Evidence Disclosure Requirements for Florida VAB Hearings

The Florida statutes provide a fairly detailed procedure for the exchange of evidence between the taxpayer and the Property Appraiser.  However, the statutes are a bit vague on the consequences of failing to disclose evidence in a timely manner.  This post will try to address some common questions about Florida’s evidence disclosure requirements for Value Adjustment Board hearings.

Is the Property Appraiser required to share their evidence with the petitioner prior to the VAB hearing?

It depends.  Pursuant to section 194.011(4), Fla. Stat., the Property Appraiser is required to disclose their evidence to the petitioner at least 7 days prior to the hearing only if the petitioner discloses their evidence (witness information and copies of documentary evidence) to the Property Appraiser at least 15 days prior to the VAB hearing and the petitioner sends the Property Appraiser a written request for disclosure of the Property Appraiser’s evidence.  If the petitioner fails to disclose their evidence in a timely manner, or if the petitioner discloses their evidence but neglects to send the Property Appraiser a written request for disclosure of evidence, the Property Appraiser is under no duty to share their evidence with the petitioner.  That said, the Property Appraiser’s records are, for the most part, still subject to the disclosure requirements of the Public Records Act, and thus a petitioner may still be able to make a request for specific documents.

If the Property Appraiser does disclose their evidence in a timely manner, will it be excluded from evidence?

No.  If the petitioner complies with the requirements of section 194.011(4), Fla. Stat. and the Property Appraiser fails to disclose their evidence at least 7 days prior to the hearing, the hearing will be re-scheduled, but there is no indication in the statute that the Property Appraiser’s evidence would be inadmissible.

Is the petitioner required to disclose their evidence to the Property Appraiser prior to the VAB hearing?

No.  If the petitioner wants to see the Property Appraiser’s evidence prior to the hearing, the petitioner must disclose their evidence at least 15 days prior to the hearing.  However, according to the training materials provided by the Florida Department of Revenue to the VABs and Special Magistrates, the petitioner’s initiation of an evidence exchange with the Property Appraiser is strictly optional.  If the petitioner chooses not to disclose their evidence, the evidence is not necessarily inadmissible.  The only consequence provided in the statute is that the  petitioner does not have a right to see the Property Appraiser’s evidence in advance.

What if the Property Appraiser sends the petitioner a request for documents?  Must the petitioner respond?

Yes.  Pursuant to section 194.034(1)(d), Fla. Stat. and the Higgs v. Good case, if the Property Appraiser makes a written request for information and the taxpayer fails to respond, the taxpayer will be prohibited from using that information at the VAB hearing or in court.  Thus, while the taxpayer is  not required to initiate an evidence exchange, failing to respond to a written request from the Property Appraiser could affect their right to introduce the requested information at a later hearing.

What transmission methods can be used for exchanging evidence?

Rule 12D-10.0044 of the Florida Administrative Code provides that the exchange of evidence can be accomplished by mail, fax, e-mail, hand delivery or any other method agreed upon by the parties.  See Rule 12D-10.0044 for more information on delivery methods.

VAB Evidence Part 2: Use of Sales That Close After the January 1st Assessment Date

One of the more confusing issues that seems to arise during Value Adjustment Board hearings is the question of whether and to what extent the Property Appraiser and the taxpayer can use sales that close after the January 1st assessment date to support their respective opinions of value.  The short answer is that there is no legal prohibition against using post-assessment date sales as evidence.  Ultimately, the issue is the just value of the property as of January 1st, and any evidence that tends to indicate the value of the property on that date may be admissible.

The confusion about this issue arose, in part, because of Florida Department of Revenue Bulletin PTA 06-08, wherein the Department of Revenue advised Florida county property appraisers that the use of sales that occur after January 1st to prepare their tax rolls would be inconsistent with the requirements of Florida law.  This bulletin raised some eyebrows among the appraisal community, as many appraisers and attorneys felt that, particularly when the market was in a state of transition on January 1st, post-assessment date sales could be indicative of a market trend that affected the value of the property on January 1st.  The bulletin also appeared to conflict with the case of Bystrom v. Equitable Life Assurance Society, wherein the appellate court held that evidence (in that case, income data) that comes to light after the assessment date may be relevant to the value as of January 1st.

