VAB Evidence Part 1: Assessments of Similar Properties

September 29, 2009 — Sherri Johnson

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.

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Deadline Approaching to Submit Evidence of Chinese Drywall

September 11, 2009 — Sherri Johnson

The Lee County Property Appraiser has announced that the deadline to submit evidence that your home is affected by toxic Chinese drywall is September 18, 2009.  Click here for more information.  Upon submitting such evidence, you may be able to obtain a reduction of 50% off the just value of your home, according to a memo released last week.

I will be looking into other counties’ policies and hopefully posting some more information on this issue, so stay tuned.  If you have information about the requirements of any other counties that are making adjustments for Chinese drywall-related issues, please feel free to post a comment.

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Deadlines Approaching for Value Adjustment Board Petitions

September 1, 2009 — Sherri Johnson

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).

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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 »

How to File a Value Adjustment Board Petition

August 20, 2009 — Sherri Johnson

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.

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Frequently Asked Questions About Property Tax Bills

August 19, 2009 — Sherri Johnson

With TRIM notices being issued around Florida in the coming weeks, this post will attempt to answer three of the most commonly-asked questions about property tax bills:  (1) Why is my property assessed at a higher value than my neighbors’ similar property?  (2) Why is my assessed value higher than the price I paid for the property?  (3) Sales prices are going down, so why is my assessment going up?

Why is my property assessed at a higher value than my neighbors’ similar property?  The reason the property tax system was historically considered to be a fair system of taxation was that everyone was assessed based on the fair market value of their property, and that was that.  In the last few years, however, the number of exemptions, special classifications and assessment caps has exploded, thus resulting in similar properties within the same neighborhood being taxed at vastly different rates, depending on when the property was purchased, whether the purchaser was a first-time home buyer, whether the property has a homestead exemption and whether the owner “ported” their cap from another property.

The short answer is that, while the assessed values may differ for a variety of reasons, if the properties are truly similar, the just value should reflect that similarity.  If the just values are substantially different, it is most likely due to differences in the size or configuration of the lot, the age of the improvements, or the overall quality of the construction.  However, if you feel that a mistake has been made, you should contact the Property Appraiser.

Why is my assessed value higher than the price I paid for the property?  The just value of your property is determined as of January 1st of the tax year in question.  While the Property Appraiser is statutorily required to consider the price paid for your property, he can disregard that factor if it is not relevant, i.e. if the sale occurred too long ago or it was not an arms-length transaction, for example.  In most cases, the assessed value is influenced the most by sales of similar property in the area during the last calendar year.

As an example, if you paid $100,000 for your property in January 2005, but similar properties were selling for closer to $200,000 in the last few months of 2008, your 2o09 assessment will likely be higher than what you paid for the property.

If I re-finance my property or take out a line of credit, will my assessment increase?  Probably not.  The Property Appraisers generally base their determinations on actual consummated sale transactions between willing buyers and willing sellers.

Sales prices are going down, so why is my assessed value going up?  Two issues are at play here.  First, the Property Appraiser is required to assess all property at its value as of January 1st, and must submit his or her completed tax roll to the Department of Revenue by July 1st.  Thus, the Property Appraisers tend to rely more on sales that occurred during the previous calendar year, and possibly sales from the first couple months of the current year.  Thus, if sales begin to decline in the spring or summer, that decrease probably will not be recognized until the following tax year.

The other possible reason is the “re-capture” provision of the Save Our Homes Amendment.  If you have had a homestead exemption on your property for many years, chances are your assessed value (on which taxes are determined) has been much lower than the fair market value of your property.  This is because, by law, the assessment of homestead property cannot increase more than 3% per year (or the percent change in the CPI).  However, if your assessment is lower than the fair market value of your property, the assessment will increase by that 3% each year until it matches the just value.  So, even if the just value of your property decreased, as long as your assessed value was lower, that assessed value will continue increasing by 3% per  year or the CPI, until it equals the just value.

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How Does the Property Appraiser Determine the Value of Your Property?

August 18, 2009 — Sherri Johnson

  The Florida Constitution requires the county Property Appraisers to assess all property at its just value, which has been defined as “fair market value.”  The purpose of this post is to explain, in a nutshell, how the Property Appraisers determine the just value of residential, commercial and tangible personal property in their jurisdictions.

First, it is important to note that the Property Appraiser must consider eight statutory factors, such as the present cash value, the highest and best use and current use of the property, location, quantity or size, the cost of the property and improvements, the condition of the property, the income from the property, if any, and the net proceeds from the sale of the property.

Residential Property.  In most counties, residential property is assessed by a computer-assisted mass appraisal [“CAMA”] system.  The Property Appraisers’ staff gathers market data and inputs it into the CAMA system, which produces values based on recent sales and construction costs.  The values for each neighborhood may be reviewed by the staff and compared to recent sales to verify the accuracy of the assessments.

Commercial Property.  Values for commercial property may be calculated in a variety of ways.  Income-producing property, such as hotels, apartment complexes and office buildings, may be assessed by the income approach, which utilizes rental and sales data from similar properties.  The sales comparison approach may also be used for commercial properties that are of a type that is commonly bought and sold.  Unusual or special-purpose properties may be assessed by the cost approach, which adds the depreciated cost of the improvements to the land value to produce an total assessed value.

Tangible Personal Property.  Tangible personal property is self-reporting, and thus the Property Appraisers rely heavily on taxpayers to accurately report the quantity, age and condition of their personal property.  If deemed accurate, costs reported by the taxpayer are usually depreciated according to economic life tables and depreciation schedules published by the Florida Department of Revenue, or developed by the local Property Appraiser based on local market data.

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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 »

Understanding Your Truth In Millage (TRIM) Notice

August 16, 2009 — Sherri Johnson

All property owners in Florida will soon be receiving what is known as a Truth in Millage notice from their county Property Appraiser.  The purpose of the TRIM notice, as it is called, is to advise you of the value that the Property Appraiser has assigned to your property for the current tax year, and to notify you of how the taxing authorities’ proposed millage rates will affect your taxes.  Below are some frequently asked questions about the TRIM notices.

What is the difference between the property assessment and my property taxes?  Your ad valorem property taxes are determined by multiplying the taxable value of your property by the millage rate for the current tax year.  The taxable value of the property is determined by the county Property Appraiser, a constitutional officer.  The millage rate is adopted each year by the local taxing authorities for your area.

Example:  If your property has a taxable value of $100,000 and the millage rate is .001, your taxes would be $100 (or $100,000 x .001).  If your property had a taxable value of only $90,000, but the millage rate was .002, then your taxes would be $180 (or $90,000 x .002).

What is the difference between just value, assessed value, and taxable value?  The just value represents the fair market value of the property as of January 1st of the current tax year, as determined by the Property Appraiser.  The assessed value is the value of the property after applying any laws that require the property to be assessed at less than just value (such as agricultural property classifications or the constitutional caps on increases in the assessment of homestead and certain commercial properties).  The taxable value represents the assessed value less any exemptions, such as the homestead exemption.  The taxable value is used to determine the ultimate amount of taxes that you will owe.

How do I object to my property taxes?  Objections to the millage rate should be addressed to the local governing body levying the taxes.  However, if you disagree with the values assigned to your property, you can meet with the Property Appraiser informally to discuss your concerns or you can file a petition to the Value Adjustment Board.  Petitions to the Value Adjustment Board must be filed no later than 25 days after the mailing of the TRIM notice.  You also have the right to challenge the assessments in court.

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