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Owners make plea for lower valuations

Thursday, July 9, 2009

One homeowner contends that a nearby junkyard is affecting the valuation of her property. Another said because he would never pay that much again for his house, he deserves a reduction in his valuation.

A third told Red Willow County commissioners that he wasn't whining ... "just trying to make a living, like everyone else."

County commissioner and board of equalization chairman Steve Downer, fellow commissioners Earl McNutt and Leigh Hoyt, and Red Willow County Assessor Sandra Kotschwar listened to 12 property owners Monday afternoon, during the first round of protests of 2009 real estate property taxes.

Commissioners and Kotschwar will need to make decisions regarding a total of 71 protests -- many from commercial property owners -- by July 25. Those who disagree with commissioners have the right to appeal to Nebraska's Tax Equalization and Review Commission (TERC).

A Danbury resident told commissioners and Kotschwar that a junkyard at the intersection of Highway 89 and Danbury's Grandview main street is affecting the valuation of all properties in the community. "There are lots of nice houses in Danbury and the area that are not selling," she said. "Properties in Danbury are not worth a lot with 'that lovely scenic view'" of a junkyard filled with car bodies, auto parts and storage tanks.

If a judge has ruled that an unoccupied house at 301 E. First in McCook is "unsightly" enough to affect neighborhood property values, she asked, "Can you imagine what the junkyard does to our valuations in Danbury?"

"We've tried to get something done for years ... for decades ... ," she said, with the village, the county attorney, the state, the railroad. The situation continues to get worse, she said.

Kotschwar admitted that the junkyard may be affecting valuations, although, she explained, it is also difficult to find properties in Danbury comparable to the homeowner's in age, in size, in condition. The homeowner said, "We'd never be able to sell it, not for $90,000."

McNutt promised to look into the situation. "We'll look at the property ... take a drive through Danbury."

An Indianola resident asked that the valuation of both his land and his house be reduced because he "got lied to" by a real estate agent, a former owner ... a contractor or two.

The man said the roof leaks and a contractor won't guarantee the work because he wasn't paid for it by the previous owner. A real estate agent misrepresented the size of the lot, he said, and a neighbor claims to own land he (the homeowner) thought belonged to the property he purchased. Repair costs for interior damage caused by leaking outdoor faucets (another undisclosed problem) are going to be astronomical, he said.

He and Kotschwar agreed that it is difficult, if not impossible, to find properties and/or sales comparable to his in Indianola. The man said, "You can't rely on what I paid for it ... you can't base my valuation on what I paid for it." He'd never be able to sell it for what it's valued at, he said, adding, "I wouldn't pay that much again."

The owner of a multi-unit rental in McCook asked commissioners to reduce his valuation, requesting that they take into consideration the costs involved with maintaining the apartments.

"You've seen that movie, 'The Money Pit'?" he asked. "That's exactly how I feel about this property. Every dollar of rent goes back into maintenance. It takes a lot of money and a lot of time and energy. There's always something to fix."

He continued, "I pay utilities and repairs. Maintenance eats up any income."

The man is also concerned with vacancy rates, and the frequent loss of one or two months' income when renters skip out without paying their rent. "It's hard to keep the apartments full," he said.

"I'm not against paying my taxes," he said. "I'm just trying to provide affordable housing, affordable apartments, and that's very difficult, folks."

The man said he can't justify raising the rents, as he rents mainly to single mothers with children.

He told commissioners, "I'm not here whining. I'm just trying to make a living, like everyone else."

Kotschwar said that she and the outside commercial appraiser that the county hires to determine valuations on commercial properties agree that there might need to be some adjustments made to this property, considering the property's income ability, expenses and vacancy rate.

Kotschwar said her staff contacts property owners, requesting information such as that, before determining tax valuation. "Some landowners don't want to share their information with us," she said.

The man said, with a chuckle, "I can't imagine why not. We want to be truthful, but ya know what'll happen when you are. 'Yes, you added another bathroom' ... cha-ching!"

The man admitted that he improved the building's deck, but said that those improvements addressed safety concerns as well as aesthetics. "I want it to look nice," he said, "but 'Phase II' just went out the window."

A resident of a rural McCook subdivision said his neighbors have outbuildings and bigger, fancier homes and his valuation increased by $32,000, compared to his neighbors' increases from $9,000 to $15,000.

Kotschwar defended her valuation, explaining that the purchase price of the property and sales of similar properties support the valuation placed on the man's house and land. The man countered, "If I was ignorant in paying too much, it can't be proven because I didn't have an appraisal done."

A McCook-area farmer told commissioners that the only structure of any value on the old homestead is a granary. He chuckled about the other structures -- a hog house and chicken coops -- "I could let the wind blow 'em down. The barn would be gone in a good wind storm."

Repairs to an elderly rental house would be too expensive, he said. A renter moved out, he said, for a time returning only to feed two dogs he kept cooped up inside, causing irreparable damage to floors. No one's lived there for eight to 10 years now, he said.

Downer said, "Things depreciate fast when no one's living in it."

Kotschwar said her office maintains a "flat" or "minimal" value on irreparable properties -- $500 to $1,000 on a house and "no value" on outbuildings -- until they can be torn down.

Commissioners promised to make a close inspection of the property and make adjustments to the property's valuation if necessary.

Kotschwar said assessors can't place a lot of weight on the price of a property purchased at auction, especially if it's a distress auction or foreclosure sale, explaining to commissioners the difference between her tax valuation of an Indianola property and what a new owner paid for it at a recent auction. The property sold a couple years ago for $62,000, and $22,500 at a recent foreclosure auction.

In another situation, she said, a two-story rural house has new vinyl siding and some new windows. What's the condition of the inside?

From the outside of another home, it's not apparent that the owner has renovated her duplex into a single-family dwelling, and that the basement is unfinished.

In a perfect world, Kotschwar said, "We'd get into every home to see the whole picture. The interior does affect the valuation."'

"We haven't done anything to that house in seven years," the man said. "You raised my taxes 14 percent, and I want to know why."

Kotschwar explained to the man and his wife that the state requires that all residential properties be valued for tax purposes at 92 to 100 percent of fair market value. If the state feels that Red Willow County properties are not valued within that range, it will demand that they be valued at 100 percent of fair market value.

Recent sales of similar homes in the couple's neighborhood are driving valuation increases, Kotschwar said.

Nebraska and Red Willow County are not experiencing the same dramatic slump in the housing market that many homeowners and buyers across the nation are seeing, Kotschwar said. If that does begin to happen, if the prices and sale of homes begin to decline because of instability in the housing market and the economy, she assured the couple that the valuation of Red Willow County properties would be adjusted accordingly.

The couple's home is in a very desirable neighborhood, Kotschwar said, and recent sales of similar properties will support the valuation placed on the couple's property.

Kotschwar said that sales of residential properties used for comparison must be recent, having happened for 2008 taxing purposes between July 1, 2006, and June 30, 2008. Sales of commercial properties used for comparison must have happened between July 1, 2005, and June 30, 2008.

Though the couple presented a long list of the varying percentage of increases in taxes for their neighbors, Kotschwar said her office does not compare the percentage of increases from one house to another within a neighborhood.

Commissioners and Kotschwar have more hearings, on July 13 and July 15.

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