Thereafter, the Department of Revenue issued Bulletin PTO 08-02, which replaced Bulletin PTA 06-08.  In this new bulletin, the Department reviewed the case law in more detail and came to the conclusion that post-assessment date sales may be considered if they are probative of the just value on the assessment date.  Specifically, the Department advised county property appraisers that post-assessment date sales may only be considered in preparing the tax roll when the following four conditions are met:

1.  When post-assessment date sales are probative of just value for the subject property as of January 1st;

2.  When post-assessment date sales are not used as a substitute for pre-assessment date sales;

3.  When post-assessment date sales are considered only in conjunction with pre-assessment date sales;  and

4.  When the consideration of post-assessment date sales is otherwise consistent with law.

In short, the Department indicated that, in preparing their tax rolls, county property appraisers may consider post-assessment date sales, as long as they are considered in conjunction with pre-assessment date sales and the sales are indicative of the January 1st value.

Of course, as a practical matter, because the property appraisers must submit their tax rolls by July 1st, they are simply unable to use sales that occur late in the year.  Thus, sales that occur later in the year will likely not be admissible to prove that the Property Appraiser failed to properly consider those sales, since it would have been impossible to consider a sale that had not yet occurred.  And even when there is a sale of the actual property in question, the court in Haines v. Holley held that a sale that occurs in June should not necessarily be relied on to assess the property as of January 1st.  However, based on the current state of the law and the Department’s most recent bulletin, it appears that both the Property Appraiser and the taxpayer could conceivably use post-assessment date sales to defend their respective opinions of value, as long as they can tie the sales to the January 1st assessment date.

VAB Evidence Part 1: Assessments of Similar Properties

Florida Statute s. 194.034(5) provides that “for the purpose of review of a petition, the [VAB] may consider assessments among comparable properties within homogeneous areas or neighborhoods.”  Conversely, the Florida Supreme  Court has long held that a court may not reduce a taxpayer’s asssessment below its fair market value based on a mere showing that parcels of other taxpayers are assessed at a lesser amount.  This creates a bit of a conundrum for the taxpayer, property appraiser and the VAB in trying to determine whether and to what extent evidence of the Property Appraiser’s assessment of other properties is relevant and admissible.

In Deltona v. Bailey, the Florida Supreme Court relied on the constitutional requirement that all property be assessed at its just value in holding that taxpayers’ assessments may not be reduced below just value just because other taxpayers may be assessed at a lower amount.  The exception to this rule is when the taxpayer can plead and prove that it is being “singled out” and specifically discriminated against vis-a-vis the other taxpayers generally in the county.  Based on the Deltona case, some VABs have refused to consider evidence of the assessment of comparable properties, despite the existence of Florida Statute s. 194.034(5).  It is possible that they are correct in doing so, as any reduction based solely on the assessment of other comparable properties would likely be unconstitutional, absent evidence that the assessment of the subject property exceeded its just value. 

However, another view is that the statute allows VAB petitioners to submit evidence of assessments of comparable properties in order to help prove that the Property Appraiser’s assessment was “arbitrarily based on appraisal practices which are different from the appraisal practices generally applied by the property appraiser to comparable property within the same class and within the same county,” per Florida Statute 194.301.  Prior to 2009, if a taxpayer could meet this burden, their burden of proving that the assessment exceeded just value would be reduced from “clear and convincing evidence” to a “preponderance of the evidence.”  Beginning in 2009, if the taxpayer meets this burden, the Property Appraiser’s assessment is overturned and the VAB must either set the value or remand to the Property Appraiser for a reassessment.

Viewed this way, evidence of the assessment of comparable properties could have limited relevance if it tended to support the taxpayer’s contention that the Property Appraiser used different appraisal practices for their property that were not  used for other similar properties.  However, based on Deltona v. Bailey, the VAB would still not have the authority to reduce a taxpayer’s assessment based solely on other assessments.  To reduce the taxpayer’s value, the VAB would need to see evidence that the assessment exceeded just value.

