , , , . Leave a Comment »

Obtaining “Working Waterfront” Classification for Florida Property Tax Purposes

January 20, 2010 — Sherri Johnson

In 2008, Florida voters amended the Florida Constitution to allow “working waterfront” properties to be assessed based on the current use of the property, as opposed to the highest and best use of the property.  Pursuant to Amendment 6, waterfront land used for commercial fishing, public boat launches, marinas, drystacks, and water-dependent marine manufacturing and repair facilities can no longer be assessed at its fair market value, which often represents the value of the property for a more-intensive use, such as for a hotel or condominium project.  Instead, the property must be assessed based on its actual use as of January 1st of each tax year, beginning with the 2010 tax year.

Sounds great, right?  Well, the bad news is that, despite the approval of this amendment by the voters, the Florida legislature has yet to pass any enabling legislation to define the types of properties that qualify or, more importantly, to provide a procedure for applying for and receiving classification as a working waterfront.  Oops.  The Senate considered SB 1468, which would have required taxpayers to apply for working waterfront classification by March 1st of each year, unless the counties waived the annual application requirement, but that bill died in committee.

In July 2009, the Florida Department of Revenue issued an informational bulletin, PTO 09-24, advising the county property appraisers that, because this constitutional provision is self-executing, working waterfront properties are entitled to be assessed at their actual use beginning in the 2010 tax year, regardless of the lack of enabling legislation.  Thus, while some property appraisers may disagree with the DOR and decide not to apply the constitutional amendment until the legislature passes enabling legislation, I expect that most counties will try to begin implementing the new law this year.

So, absent any procedures or forms for taxpayers to use in applying for working waterfront classification, how should one go about seeking this classification?  Some property appraisers may choose to develop county-specific procedures for taxpayers to use in their jurisdiction, but others may not.  The important thing to remember is that the property appraisers’ systems will generally not automatically recognize which properties qualify as working waterfronts.  So, if you believe your property qualifies for this classification, you should contact your county Property Appraiser and make sure that they are aware of how your property is being used, and that they have all of the information they need about your property to assess it based on its actual use.

Posted in Commercial Property, Property Tax Legislation. Tags: , , , , , , . 1 Comment »

The New Reduced Burden of Proof in Property Tax Appeals

August 25, 2009 — Sherri Johnson

UPDATE:  The Department of Revenue just released revised DOR VAB Training Revision – September 18 2009 that reflect a significant change in the way the DOR is interpreting the new presumption statute.  Contrary to what is stated in my blog below, it appears that the DOR is now advising the VABs that the Property Appraiser has the initial burden of coming forward with evidence to support his assessment, and that if the Property Appraiser loses the presumption of correctness, the VAB may set the value.  I will be revising this post accordingly, so stay tuned.

Taxpayers across Florida rejoiced when the legislature passed HB 521, effectively eliminating the high hurdle that taxpayers faced in appealing their property tax assessments.  Unfortunately, the new statute also raises a lot of questions about what proof is expected of the parties in a property tax case.  This post will try to address some of those questions.

When does the new burden of proof statute take effect?

The significant provisions of the new statute apply to the 2009 assessments, meaning that they will be applied in this year’s VAB proceedings and in any court cases challenging 2009 assessments.

So, who has the burden of proof in a property tax appeal?

When HB 521 passed, newspaper headlines across the state proclaimed that the legislature had shifted the burden of proof to the Property Appraiser.  Not so.  Actually, even though the “clear and convincng evidence” hurdle has been eliminated, the party bringing the action (generally the taxpayer) still has the burden of proving their case by a preponderance of the evidence.  Specifically, the taxpayer must prove by a preponderance of the evidence that either the Property Appraiser’s assessment does not represent the just value  (fair market value) of the property or that the assessment was arbitrarily based on appraisal practices that are different from the appraisal practices generally applied by the property appraiser to comparable property within the same county.

What happens if the taxpayer proves that the assessment does not represent just value?

If the record contains competent, substantial evidence of value which cumulatively meets the requirements of law as set forth in section 193.011, Fla. Stat. and  which complies with professionally accepted appraisal practices, then the Value Adjustment Board [“VAB”] or court must establish the value.  Under prior law, the taxpayer’s evidence was only required to meet the requirements of law, but was not required to comply with professionally accepted appraisal practices.  Thus, it could be inferred that, under the new law, the court cannot set the value unless the taxpayer puts a valid appraisal in the record along with  testimony that the appraisal complies with professionally accepted appraisal practices.

If the evidence of value that is in the record does not meet the requirements of law or professionally accepted appraisal practices, the VAB or court must remand the matter back to the Property Appraiser with appropriate directions, which the Property Appraiser must follow.  If the Property Appraiser re-assesses the property on remand and the taxpayer is still dissatisfied, they can challenge the re-assessment using these same procedures.

What happens if the taxpayer proves that the assessment was arbitrarily based on appraisal practices that are different from the appraisal practices generally applied to comparable property within the county?