Also, it is important to note that Fla. Stat. 194.034(5) only applies to VAB proceedings, not to actions in circuit court.  Thus, taxpayers who take their case to court should not plan to rely on this statute.

DOR: New Statute Places Initial Burden of Proof on Property Appraiser

Subsequent to my earlier blog post on The New Reduced Burden of Proof in Florida Property Tax Appeals, the Florida Department of Revenue has revised its VAB training materials and issued its DOR VAB Training Revision – September 18 2009, which reflects a significant change in how it is interpreting the new burden of proof  statute.

Page 8 of the new training materials indicates that the Property Appraiser has the initial burden of coming forward with evidence that the assessment complied with section 193.011, Fla. Stat. and professionally accepted appraisal practices.   They also indicate that if the Property Appraiser does not prove by a preponderance of the evidence that the assessment met those requirements, the assessment will be overturned and the VAB must either set the value or remand to the Property  Appraiser for a reassessment.

This represents a dramatic change from the training materials released on September 1, 2009, which continued to place the burden of proof on the taxpayer, consistent with the statutory language that states that the party bringing the action has the burden of proof.  I will be reviewing the  revised training materials in more depth and will let you know if there are any additional significant changes.

Filing a Late VAB Petition in Florida

In Florida, petitions to the county value adjustment board must be filed no later than 25 days after the Property Appraiser mails the Notice of Proposed Property Taxes (or TRIM notice, as it is often called).  If a taxpayer misses that deadline, their VAB petition will only be considered  if they can demonstrate that the late filing was due to “good cause.”

The Florida courts have not had much opportunity to consider what constitutes good cause for filing a late VAB petition.  However, in one case, the appellate court held that the fact that a non-profit corporation had difficulty assembling its directors to approve the filing of the VAB petition was not such an extraordinary circumstance that would justify filing a VAB petition after the statutory deadline.

In its training for the 2009 VAB Special Magistrates, the Florida Department of Revenue explains the meaning of “good cause” as follows:

“Good cause” means the showing of extraordinary circumstances.  While this is not a compete list, some examples of circumstances that may affect the taxpayer’s ability to file on time are:  (a) personal, family, or business crisis or emergency or emergency at a critical time or for an extended period of time;  and (b) physical or mental illness, infirmity, or disability.

When a taxpayer files an untimely VAB petition, they must attach an explanation of their reasons for filing the petition late.  Those reasons are then considered by the VAB or its designee.  In some counties, the question will be referred to a Special Magistrate for a hearing.  If the Special Magistrate finds good cause, then a later hearing will be scheduled on petition itself.  Other counties allow the attorney for the VAB to make the good cause determinations.

The Department of Revenue’s training materials also provide that the VAB should consider whether the delay will affect the performance of its function in the property tax process.  Thus, a petition received a few days after the deadline is probably much more likely to be considered than a petition received months into the VAB hearing process.

Revised VAB Training Materials Available

The Florida Department of Revenue has released the 2009 VAB  revised on-line training materials, which reflect the recent statutory changes to Florida’s ad valorem tax laws.  The on-line training is mandatory for all persons serving as Special Magistrates in 2009.  For smaller counties that do not use Special Magistrates, the training is mandatory for the VAB members.  The materials are also available to taxpayers, attorneys and other interested persons.

Deadlines Approaching for Value Adjustment Board Petitions

The deadlines are quickly approaching for filing petitions to the Value Adjustment Boards of many Florida counties.  Below are the deadlines for some of the counties within the author’s practice area:

Broward County                 September 18, 2009

Charlotte County                September 14, 2009

Collier County                      September 11, 2009

Hendry County                    September 18, 2009

Hillsborough County         September 14, 2009

Manatee County                  September 14, 2009

Miami-Dade County           September 18, 2009

Orange County                     September 18, 2009

Palm Beach County            September 14, 2009

Seminole County                 September 11, 2009

How much does it cost to file a VAB petition? The filing fee for a VAB petition is $15.  Depending on the nature of the dispute, the petitioner may also want to retain an attorney and/or appraiser to assist with the process, and those fees must be negotiated directly with the attorney or appraiser.

Where are petitions filed? Petitions are filed with the Clerk of the Value Adjustment Board (the Clerk of Court also serves as clerk of the value adjustment board).

The New Reduced Burden of Proof in Property Tax Appeals

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.

How to File a Value Adjustment Board Petition

Property owners who disagree with the Property Appraiser’s assessment of their property have the option of scheduling an informal conference with the Property Appraiser, filing a petition to the Value Adjustment Board [“VAB”], bringing an action in circuit court, or all of the above.  If there is a clear error in the Property Appraiser’s calculations or in their assumptions about your property, you can probably resolve the issue with a simple phone call.  However, if there is a serious disagreement about the ultimate value of the property, and you want to file a VAB petition, this post will explain that process.

What is the VAB?

The VAB is a a five member quasi-judicial board that consists of two county commissioners, one school board member, and two citizen members (one appointed by the county commission and the other appointed by the school board).  The VAB is not affiliated with the Property Appraiser’s office. 

The Petition

The VAB petition forms can usually be obtained from the Clerk of Court and the Property Appraiser.  The petition must be filed with the Clerk of the Value Adjustment Board no later than the 25th day after the Property Appraiser mails the Truth in Millage [“TRIM”] notice to the taxpayers, which usually occurs toward the end of August.  The VAB may only consider untimely petitions upon a showing of good cause, so it is important to file by the statutory deadline.

The Hearing

Once your petition is filed, if you request a hearing, the Clerk will schedule a hearing before a Special Magistrate.  In small counties, the hearings may be held before the entire VAB.  However, in larger counties, special magistrates are appointed to hear testimony, take evidence, and make recommendations to the VAB.  In disputes about the value of real property, the Special Magistrate will be a real property appraiser.  In disputes about the value of tangible personal property, the Special Magistrate will be a tangible personal property appraiser.  In exemption and classification disputes, the Special Magistrate will be an attorney.  The Special Magistrates are hired by the VAB, and are not affiliated with the Property Appraiser’s office.

You are entitled to be represented by an attorney or other agent in the VAB proceeding, but that is not a requirement.  If you decide to proceed without an attorney, you should be sure to review both the applicable Florida Statutes and any local rules adopted by your county’s value adjustment board.  In particular, you need to be aware of the requirements for exchanging evidence prior to the hearing as failure to do so may result in your evidence being excluded. 

Prior to the hearing, the Special Magistrate will usually review the procedures with all of the petitioners in attendance and administer an oath to all testifying witnesses.  When it is your turn to present your case, you will have an opportunity to present your evidence and the Property Appraiser’s representatives or counsel will be permitted to cross-examine you.  You will have the same right when the Property Appraiser presents their case.  You may also be given time for a brief rebuttal (basically, the last word).  Some VABs are stricter than others in applying the rules of evidence.   In general though, you should always be prepared to present live witness testimony, as affidavits, letters and other hearsay evidence will usually not be admitted. 

The Decision

Some Special Magistrates will advise you of their decision at the conclusion of the hearing, but most will take the decision under advisement and issue a written recommendation shortly after the hearing.  The written recommendations are submitted to the Value Adjustment Board, with copies to both parties.  The Value Adjustment Board will hold a final meeting or meetings, during which it will either reject or approve the recommendations of the Special Magistrates.  Some VABs allow petitioners to address the Board, but generally no new evidence may be presented at the final VAB meeting.  Any evidence you want to present must be presented at the hearing before the Special Magistrate. 

Following the final VAB meeting, you will receive a Final Record of Decision, which represents the final decision of the Board.  If your petition is approved, your assessment will be reduced accordingly.  If it is denied, you would have the right to file an action in circuit court, but it must be filed within 60 days of the Record of Decision.