This is where it gets interesting.  Under prior law, if a taxpayer proved that his property was assessed by different appraisal practices than other similar property, the taxpayer was still required to prove that the assessment exceeded just value, albeit by a preponderance of the evidence, rather than clear and convincing evidence.  The courts had held that, even where a taxpayer proved that other properties were assessed at a lower value, the taxpayer could not obtain a reduction of their assessment unless they could show their own property was assessed higher than fair market value.  In effect, the courts were saying that just because your neighbors’ assessments may be too low, you are not entitled to have your property assessed at less than its just value.  The exception to this was for taxpayers who could state a claim under the Equal Protection Clause, which required them to prove that they were arbitrarily and systematically being assessed at a higher rate than substantially all other property in the county.

With the amended statute, it appears that if a taxpayer can prove that the Property Appraiser arbitrarily used different appraisal practices for their property, even if the taxpayer cannot prove that their assessment is too high, they may be entitled to an order remanding to the Property Appraiser for a reassessment, as described above.

So why am I hearing that the Property Appraiser now has the burden of proof?

Under the old law, the Property Appraiser’s assessment was presumed correct and the taxpayer had the burden of proving their case by clear and convincing evidence.  However, if the taxpayer proved that the Property Appraiser had failed to properly consider the factors of section 193.011, Fla. Stat., then the presumption of correctness was lost and the taxpayer only had to prove their case by a preponderance of the evidence.

Under the new law, if the Property Appraiser wants to retain the presumption of correctness, the Property Appraiser has the burden of proving that he properly considered the factors of section 193.011, Fla. Stat. and used appraisal methodology that complies with professionally accepted appraisal practices.  However, here’s the rub.  The legislature did not explain what happens if the Property Appraiser retains the presumption of correctness.  Under the old law, by retaining the presumption, the Property Appraiser forced the taxpayer to prove its case by a higher burden of proof (clear and convincing evidence).  The new law does not explain what benefit inures to the Property Appraiser if they go to all the trouble to retain the presumption of correctness.  Thus, this section, as written, is virtually meaningless.

This section of the statute also purports to overturn prior cases that had held that it is not for the court to decide which method of assessment is superior, as long as the Property Appraiser had properly considered the factors of section 193.011, Fla. Stat.  The new statute apparently requires the court, in deciding whether the Property Appraiser’s assessment is entitled to a presumption of correctness, to determine the appropriateness of the Property Appraiser’s choice of appraisal methodology (i.e. the income, cost or sales comparison approach).  Again, however, I would suggest that, absent any benefit to the Property Appraiser for retaining the presumption, this section of the statute will be rarely used, as many Property Appraisers may opt to simply waive the so-called “presumption” and proceed to the next step, whereby the taxpayer must prove their case by a preponderance of the evidence.

What exactly are “professionally accepted appraisal practices”?

This will no doubt be the subject of many disputes in the future.  One potential interpretation is that this requires compliance with the Uniform Standards of Professional Appraisal Practice [“USPAP”].  However, the Supreme Court of Florida and other Florida courts have referenced a variety of appraisal texts in past cases in an attempt to discern what constitutes generally accepted appraisal practices.  Thus, texts published by authoritative sources such as the International Association of Assessing Officers and the Appraisal Institute might qualify as evidence, as might testimony by a local appraiser or even the Department of Revenue’s publications.  This issue is definitely up in the air.

Does the new statute affect the burden of proof in exemption and classification disputes?

In my opinion, yes.  Prior cases had held that a property appraiser’s assessment (which includes exemption and classification decisions) must be upheld as long as it was supported by a reasonable hypothesis of legality.  The legislature did away with the “no reasonable hypothesis” burden years ago in value disputes, but trial courts have continued to apply that standard to exemption and classification disputes.  The new statute provides that, beginning with 2009 assessments, taxpayers who dispute the denial of an exemption or special classification need only prove their case by a preponderance of the evidence.

Posted in Burden of Proof, Property Tax Legislation, Uncategorized, Value Adjustment Board. Tags: , , , , , , , , , , . 1 Comment »

Assessed Values Down, But Property Taxes Up

August 17, 2009 — Sherri Johnson

I hate to say “I told you so,” but there it is.  The Sarasota Herald-Tribune reported today that Southwest Florida property owners are seeing their tax bills increase, despite receiving reductions in their assessed values due to the economy and the legislative machinations of the last two years.  The simple fact of the matter is that by limiting increases in the value of commercial property to no more than 10% per year, the legislature eroded much of the protection afforded homeowners by the Save Our Homes Amendment.

Owners of homestead property should take heed, as the legislature now wants to give commercial property virtually the same protections enjoyed by homestead property.  If that passes, the current protections in place for owners of homestead property will be essentially worthless.

Posted in Commercial Property, Property Tax Legislation, Save Our Homes Amendment. Tags: , , , , , , , . 1 Comment »